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Université catholique de Louvain. Empirical Taxonomy of Start-Up Firm Growth Trajectories. Mahamadou Biga D., D. François, B. Gailly, M. Verleysen, V. Wertz. Centre for Research in Change, Innovation and Strategy Louvain School of Management www.crecis.be

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empirical taxonomy of start up firm growth trajectories

Université catholique de Louvain

Empirical Taxonomy of Start-Up Firm Growth Trajectories

Mahamadou Biga D., D. François,

B. Gailly, M. Verleysen, V. Wertz

Centre for Research in Change, Innovation and Strategy Louvain School of Management

www.crecis.be

Machine Learning Group Engineering Faculty

www.ucl.ac.be/mlg

slide2

How do “promising” firms grow and develop over time? Do typical growth trajectories exist?

What are the key characteristics of these growth trajectories?

“Promising” firms generate significant wealth and jobs

OECD; Audretsch & Turik,; Storey; Birsch…

Knowledge about new & small firm growth remains scattered

Wiklund & Shepherd; Delmar et al; Davidsson & Wiklund…

Longitudinal approaches generate methodological challenges

Garnsey & Heffernan, Garnsey et al. ; Davidsson & Wiklund…

Motivation

proposed approach

Use of multiple economic data

(10 indicators)

Focus on

growth trajectories

Analysis across multiple sectors

Proposed approach

Growth is a multidimensional process

Wiklund, 2004; Delmar & et al., 2003; Dess & Lumpkin, 2001; Weinzimmer et al., 1998; Lumpkin & Dess, 1996; Birley & Westhed, 1990; Cameron, 1978.

Growth is a longitudinal process

Garnsey et al., 2006; Busenitz et al., 2003; Chandler & Lyon, 2001; Pettigrew et al., 2001; Davidsson & Wiklund, 2000;…

Growth is an ubiquitous phenomenon

Delmar & Davidsson, 1998; Delmar et al.,2003

slide4

Methodology 1/2: « Promising firms »

Sales

Employment

Assets

10 years

Excluded firms

Sample of 741 “promising” firms with complete trajectory, out of 17,168 firms created between 1992 and 2002 in Belgium.

“Promising” firms

Threshold of micro-firm size

Firm age

importance of using multidimensional approach

Employment

(above 9)

50%

5%

1%

2%

Assets

(above 2M€)

Sales

(above 2M€)

33%

3%

8%

Importance of using multidimensional approach

Share of firms growing beyond micro-firm level based upon criteria selected to measure growth. (n=741)

ubiquity of promising firms
Ubiquity of ‘‘promising firms’’

Sector distribution

High-tech vs. low-tech distribution

methodology 2 2 discretization

●● ●●●● ● ● ●●● ●●●●● ● ●●●● ●●● ● ● ● ● ●● ●● ● ● ● ●● ●●●●● ● ● ● ●● ●●● ●● ● ●● ●● ●●●● ● ●● ●●● ●●●●●●●●●●●●●●●●●●●●●●● ●● ● ● ● ● ● ● ● ● ● ● ● ● ●●●● ●●●●● ●● ●●●● ●● ●● ●●● ● ●● ● ● ●

2

●● ●●●● ● ● ●●● ●●●●● ● ●●●● ●●● ● ● ● ● ●● ●● ● ● ● ●● ●●●●● ● ● ● ●● ●●● ●● ● ●● ●● ●●●● ● ●● ●●● ●●●●●●●●●●●●●●●●●●●●●●● ●● ● ● ● ● ● ● ● ● ● ● ● ● ●●●● ●●●●● ●● ●●●● ●● ●● ●●● ● ●● ● ● ●

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1

4

3

Clustering and discretization

Sequence analysis

Methodology 2/2: Discretization

●● ●●●● ● ● ●●● ●●●●● ● ●●●● ●●● ● ● ● ● ●● ●● ● ● ● ●● ●●●●● ● ● ● ●● ●●● ●● ● ●● ●● ●●●● ● ●● ●●● ●●●●●●●●●●●●●●●●●●●●●●● ●● ● ● ● ● ● ● ● ● ● ● ● ● ●●●● ●●●●● ●● ●●●● ●● ●● ●●● ● ●● ● ● ●

Multidimensional

representation of growth trajectories

7 typical growth trajectories identified
7 Typical growth trajectories identified
  • Grow as a question mark
  • Grow as a start-up
  • Grow as a star
  • Grow as a boutique
  • Grow from start-up to question mark
  • Grow from start-up to boutique
  • Grow from start-up to star

vii

ii

iv

v

vi

i

iii

Span (years)

4

5

6

n

602

521

431

Share of firms adopting one of 7

58 %

50 %

42 %

conclusions further work
Conclusions & Further Work
  • Original empirical approach based on systematic clustering

and classification

  • Relevance of longitudinal and multidimensional approach

based on economic data

  • Identification of several possible growth trajectories beyond

classical “start-ups” profiles

Further interpretation could rely upon international sample, in-depth case studies or use of more complete data (business model, entrepreneur’s motivation, competitive environment….)

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