Firm strategies and performance

Scope of the firm strategies and performance research program

• Shows that new small firms play an important role in shaping the evolution of the industrial landscape. Over time, the turnover within industry populations generated via successive entry cohorts is dramatic. Industries exist in a constant state of competitive turbulence - one that is shaped by the emergence, growth and decline of small firms.
• Examines the survival profile of new small firms showing that they face high rates of infant mortality. The size advantages that some young firms develop over others are strongly correlated with success, and mirror the development of a whole host of firm-specific competencies. It also examines the causes behind failure. Small firms fail because they lack basic business skills-notably in areas related to management and financing.
• Examines the characteristics that are peculiar to successful small firms-those that survive and grow. It is demonstrated that they pursue a wide array of innovation strategies, and often develop a supporting network of complementary business skills. There is no single archetype that adequately summarizes innovation in small firms. Research, technology adoption, human resource skills, marketing, financing and management all contribute, in varying degrees, to growth and performance. Innovative firms are compleat firms in that they have to develop a range of competencies to succeed. This is true both for more recent entrants and for small and medium-sized incumbents.
• Illustrates that innovation strategies are often tailored to the specifics of an industry's environment. An industry's science base affects the nature and intensity of a firm's investments in knowledge, as do changes in the competitive pressures that small young firms face.
• Shows more innovation is typically associated with the more successful firms. High-performance firms are often those that make significant investments in knowledge; what is more, they are often compleat firms-they take on many activities and excel in numerous areas. Success is borne out of activity, not just by random chance.
• Illustrates that the innovative sector depends heavily on a particular type of finance-equity capital. And firms that downplay equity are less likely to perform R&D and consequently to be successful innovators.

Overview and description of publications

Research questions