Diversification – enterprises are generally medium-sized with increasing tendency to have divisionalised structures. There is a mean of 5.70 organisational levels. Centralisation is low, and formality is highest for any stage in the life-cycle model. There is a mean of 15.30 specialised functions. Mean sales revenues growth is 37 per cent per annum, and mean employment growth is 57 per cent per annum.
Particularly note that generally increasing size and age of enterprises when reading down this list of life-cycle stages provides some evidence that businesses may, in some sense, progress sequentially through the stages as they evolve and develop. Kazanjian & Drazin (1989) make a similar point based on findings of their study of growth in technology-based concerns.
Hanks et al. (1993) further describe the two apparently stable and sustainable disengagement configurations or stages in their taxonomic life-cycle model as follows:
Life-style – these enterprises are slightly larger than those in the start-up stage, but are generally much older. In most other respects, they are organisationally like start-up businesses. Mean sales revenues growth is 34 per cent per annum, but there is no growth in employment. These enterprises appear to have disengaged from the growth process after establishing their viability at relatively small size following start-up. Hanks et al. (1993) observe:
Perhaps they represent life-style firms, where owners have consciously chosen to keep their firms small. Davidsson (1989), in his study of Swedish firms, found that for many small business managers, the negative effects of growth appeared to outweigh the positive outcomes once the firm had reached the size of five to nine employees, roughly the size of firms in this cluster. This configuration may also reflect firms whose growth is limited because they operate in very small market niches.
Capped growth – these enterprises are slightly larger than those in the expansion stage, but are generally much older. Organisationally, they are somewhat less complex than typical businesses in the expansion stage. Mean sales revenues growth is 44 per cent per annum, but mean employment growth is only 4 per cent per annum. These enterprises appear to have disengaged from the growth process after successfully expanding to modest size following start-up. Hanks et al. (1993) observe that such businesses could be in Churchill & Lewis’ (1983, p. 34) ‘success-disengagement’ sub-stage described as follows:
. . . the company has attained true economic health, has sufficient size and product-market penetration to ensure economic success, and earns average or above-average profits. The company can stay at this stage indefinitely, provided environmental change