Publication Type

Conference Paper

Publication Date

8-2010

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 ten 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

de novo entrants, new ventures, growth, capacity expansion

Discipline

Corporate Finance | Portfolio and Security Analysis

Research Areas

Strategy and Organisation

Publication

Academy of Management 2010 Annual Meeting

First Page

312

City or Country

Montreal, Canada

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