Factors influencing high-growth aspirations of entrepreneurial firms: Evidence from GEM data

Abstract

High growing firm in the literature on entrepreneurship is a cornerstone issue. Over the last several decades researchers have been investigating different aspects of high growth. Evidence was provided that fast growing young small entrepreneurial firms favor country economy. Specifically, it was found that a tiny percent of young small entrepreneurial firms is in charge of majority of the jobs created. Due to small size and young age, those firms are thorny to spot ex ante they realized growth. Aspirations to growth are considered to be robust predictors of realized high growth. This research attempts to create holistic model that would be indicative of high growth aspirations of firm. The model considers individual, industry and country level factors. The purpose of this paper is to contribute to understanding of the phenomenon of growth aspirations of the firm. The study was realized on the data collected by GEM Global Entrepreneurship Monitor in 2011. As an indicator of high growth aspirations, percent of entrepreneurially active adult population by country that plans to create additional 10 jobs and assesses growth potential of his enterprise to exceed 50% in 5 years was used. The model was tested using SPSS 20.0 by applying linear regression statistics to data. Results of the study suggest that on individual level human capital presented by high education and work experience play positive effect on growth aspirations. On firm and industry level, intra-firm entrepreneurship, internationalization and product/market innovation, growth of B2B sector correlate positively with high growth aspirations of firms. Firms in transforming sector have high growth aspirations, eventually due to high minimum efficient scale (MES). Contrary to expectations, business service sector showed negative β coefficient in regression. On the country level, intellectual property rights (IPR) efficient enforcement gave positive statistically significant β. The theoretical contribution of the work is related to the development and testing of the model of high growth aspirations of the firm. The results obtained can be used in management practices by firms that aspire to grow.