Motivation of small business managers affects firm growth

June 5, 2008

Economic theory often assumes that firm growth is automatic, given the existence of growth opportunities in the marketplace. However, a new study published in Entrepreneurship Theory and Practice reveals that the motivation of small business managers has a long-term effect on the actual future growth of the firm.

Researchers gathered information from two different Swedish samples of small firms. The managing director was asked about employment and sales growth as well as sales and related motivation. The researchers then used regression analysis to investigate the data.

The study found that motivation was a relevant predictor of firm growth. The results provide evidence showing support for the idea that motivations of managers affect important firm outcomes. Managers vary in their motivations to grow firms, and those motivations affect the growth achieved.

Growth motivation is partly affected by previous outcomes but remains relatively stable over time. This is an important result, as motivations have to be stable to be good predictors of behavior. Hence, growth motives are effective predictors of firm growth when they are stable over time.

Source: Wiley

Explore further: Novel method projects growth potential of new firms

Related Stories

Novel method projects growth potential of new firms

February 5, 2015

New businesses spring up all the time in the U.S. But which ones have the greatest ability to become big? A method developed by MIT researchers, based on an empirical study, projects the growth potential of high-tech firms ...

Recommended for you

Biologists trace how human innovation impacts tool evolution

November 24, 2015

Many animals exhibit learned behaviors, but humans are unique in their capacity to build on existing knowledge to make new innovations. Understanding the patterns of how new generations of tools emerged in prehistoric societies, ...

First Londoners were multi-ethnic mix: museum

November 23, 2015

A DNA analysis of four ancient Roman skeletons found in London shows the first inhabitants of the city were a multi-ethnic mix similar to contemporary Londoners, the Museum of London said on Monday.

1 comment

Adjust slider to filter visible comments by rank

Display comments: newest first

2 / 5 (1) Jun 05, 2008
>This is an important result

Yes this is an extremely important result, and very unexpected! Who could have known that motivation of business managers can affect firm growth!

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.