1984; Gibb & Scott, 1985; 1986; Stanworth & Curran, 1986; Chell & Haworth, 1988; O’Farrell & Hitchens (1988); Gibb & Davies, 1989; Birley & Westhead, 1990; Gibb & Davies, 1990, 1991; Bygrave & Petty, 1991; McMahon et al., 1993a; Petty & Bygrave, 1993).
Theories that have their origins in the field of economics according to which SME growth is viewed as a series of phases or stages of development through which the business may pass in an enterprise life-cycle. As the literature cited later in this paper indicates, these are the most prevalent explanatory devices employed by researchers and policy-makers for explaining growth in SMEs. Unfortunately, over time there have been a great many stage models of growth proposed in the literature, and there is a bewildering range from which to choose for the purposes of research and policy-making. The number and nature of growth or development stages in these models vary widely from author to author, as do their emphases. For reasons which will soon become apparent, this broad approach to explaining growth of SMEs is subjected to further critical examination in the following sections of the paper.
In concluding their literature review on SME growth, O’Farrell & Hitchens (1988, p. 1379) acknowledge that ‘As in so many aspects of the social sciences, it is easier to provide a critique of contemporary theories than to present a definitive new conceptual framework within which to study small-firm growth’. They go on to make some suggestions on modifications and extensions to the theories they have considered which would, they believe, make them more cognisant of the realities faced by SMEs. Gibb & Davies (1989, 1990, 1991) are similarly unable to suggest a explanatory framework that is free from the many criticisms they direct at the theories of SME growth reviewed by them. Like O’Farrell & Hitchens (1988), these authors are, however, liberal with their views on what such a theory should include, how it should be derived, and other such questions.
While industrial economics and stochastic theories shed light on some phenomena of interest, they are far from full explanations of the growth process in SMEs. They are useful adjuncts in the present context, but are less than adequate as broad conceptual frameworks for research and policy-making, given their somewhat spartan and rationalistic/mechanistic features. To the extent that SMEs are and must be managed in an holistic manner, and given evidence which suggests strategic awareness in owner-managers is a key factor in successful growth and development of such concerns (Gibb & Scott, 1985, 1986), a strong case can be made that strategic management perspectives on growth hold most promise as rich and context-sensitive explanatory frameworks.