Firm growth and profitability : The role of age and size in shifts between growth–profitability configurations
Mansikkamäki, S. (2023). Firm growth and profitability : The role of age and size in shifts between growth–profitability configurations. Journal of Business Venturing Insights, 19, Article e00372. https://doi.org/10.1016/j.jbvi.2023.e00372
Published inJournal of Business Venturing Insights
© 2023 The Author. Published by Elsevier Inc.
To investigate the routes toward profitable growth, this study partially replicates and extends the work of Davidsson et al. (2009) on firm growth–profitability dynamics with multi-industry data on over 66,000 Finnish firms. The results support prior findings on initial profitability being more important than initial growth for achieving high performance in both performance dimensions. Additional investigations on the role of firm age and size reveal further interesting dynamics: Very small young firms face fewer risks from growing at a low profitability level than other firms, and the benefits of firm size for future performance depend on the firm's current profitability. The results advance the understanding of the reasons and consequences of the different modes (i.e., profitable vs. non-profitable) of firm growth.
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- Kauppakorkeakoulu 
Additional information about fundingPartial financial support from the Foundation for Economic Education (Liikesivistysrahasto) and the Central Finland Regional Fund is gratefully acknowledged.
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