The study of corporate growth is a phenomenon in entrepreneurial theory, the beginnings of which date back to the 1950s, more precisely 1959, when author Edith Penrose (1959) published her theory on the growth of the firm. Nevertheless, researchers only placed more importance on high-growth companies (HGCs) in the late 1970s, when David Birch presented his then-controversial findings on the economic significance of small HGCs (Landström 2010, p. 159 and 164). Lately, HGC research has been diverse and focused mainly on the interpretation of the importance of entrepreneurship, the characteristics of companies (demographic factors) and the impact on the creation of employment and economic growth (Henrekson and Johansson 2010, p. 127).
HGCs seeking to create jobs and economic growth must manage a number of factors that affect their performance, both from a financial perspective and from a growth perspective. With the conceptual model design, we wish to contribute to understanding the specificity of the financing of HGCs, as the accessibility of financial resources is one of the key factors in the development and growth of small and medium-sized enterprises (SMEs) (IFC 2011), which include a large proportion of HGCs. Insufficient or inadequate sources of financing may lead to the inability to operate properly and to realize business opportunities or to reduce the growth and development of companies (Beck and Demirguc-Kunt 2006; Kim-Soon et al. 2017). On a sample of HGCs, Brüderl and Preisendörfer (2000, p. 62) found that the amount of financial capital invested in companies had a significant impact on the likelihood of rapid growth, which is also in agreement with Hambrick and Crozier (1985). This leads us to the realization that financing is especially important for HGCs, since these enterprises certainly require substantial financial resources in order to achieve high growth rates, while at the same time they may be subjected to more financing restrictions (Moreno and Casillas 2007; Hambrick and Crozier 1985). Access to relevant financial resources is also important for future access to financial resources, as the possession of a sufficient amount of financial resources is perceived as a measure of stability, reliability and reputation of the company/entrepreneur in the eyes of the investor (Neville et al. 2005; Baum 1996). This aspect is particularly important for HGCs, which can be slightly smaller in comparison to other companies, since an extensive part of theory and empirical research suggests that growth rate decreases with the size of the company, or that smaller companies grow faster (Calvo 2006; Yasuda 2005; Audretsch 1995; Reid 1995; Evans 1987a, b). Additionally, HGCs are, on average, also younger than non-growing companies, since the age of a company is negatively linked to the achieved growth rate (Delmar et al. 2003, p. 196; Henrekson and Johansson 2010, p. 237), and they are also more prone to risk (Davidsson and Delmar 2006) but to greater innovation as well (Shane 2009). As a result, there are differences between the financing of HGCs and the financing of non-growing (static) companies, relating mainly to the extent of the necessary financial resources (Brüderl and Preisendörfer 2000) and the use of different sources of financing, since HGCs, compared to other companies, are more likely to use a “cocktail” of various financial resources (Brown and Lee 2014, p. 1). Financial resources and their accessibility represent a key aspect/challenge of the modern entrepreneurial process (Grichnik et al. 2014), especially among HGCs.
According to the theory on the growth of the firm (Penrose 1959), the growth of companies is not inherently present (Močnik and Širec 2016, p. 300) but is rather an effect of appropriate motivation, growth opportunities (promoted by the entrepreneurial orientation) and harmonious organization of production resources, including human and social capital (Gilbert et al. 2006). As past research suggests, entrepreneurial orientation, human capital and social capital (particularly networking and organizational networking capacity) also have an important role in the selection and formulation of access to financial resources (Lukkarinen et al. 2016; Carter et al. 2007; Freel 2007). On the basis of the past theoretical knowledge, we have created our own conceptual model that links multidimensional variables—growth factors (entrepreneurial orientation, human capital, organizational networking capability—as a key aspect of the structural dimension of social capital) that affect perceived accessibility to the various forms of financing and the measures that the HGCs implement in regard to perceived financing constraints or in order to ensure optimal access to financial resources, and consequently also the financial performance of the company. Financial performance is crucial for HGCs; Penrose (1959) pointed out that excessive growth can compromise financial performance. Financial performance is also highlighted in connection with the possibility of maintaining jobs by Davidsson and Delmar (2006), who consider that a significant proportion of jobs are lost in HGCs as a result of extremely high and sometimes significantly risky growth and the difficulties that such growth brings about. We use the designed conceptual model that we have empirically verified on a random sample of HGCs in the Republic of Slovenia to supplement a deficit and heterogeneous field of research, thus creating an important scientific publication. The importance of the original scientific contribution is also reflected in the implications of the results for the needs of economic (entrepreneurial) policies, both at company level and at the national economy level.
The book is based on a doctoral dissertation (Frešer 2020) and consists of several parts. The introductory part is followed by the theoretical planning and design of the theoretical conceptual model by formulating relevant research hypotheses. Next, there is a demonstration of the empirical verification of the conceptual model on a sample of HGCs from the Republic of Slovenia. We conclude the publication with a discussion and the implications of the results for the needs of economic (entrepreneurial) policies as well as our concluding thoughts.
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Carter, S., Shaw, E., Lam, W., ...
