The Growth Corridor: Financial Thresholds to Optimum Firm Expansion
Type
conference paper
Date Issued
2007-10-14
Author(s)
Abstract
One of the most controversial issues in the growth literature is whether there is an optimal growth rate that maximizes firm performance. Contrary to prior research, we argue that optimum growth rates are firm-specific and, as such, cannot be established across whole populations of firms. Drawing on financial theories, we develop a model of optimum firm growth. Our research suggests that there are firm-specific corridors of optimum growth and that they may have a significant effect on firms' long term-performance. Our research shows that a company's minimum growth requirement results from shareholder's earnings expectations and that the upper boundary of growth is defined by the firm's sustainable growth rate.
Language
English
Keywords
Expected growth rate
growth
performance
sustainable growth rate.
HSG Classification
not classified
Refereed
No
Event Title
27th Strategic Management Society (SMS) Annual International Conference
Event Location
San Diego, CA
Event Date
14.-17.10.2007
Subject(s)
Division(s)
Eprints ID
37022