Title

Differentiating large absolute from relative expansions in De Novo Ventures — Are large capacity expansions sustainable in the long run?

Publication Type

Book Chapter

Publication Date

2-2017

Abstract

By considering how in many industries an augmentation in production capacity is necessary to bring about significant growth in sales or eventual profit, this study adds an important footnote to prevailing theories of firm survival and competitiveness in strategic management. First, it distinguishes between attempts for new ventures to grow their production from the outcome of their expansions. Second, this study delineates the role of large absolute versus relative growths in production and their differential implications on young, de novo ventures: the former being conducive to firm survival while the latter being detrimental to it. This prediction is supported empirically by 10 years of archival data from the intra-European passenger airline industry. In particular, many young firms would survive longer over the medium- to long-term if their relative growth is achieved at a lower but more sustainable rate.

Keywords

capacity, expansion, new ventures, start-ups, failure, fast growth, high growth

Discipline

Business Administration, Management, and Operations | Sales and Merchandising

Research Areas

Strategy and Organisation

Publication

The World Scientific Reference on Entrepreneurship: Volume 3: Sustainability, Ethics and Entrepreneurship

Volume

3

Editor

Amy J Guerber, Gideon D Markman, Sherry Chih-Yi Su

First Page

395

Last Page

423

ISBN

9789814733304

Identifier

10.1142/9789813220614_0015

Publisher

World Scientific Publishing

City or Country

USA

Copyright Owner and License

World Scientific Publishing

Additional URL

http://doi.org./10.1142/9789813220614_0015

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