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The Management of Growth: An Entrepreneurial Crisis

The Management of Growth: An Entrepreneurial Crisis THE MANAGEMENT OF GROWTH: AN ENTREPRENEURIAL CRISIS WILLIAM C. FELDBAUMER, Trenton State College The evidence is clear that the success of an entrepreneur creates problems of growth for him. The transition from a small company which can be directly managed by one individual to a larger one which requires a more formalized management system is a difficult period which often involves some severe crises. These crises entail, among other things, redesign of the organization structure and changes in the entrepreneur's personal style of leadership. Theory to guide entrepreneurs in the management of the growth of their small-size companies into medium-size companies is relatively meager compared to the body of knowledge concerned with the management oflarger, more mature companies. This dissertation provides research in this relatively neglected area. The focus is specifically on changes in organization structure as a function of growth from the founding of companies to their maturity, along with the implications of these changes for the management of growth. An extensive literature search was undertaken to gather together existing theories of growth. They range from general theories applicable to all growth phenomena to twenty-one specific models of company growth. Relations among these theories are shown. It is also shown that the greatest need for research at this time is for replicative testing to validate or call into question existing theories rather than for the generation of a new theory supported by a single test made by its author. Filley's three-stage metamorphosis model of company growth was chosen as the It postulates a fundamental growth cycle of sales; it is most appropriate for this study. suitable for testing changes in factors of management interest between stages; and it is supported by published, empirical data. Six hypotheses were tested in the context of the model by making longitudinal case studies of three manufacturing companies from their founding to the present. The hypotheses deal with the shape of sales growth curves, the use of multiple subordination, changes in spans of control, composition of staff, the magnitude of the staff ratio, and the sequence of formalization of organiza· tion components. The hypotheses generally were supported by the empirical data. It was concluded that Filley's model of company growth is a viable model capable of being expanded with the creation of additional hypotheses and with further empirical testing. Modifications to the model are suggested, however. The author believes strongly that replicative testing of existing theories conducted by different researchers to the same ground rules can do much to speed the development of the science of management at this time. Implications for management of changes associated with growth are drawn. Sugges· tions are offered for managing growth in a manner which could lessen the crises often associated with the changing of organization structures and managerial styles. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Journal of Small Business SAGE

The Management of Growth: An Entrepreneurial Crisis

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Publisher
SAGE
Copyright
© 1977 SAGE Publications
ISSN
0363-9428
eISSN
1540-6520
DOI
10.1177/104225877700100306
Publisher site
See Article on Publisher Site

Abstract

THE MANAGEMENT OF GROWTH: AN ENTREPRENEURIAL CRISIS WILLIAM C. FELDBAUMER, Trenton State College The evidence is clear that the success of an entrepreneur creates problems of growth for him. The transition from a small company which can be directly managed by one individual to a larger one which requires a more formalized management system is a difficult period which often involves some severe crises. These crises entail, among other things, redesign of the organization structure and changes in the entrepreneur's personal style of leadership. Theory to guide entrepreneurs in the management of the growth of their small-size companies into medium-size companies is relatively meager compared to the body of knowledge concerned with the management oflarger, more mature companies. This dissertation provides research in this relatively neglected area. The focus is specifically on changes in organization structure as a function of growth from the founding of companies to their maturity, along with the implications of these changes for the management of growth. An extensive literature search was undertaken to gather together existing theories of growth. They range from general theories applicable to all growth phenomena to twenty-one specific models of company growth. Relations among these theories are shown. It is also shown that the greatest need for research at this time is for replicative testing to validate or call into question existing theories rather than for the generation of a new theory supported by a single test made by its author. Filley's three-stage metamorphosis model of company growth was chosen as the It postulates a fundamental growth cycle of sales; it is most appropriate for this study. suitable for testing changes in factors of management interest between stages; and it is supported by published, empirical data. Six hypotheses were tested in the context of the model by making longitudinal case studies of three manufacturing companies from their founding to the present. The hypotheses deal with the shape of sales growth curves, the use of multiple subordination, changes in spans of control, composition of staff, the magnitude of the staff ratio, and the sequence of formalization of organiza· tion components. The hypotheses generally were supported by the empirical data. It was concluded that Filley's model of company growth is a viable model capable of being expanded with the creation of additional hypotheses and with further empirical testing. Modifications to the model are suggested, however. The author believes strongly that replicative testing of existing theories conducted by different researchers to the same ground rules can do much to speed the development of the science of management at this time. Implications for management of changes associated with growth are drawn. Sugges· tions are offered for managing growth in a manner which could lessen the crises often associated with the changing of organization structures and managerial styles.

Journal

American Journal of Small Business – SAGE

Published: Jan 1, 1977

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