Companies that evolve their management strategy are more likely to see sustained and rapid growth

Study reveals what fuels "gazelles"

 

LONDON, ON, January 19, 2010 - Lessons learned today won't necessarily work tomorrow when it comes to sustaining rapid growth, according to a new study investigating why some firms grow faster than others.

The research investigates whether rapid firm growth can be stimulated by specific management strategies. It reveals certain strategies in areas such as marketing and customer service are adopted by fast-growing firms or "gazelles". It also finds such strategies generally need to change with the times and that a firm's ability to make adjustments helps it to sustain growth.

"Gazelle-like growth appears to be fragile and only a small portion of firms can jump the hurdle of sustaining it," said Simon Parker, MBA '80 Professor in Entrepreneurship and Director of the Driving Growth Through Entrepreneurship & Innovation Cross-Enterprise Leadership Research Centre at the Richard Ivey School of Business, the study's lead author. "Firms are unlikely to sustain success if they attempt to draw lessons from observing growth in one period and then routinely apply these lessons at a different point in time."

The study, "What happens to gazelles? The importance of dynamic management strategy," will be published in an upcoming edition of the scholarly journal Small Business Economics.

It is co-authored by David J. Storey, Professor of CSME and Enterprise Group, Warwick Business School, and Arjen van Witteloostuijn, Professor of Economics and Applied Economics, University of Antwerpen.

Some strategies that appear to contribute to rapid growth include:

Maintaining a core product or service rather than diversifying;

Having and using a specialised marketing department;

Using customer surveys rather than customer complaints as a basis for quality control;

Restricting share issues to workers or outside investors, thereby enabling management to retain control.

However, the researchers stress best practices of one period may prove counter-productive in a later period.

"There are key strategies that seem to help gazelles to become or remain large, but, to sustain growth, there need to be dynamic, rather than static, management strategies," said Parker. "Timely adaption of strategies is key."

 

About the Richard Ivey School of Business

The Richard Ivey School of Business at The University of Western Ontario (www.ivey.ca) offers undergraduate (HBA) and graduate degree programs (MBA, Executive MBA and PhD) in addition to non-degree Executive Development programs. Ivey has campuses in London (Ontario), Toronto, and Hong Kong. Ivey recently redesigned its curriculum to focus on Cross-Enterprise Leadership - a holistic issues-based approach to management education that meets the demands of today's complex global business world.

 

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For more information, please contact:
Dawn Milne, Richard Ivey School of Business, 519-850-2536, dmilne@ivey.ca