Search

Untangling the relationships among growth, profitability and survival in new firms

PublicationArticle (with peer review)
Alexander McKelvie, Företagandets villkor, Företagsöverlevnad, Frédéric Delmar, Nya företag, Tillväxt

Abstract

The performance of new firms is important for economic development but research has produced limited knowledge about the key relationships among growth, profitability, and survival for new firms. Based on evolutionary theory, we develop a model about how new firms resolve uncertainty about their ability to prosper in a market by monitoring changes in profitability. Our model predicts selection pressures to weed out underperforming firms and learning in order to allow survivors to improve performance and grow. We test our theory using a unique panel of knowledge-intensive new firms in Sweden. We find strong support for the notion that profitability enhances both survival and growth, and growth helps profitability but has a negative effect on survival. Implications are discussed.

Related content: Working Paper No. 205

Delmar, F., McKelvie, A., & Wennberg, K. (2013). Untangling the relationships among growth, profitability and survival in new firms.Technovation, 33(8–9), 276-291.

Länk till artikel

Based on content

Untangling the relationships among growth, profitability and survival in new firms
Artikel (med peer review)Publication
Delmar, F., McKelvie, A., & Wennberg, K.
Publication year

2013

Published in
Abstract

The performance of new firms is important for economic development but research has produced limited knowledge about the key relationships among growth, profitability, and survival for new firms. Based on evolutionary theory, we develop a model about how new firms resolve uncertainty about their ability to prosper in a market by monitoring changes in profitability. Our model predicts selection pressures to weed out underperforming firms and learning in order to allow survivors to improve performance and grow. We test our theory using a unique panel of knowledge-intensive new firms in Sweden. We find strong support for the notion that profitability enhances both survival and growth, and growth helps profitability but has a negative effect on survival. Implications are discussed.

Related content: Working Paper No. 205

Effects of employees’ opportunities to influence in-store music on sales: Evidence from a field experiment
Article (with peer review)Publication
Daunfeldt, S.-O., Moradi, J., Rudholm, N., Öberg, C.
Publication year

2021

Abstract

The effects of in-store music on consumer behavior have attracted much attention in the marketing literature, but surprisingly few studies have investigated in-store music in relation to employees. By conducting a field experiment in eight Filippa K fashion stores in Stockholm, Sweden, we investigate whether it is beneficial for store owners to give employees more opportunities to influence the in-store music. We randomly assigned the stores into a treatment group and a control group, with the employees in the treatment stores having the opportunity to influence the in-store music through an app developed by Soundtrack Your Brand (SYB). The experiment lasted 56 weeks and sales data were also gathered 22 weeks before the experiment, resulting in a total of 4626 observations. Our results show that sales decreased by 6% when the employees had the opportunity to influence the music played in the store, and the effect is driven by a reduction in sales of women’s clothing. Interviews with the employees revealed that they had diverse music preferences, frequently changed songs, and preferred to play high-intensity songs. Employees thus seem to make choices regarding the in-store music that reduce sales, implying that store owners might want to limit their opportunities to influence the background music.

Nominated procurement and the indirect control of nominated sub-suppliers: Evidence from the Sri Lankan apparel supply chain
Article (with peer review)Publication
Fontana, E., Öberg, C., Poblete, L.
Publication year

2021

Abstract

This article describes and discusses nominated procurement as a means through which buyers select sub-suppliers to achieve sustainability compliance upstream in emerging economies’ supply chains. Hence, it critically examines the ways buyers articulate nominated procurement and the unfolding supply chain consequences. Based on in-depth interviews and fieldwork in the Sri Lankan apparel supply chain, the findings indicate that buyers accomplish sustainability compliance among their sub-suppliers while prioritizing their own business agenda. In doing so, however, buyers perpetuate “suboptimal compliance” of raw material suppliers and “sandwiching” of direct suppliers as harmful consequences on the supply chain. These consequences link theoretically with commercial, geographical, compliance and extended-compliance pressure. This article contributes to the advancement of the Sustainable Supply Chain Management literature by theorizing about nominated procurement, direct and indirect pressure, and pointing to the supply chain consequences beyond achievements in sustainability compliance.

Show more