The growth of Start-up firms

Start-up firms are considered important engines of economic development and job creation worldwide. However, a considerable amount of start-ups cannot achieve fast growth or even grow at all. Consequently, start-ups have received increasing attention from both scholars and policy makers to understand which factors trigger, support or hinder their growth. In recent decades, empirical studies on this subject have proliferated, applying numerous theoretical perspectives and proposing various hypotheses to understand the role of specific drivers in stimulating the growth of the start-up firm. The drivers considered include bundles of resources and capabilities, the composition of the founding team, the strategy and business model adopted, and the characteristics of the context where the start-up is located. Despite this abundance of perspectives and drivers the accumulated evidence remains largely inconclusive. The purpose of this thesis is to shed light on the phenomenon of the growth of start-up firms. We start our research with a systematic review of 233 empirical studies on the growth drivers of start-up firms from the process perspective. Our analysis reveals an imbalance in the use of variance-based empirical approaches to study the process-based phenomenon and some misalignments in the use of non-process-based empirical approaches to improve a process- based theory. We then extend our research by including other papers recently added to the literature and by designing a sophisticated database that for each paper reports in details all the variables and their relations. In this way and even through original visualisation techniques we are able to reach a more sophisticated understanding of the growth drivers and to discover both potential and real contradictions in the literature. At the end we consider 247 empirical studies dealing with start-up firms and growth and we identify, categorize and map 66 growth drivers. We then project such drivers on a three-dimensions matrix that combine information about the frequency of use of each driver in previous empirical studies, the net effect (positive or negative) of each driver on the growth of the start-up firm and the consistency of each driver, expressed in terms of number of studies supporting its statistical significance. By adopting such perspective our study is able to enrich the current theoretical discussion on start-ups’ growth by highlighting on- going trends, research flaws and research opportunities within the extant empirical literature and by identifying factors which role is evident and supported and variables which role as growth driver remain still controversial. We finally identified a potentially interesting variable that seems to be directed towards increasing consolidation in the literature but cannot be yet defined as “evident” driver: the business model. Start up firms are continuously subjected to pressures coming from the external environment and to respond to such pressures, they adapt their business models accordingly in order to preserve their competitiveness. We hypothesize upon such premises that the ability to dynamically adjust the business model will also influence the ability to growth of the start-up firm. Despite its simplicity, such argumentation still lacks of empirical evidence. With the aim of contributing to fill this gap in the literature, we carried out an empirical study involving 266 start-ups. In other terms we try to understand how the evolution of the business model impacts on the growth paths of start up firms. This dissertation offers many original perspectives from which to reconsider the relevant literature and provides useful recommendations for researchers to forge a path ahead in this field.