Growing Pains: A Study of SME Growth
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Growth in small- and medium sized business (SMEs) is often seen as a sign of entrepreneurial success, and is important for employment and national economies. However, it is acknowledged that growth also leads to challenges for the SMEs, and many small business owners decide to intentionally keep their companies small in order to avoid the turmoil. Current literature and theoretical development in the academic field has emphasized the preconditions, or the antecedents, leading to growth, rather than addressing how the firms grow and the effects of growth in terms of challenges for the SMEs. This gap in research has led to the prevalence of unsatisfactory conceptualizations of the growth phenomenon. Further, the linear and deterministic growth trajectories often portrayed in the disputed theories that exist are argued to be of little value to practitioners. The problem statement for the thesis is thus: “Given the current research on SME growth, contrasted against how the phenomenon is experienced by practitioners, how can we better conceptualize the process of growth and the challenges that SMEs face as they grow?” This thesis reviews existing theoretical perspectives on SME growth and addresses some key limitations. Further, it contains the case study of growth in a small Norwegian company. By combining the insight gained from existing literature and empirical data from the case study, the thesis presents a new and novel conceptualization of the process of SME growth and the effects of growth, which is argued to better portray the idiosyncratic and path-dependent growth of SMEs than any one theoretical perspective by itself. The thesis makes a contribution to the academic field by providing an alternative conceptual framework for reasoning on the growth process of SMEs. The framework consists of four categories of internal and external forces, changing through the growth of the SME, and putting pressure on the existing organizational configurations and practices. Further, the framework suggests seven categories of challenges that may arise due to misalignment of the forces, based on findings from existing literature and the case study. Together, this new conceptualization is argued to potentially help practitioners better understand and address the challenges that arise from the growth process.