How young firms achieve growth: reconciling the roles of growth motivation and innovative activities

Abstract

Growth orientation is important for understanding why some young firms grow but not others, but research remains silent on the intermediary mechanisms mediating the growth orientation–firm growth relationship. We study 282 Swedish firms and show that various innovative activities mediate the growth orientation–firm growth relationship. These mediating innovative activities include informal activities and the launch of new products, but not formal R&D. Our findings offer a more complete explanation for how growth orientation translates into realized growth, serving to reconcile empirical inconsistencies about the relationship between innovation and young firm growth.