However, business growth requires the willingness of entrepreneurs and the ability of the firm to grow and expand its business. Worryingly, recent surveys (including the SME Barometer Autumn 22 and the GEM Finland 2021/2022 Country Report) show a downward trend in firms' ambition to grow. And this is not just a question of economic uncertainty related to the current global situation. In the last six years, the number of companies with strong growth ambitions has fallen by 36%. Over the same period, the combined number of companies seeking strong growth and those seeking growth and opportunities has fallen by 10 percentage points (from 50% to 40%).
In order that entrepreneurs decide to pursue growth, they need to perceive it as interesting, exciting, rewarding and with manageable growth risks. This last one is a particular focus of the research theme on growth management. As a company grows, the business becomes more complex, creating change challenges and even growing pains. Research has shown that perceived and expected growth challenges strongly influence entrepreneurs' growth attitude and that non-financial concerns may be more important than expected financial outcomes in determining entrepreneurs' attitudes towards growth.
In a growing business, the key role of management is to keep growth under control. Growth requires, among other things, adaptation and reorganization. The company must develop new systems, processes and structures to support its expanding size and complexity. Unless management recognize the need for change, growth stagnates.
In the micro-enterprise context, the growth-related challenges are not unfamiliar. The micro-enterprise faces major relative changes, for example when hiring its first employee. A micro-entrepreneur who started businesses as a part-time entrepreneur has already experienced a lot when hiring ninth employee. We know that the bigger the business, the more likely it is to seek growth. That's why understanding and supporting micro-enterprises in their first steps of growth is particularly important.
As the number of growth-orientated businesses seems to be decreasing, our economy cannot afford to miss out on potential growth companies - at least not for fear of foreseeable growth risks. What is needed, therefore, is research-based knowledge and skills to identify, prevent and manage the challenges associated with business growth - in other words, business growth management.
Writer:
Martti Saarela, PhD, M.Sc., Econ.
Development Manager, MicroENTRE® Microentrepreneurship Centre
Programme Director (deputy) in National task of microentrepreneurship research and education.
Kerttu Saalasti Institute
University of Oulu
References:
Björk, P., Saarela, M., Kotavaara, O. & Muhos, M. (2022). Global Entrepreneurship Monitor 2021/2022 Finnish Report. Publications of Kerttu Saalasti Institute, University of Oulu 3/2022.
https://www.gemconsortium.org/file/open?fileId=51137
Flamholtz, E. G & Randle Y. (2016). Growing Pains: Building Sustainably Successful Organizations, Fifth Edition. Wiley.
Kuismanen, M., Malinen, P., Ohlsbom, R., & Vehmanen, E-S. (2022). SME barometer autumn 2022. Federation of Finnish Enterprises, Finnvera Plc., Ministry of Economic Affairs and Employment. Finland.
In Kerttu Saalasti Institute's blog we write about the topics of the Institute's research groups, micro entrepreneurship education and the Institute's general topics. The authors are researchers, experts and members of networks.
Our topics are: micro entrenepreneurship, future manufacturing technologies, regional excellence, micro entrepreneurship education