Growth in firms

Abstract

The purpose of this doctoral thesis is twofold. First, we review, in a unified and critical way, those factors and strategies that promote and explain the growth of firms put forward by the empirical literature. Second, we present two empirical research that studies the impact of a number of factors for firms' growth (age, size, financial funding and location) in two strategic sectors for the Portuguese economy: Portuguese Footwear Industry and Portuguese Textile and Clothing Industry. To accomplish this goal, this doctoral thesis is organized in the following chapters. Chapters 1 to 3 were written in Portuguese, while Chapters 4-5 were in English. Chapter 1 (written in Portuguese) presents the main concepts, definitions, and presents the objective of the thesis. The empirical findings concerning the determinants and the strategies for the growth of firms are very fragmented in the literature, sometimes obtaining contradicting results. Chapters 2 and 3 aims to present in a unified and critical way all these findings. Chapter 2 (written in Portuguese) reviews and unifies the empirical literature that identifies the determinants factors for the growth of firms. This chapter has been published (in English) in the Revista Galega de Economía, a SCOPUS journal. Chapter 3 (written in Portuguese) reviews and unifies the empirical literature that identifies the different modes of growth, the strategic paths that potentiate these different modes of growth, and the determinants strategies for the growth of firms. Under this conceptual framework, Chapters 4 and 5 undertake an empirical research to study the impact of a number of factors for firms' growth pointed out in the literature in two strategic sectors for the Portuguese economy. Chapter 4 (written in English) empirically investigates the influence of size, age, and location on the growth of firms in the Portuguese Footwear Industry. Finally, Chapter 5 (written in English) provides new evidence on the influence of location on the growth of Portuguese Textile and Clothing Industry firms. This doctoral thesis presents four main contributions. First, we found that a number of factors pointed by the empirical literature as “relevant” to the growth of firms and further effort to delimitate whether the indicated variable constitutes a direct influence on growth or it is an intermediate variable whose effects are indirect, induced for a third key variable, the true source that spurs growth. Second, we put forward that to study the phenomenon of firm growth it is necessary to better understand "how?" firms carry out their growth activities; and (ii) in "what way?" the growth has been achieved. Third, in contrast with most of the empirical literature, location is not significantly correlated with growth in firms Portuguese Footwear Industry. The lack of location effects is explained by the existence of a trade-off between positive spillovers within a cluster and an abundance of resources outside a cluster. Fourthly, location is significantly correlated with growth in firms, of some sub-sectors, the Portuguese Textile and Clothing Industry. This is the “location puzzle” present in the nonhomogeneous cluster of this Industry. Consequently, we found empirically that the growth of firms, located in the cluster, is positively correlated with external finance.