Discuss the Aphorism Small Firm Growth Being the Only...

INTRODUCTION Business growth is a good goal for most firms in general and is given great weight by the society. This could be seen with the list conjured up by the media, such as ‘Forbes Fast-Growing Companies’ and ‘Inc Fastest Growing Companies’ lists (Hupato 2011). The reason small firm growth has been prioritised by policy makers and the society is mainly due to its contribution to the economy (Bridge, O’Neill amp; Martin 2009). Small firm and entrepreneurship have so often been linked together, and it has become common to acknowledge that all small firms are established by entrepreneurs. Hence, the terms such as growth, success and performance are often linked in the research of entrepreneurial success (Reijonen amp; Komppula 2007).†¦show more content†¦Research shows that young high-growth firms (also commonly known as ‘gazelles’) generate a large share of all new net jobs (Roper 2012). Robbins, Pantuosco, Parker amp; Fuller (2000) has a lso confirmed in their research that a state with large quantity of small business has lower rates of unemployment compared to other states that has little quantity of small businesses. The reason employment rates are valuable in measuring growth is because each firm will grow until they reach the optimal size that corresponds to minimum average cost (Hart 2000). Thus, each firm will continue to employ during its growth stage until it reaches the efficient scale or natural decay. However, other research has proved that it is difficult to measure small firm performance by employee growth. This is due to moderating variables such as outsourcing activities, productivity changes and replacement of employees with capital investments (Fitzsimmons, Steffens amp; Douglas 2005). When business grow in this the rapid changing modem world, many production and service functions has been contracted out (Bridge, O’Neill amp; Martin 2009). In other words, a business can grow without having a ny increase in employment rate. Several academicians argued that sales precede other yardsticks for business growth, as pointed out that it is the increase in sales that necessitates the increase