Factors Influencing the Growth of Small and Medium Sized Firms in Different Growth Stages---------A Study of Four Chinese SMEs

University essay from Högskolan i Halmstad/Sektionen för ekonomi och teknik (SET); Högskolan i Halmstad/Sektionen för ekonomi och teknik (SET)


Small and medium enterprises play an important role in the development of a country.

The growth of SMEs is also important for the world economy which has been widely

discussed in recent years. Although the growth of small firm is a well known topic in

theoretical research, still there are some research gaps that need to be filled. There is

no single multidimensional theory which would embrace all possible approaches;

most studies on SMEs’ growth examine the growth factors one by one. (Wasilczuk,

2000) Nor is there any single theory that can adequately explain small business

growth due to the heterogeneity of SMEs. Moreover, growth itself is difficult to

measure, and can be measured either objectively or subjectively. (Delmar, 1996)

Therefore, this study incorporates the resource-based view, as well as the

consideration of SMEs’ fives stages model to examine the growth factor of SMEs.

The resource-based view provides a unified approach in the conceptualization of the

resource analysis in the small firm. The five stages model shows the position of SMEs

current growth stage. By analyzing SMEs’ key resources (tangible and intangible

resources), indentifying their growth stages, SMEs can find out the critical resources

which influence their business growth.

As a conclusion, the study finds that each resource has its importance in different

stages. Tangible resources, such as cash and physical resources are critical in the

start-up firms, while intangible resources are prioritized in the success and resource

maturity stages. In order to gain the competitive advantages, SMEs should fully

develop the unique and inimitable resources such as the brand, technology, culture

and reputations.

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