Short Term Sacrifices for Long Term Benefits: A Look at High Growth Firms

Babson College Entrepreneurship Research Conference (BCERC) 2007

Frontiers of Entrepreneurship Research 2007

13 Pages Posted: 6 Dec 2007

See all articles by Moren Levesque

Moren Levesque

University of Waterloo

Maria Minniti

Southern Methodist University; Syracuse University - Whitman School of Management

Abstract

Emerging countries tend to be characterized by large quantities of labor and by rapidly expanding markets. High growth firms typically need to increase their workforce to maintain rapid sales growth. Thus, emerging countries tend to be well suited for high growth firms with labor intensive strategies. Difficult decisions, however, must be made to achieve and sustain high growth and profitability. These decisions involve various tradeoffs, including maximizing hiring in order to generate early profit versus making short term sacrifices and investing in complementary resources in order to generate long term profits. We develop a multi-period decision model of hiring policies for high growth firms that offers new insights on the relationships between profitability, size, and relative size increase in rapidly expanding markets.

Keywords: Entrepreneurship

JEL Classification: M13

Suggested Citation

Levesque, Moren and Minniti, Maria and Minniti, Maria, Short Term Sacrifices for Long Term Benefits: A Look at High Growth Firms. Babson College Entrepreneurship Research Conference (BCERC) 2007, Frontiers of Entrepreneurship Research 2007, Available at SSRN: https://ssrn.com/abstract=1064921

Moren Levesque (Contact Author)

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

Maria Minniti

Syracuse University - Whitman School of Management ( email )

721 University Avenue
Syracuse, NY 13244-2130
United States

Southern Methodist University ( email )

P.O. Box 750333
Dallas, TX 75275-0333
United States

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