GUEST EDITORS: (alphabetical order)
- Erkko Autio, Imperial College Business School
- Nicole Coviello, Wilfrid Laurier University
- Satish Nambisan, Case Western Reserve University
- Holger Patzelt, Technical University of Munich
- Llewellyn Thomas, IESE Business School
In this special issue, we aim to explore how certain firms, behaviors, and capabilities exemplify entrepreneurship: scale-ups, scaling, and scalability. This focus reflects our limited knowledge of the role and nature of scaling, particularly in a contemporary digital context. And, with the tendency to refer to all high-growth firms as scale-ups, what it means to scale has become unclear. Although being ‘scalable’ or having ‘scalability’ are now commonly used terms, these constructs remain poorly defined and, to date, they have not been operationalized nor measured in any meaningful way. Thus our goals for this special issue are to: 1) stimulate research to address this knowledge gap of theoretical and practical significance for researchers, entrepreneurs, managers, investors, and policy-makers; and 2) unpack if and how scaling firms (and their implications) are distinct from high-growth firms.
Given JBV is a multi-disciplinary, multi-functional, and multi-contextual journal, we invite submissions from multiple theoretical perspectives. We are open to conceptual papers or empirical studies drawing on any relevant source of data (in-depth interviews, cases, surveys, secondary data, etc.). Comparative studies are of particular interest in order to identify and understand any distinctions between scale-ups and high-growth firms.
In recent years, entrepreneurship scholars have begun to examine various issues pertaining to high-growth firms. Examples include studies of the characteristics of entrepreneurs in such firms (Baum & Bird, 2010), board composition and growth intentions (Rasmussen, Ladegard & Korhonen-Sande, 2018) or the interrelationships between various performance outcomes as the firm grows (Coad, Cowling & Siepel, 2017). The review paper from Demir, Wennberg and McKelvie (2017) takes a wider perspective, concluding that five dimensions underpin high growth: human capital, human resource management, strategy, capabilities, and innovation.
In a parallel stream of work, some scholars refer to high-growth firms as ‘scale-ups’ (DeSantola & Gulati, 2017; Duruflé, Hellmann & Wilson, 2017, Gulati & DeSantola, 2016). This practice is consistent with influential policy-makers and entrepreneurial ecosystem perspectives. For example, ‘The Scale-Up Report on UK Economic Growth’ (Coutu, 2014), the UK’s ScaleUp Institute, and Nordic Innovation all target ‘scale-ups’ and define them using the OECD (2007) definition of a high-growth firm. That is, scale-ups are referred to as firms with: 1) average annualized growth greater than 20% over a three-year period; and 2) ten or more employees at the beginning of the observation period.
We have two concerns with the above. First, although a high-growth firm might be identified using employee numbers or revenue growth, we ask: can a ‘scale-up’ be defined by numbers alone? Our question stems, in part, from Barclay’s ‘Scale-Up UK’ report (Hellmann & Kavadias, 2016). In it, an important point is made: ‘scale-up’ is a stage “when a company takes a proven concept and delivers it to a wider audience, often through market penetration and geographic expansion” (p. 7). Notable here is that Hellmann & Kavadias (2016) flag the importance of factors other than firm size when identifying a firm that is a scale-up or in the scale-up stage. Further complicating the reliance on (for example) revenue growth, some firms now grow at extraordinary rates; rates that far exceed the OECD’s reference point of average annualized growth greater than 20% over a three-year period. For example, the top 10 firms in the 2020 USA Deloitte Fast 500 competition grew (over four years) at rates between 21,724% and 106,508%. Such firms are assumed to be scaling but this leads to our second concern.
Despite research signaling the relevance of scale economies (Autio et al., 2018; Hennart, 2014; Monaghan & Tippmann, 2018; Monaghan et al., 2020), ‘scale-ups’ are too often discussed without acknowledging the importance of identifying and leveraging different economies of scale (cf Coviello, 2019) in various parts of the organization. We know small firms can use technology to quickly achieve this type of advantage (Josefy et al., 2015), but what needs to be scaled in the firm? When?
At this point in time, we are still learning about what it means for a firm to scale or to have scalability. In Sullivan’s (2016) interview with Reid Hoffman (co-founder of PayPal, founder of LinkedIn), Hoffman argues that scaling involves: 1) growing revenue; 2) growing the customer base; and 3) scaling the firm to serve a large and usually global market. Hoffman also observes that scaling is more about the “character of the company than it is the exact employee headcount” (Sullivan, 2016, p. 47). Complementing Hoffman’s experiences, Shepherd and Patzelt (in press) conceptualize the knowledge implications of ‘organizational scaling’, defining it as “spreading excellence within an organization as it grows."
Nielsen and Lund’s (2018) study of Danish firms suggest that scaling also involves removing capacity constraints by, for example, shifting capital requirements to partners, implementing platform models, or leveraging the work of various partners including customers. Coviello (2019) suggests that for young Canadian technology firms to scale, they: 1) standardize and/or automate certain processes for efficiency gains; 2) are run by a diverse management team (in terms of functional and managerial experience, education, and international background); 3) are high in absorptive capacity; 4) move quickly into international markets yet are relatively asset-light in those markets. She concludes that “you can’t be a scale-up without growing but you can be growing and not be a scale-up” (Coviello, 2019, p. 15).
Together, these arguments suggest to us that traditional growth metrics (such as increased employment or rate of change in sales revenue) may provide only a partial understanding of the complexities of a firm that is trying to scale or in the scale-up stage. We argue there is a need to consider the broader question of ‘how’ rather than ‘how much’. The same applies to calling all high-growth firms ‘scale-ups’. Another consideration appears to be the boundaries of the scaling phenomenon: whether scaling is confined within the boundaries of the firm, or whether (and when) scaling can involve, e.g., building platform and ecosystem momentum and leverage (Thomas, Autio, & Gann, 2014).
We believe these initial findings are only the tip of the iceberg for entrepreneurship research. As digitalization continues across all industries and markets, firms are increasingly networked both technologically and organizationally. These results lead us to wonder: does extant knowledge on how much firms grow really help us understand their scalability, how they develop it, and how they scale-up?
We encourage submissions that focus on one or more of the areas below, although this list is not intended to be mutually exclusive or collectively exhaustive.
What is scalable? What does a firm need in order to scale?
● Which business models allow a firm to scale? Is scaling influenced by the type of market offer? Firm age? Commercialization strategy?
● What functions and processes in a firm are, or should be, ‘scalable’?
● What is the role of congenital, vicarious, grafted, or experiential learning in an organization trying to scale? What risks to organizational learning come with rapid scaling? Does that risk matter?
● Are scaling vs (for example) high-growth firms distinguished by certain organizational capabilities? Is ‘scalability’ an organizational or dynamic capability? What does it entail? What are the technological and organizational enablers and constraints to scalability?
● What motivates founders to scale? Is the motivation for scaling culturally and/or institutionally bound? How?
● Do scaling firms require cognitive congruence between (for example) the founders/Top Management Team (TMT) and employees? Is this congruence different from that found in high-growth firms?
● How does entrepreneurial cognition initiate and facilitate (or hinder) scaling?
● Is it sufficient for a firm to have scalable operations? What type of knowledge and human capital is necessary for a firm to be able to scale? Are scaling vs (for example) high-growth firms distinguished by certain TMT and/or employee characteristics? Are they distinguished by organizational capabilities?
What is the role of digitalization in scaling?
● Is digitalization necessary for a firm to scale? To what extent?
● What is the impact of digitalization on international scaling activities?
● Which digital technologies and their affordances are more likely to drive scaling? Why? How? Are there digital dependencies?
● How does digital technology generativity shape (a) the capabilities a firm needs to scale and (b) entrepreneurial outcomes (scaling)? How do these effects vary over time?
● As a firm scales, how does digitalization, and specifically digital affordances, influence (a) its strategic commitment to markets, and (b) its adaptation to foreign markets?
● Do the dynamics of economies of scale and scope change as a firm scales? Are there other digitally driven dynamics that need to be considered as a firm scales, such as economies of transaction, search, or complementarity?
● Do traditional assumptions regarding adaptation and internationalization hold in digitally-fueled scaling?
● How do network effects created by digitalization speed up the firm’s need to scale? How do firms manage time compression diseconomies?
● What is the impact of digitalization on initial location decisions for a firm? How do psychic distance considerations change in the context of digitalization and a digitalized ecosystem?
How do firms transform as they scale?
● As a firm starts to scale, what are the timing implications for organizational transformation? Does it matter which practices or processes are scaled earlier rather than later? Does this vary? How?
● How does management and leadership style change as a firm shifts into scaling? What is the role of cross-functional integration in organizational transformation as the firm scales?
● Does the firm’s reward philosophy matter when it is trying to scale? How does it change?
● How does the firm sustain its culture under explosive growth in (for example) employee numbers or markets served?
● Why might a scaling firm fail? What happens if a firm tries to scale too early? Is there a time that is ‘too early to scale’?
● How does scaling impact the cognition of those driving the venture’s scaling efforts (founders, TMT, employees) in terms of their demands for allocation attention? Learning?
● Is there equifinality in the role that different heuristics play as the firm scales? Do heuristics shift? How? When?
● Most scale-up research focuses on technology-intensive or high tech firms but scaling also applies to other contexts (see Nielsen & Lund, 2018; Hennart, 2019). What is the timing and nature of scaling in such contexts?
How do entrepreneurial ecosystems (including accelerators, incubators, universities, regions) influence firms trying to scale?
● Does being in an accelerator or incubator improve a firm’s scalability? If so, how, and why?
● Does the timing of participation in an accelerator/incubator make a difference (e.g. when a firm is a nascent start-up vs older)?
● Is acceleration or incubation more effective for firms trying to scale?
● What are the potential negative effects of acceleration and incubation on a scaling firm (e.g., diminishing variance among startups by providing standardized support)?
● Does government intervention (funding, tax credits, policy initiatives) facilitate the scaling process?
● Do investors (angel vs. VC) help or hinder scaling?
● What is more important to a scaling firm: access to capital or the process of seeking capital?
● What types of entrepreneurial ecosystems facilitate scaling processes? Is co-location still necessary for firms to benefit from ecosystem knowledge?
● How do firms leverage spill-overs of experimental knowledge in entrepreneurial ecosystems to discover scalable business models?
How do firms leverage innovation ecosystems to scale?
● How do firms harness rivalrous and non-rivalrous resources for momentum-building as they try to scale?
● How do firms identify and harness external knowledge dynamics to facilitate scaling?
● What is the relationship between ecosystem momentum and scaling momentum? How is this relationship built?
● What is the role of industry architecture for firms trying to scale? How can industry architectures be manipulated to facilitate scaling?
● How much of scaling dynamics is due to harnessing proprietary resources, and how much of it is due to harnessing common resources (e.g., open source software and hardware)?
● How can firms exploit platform leverage to drive scaling?
SUBMISSION PROCESS AND DEADLINES
- Submissions should be prepared using the JBV Manuscript Preparation Guidelines.
· Papers will be reviewed according to the JBV double-blind review process.
· The deadline for submission is 1 February 2022 although we encourage earlier submissions. Papers will be published in regular JBV issues when they are accepted. They will then be curated virtually into a JBV Special Issue.
· Manuscripts should be submitted through the JBV online submission process: www.journals.elsevier.com/journal-of-business-venturing
- Informal enquiries relating to the Special Issue, proposed topics, and potential fit with the Special Issue objectives are welcomed. Please direct any questions on the Special Issue to Nicole Coviello (firstname.lastname@example.org).
PAPER DEVELOPMENT WORKSHOP
In the interest of maximizing scholarly refinement, the guest editors of this Special Issue are planning to hold a virtual (Zoom) paper development workshop. This will be hosted by the Lazaridis Institute (Waterloo, Canada) in September 2021. Authors intending to submit a manuscript are encouraged to attend this workshop.
The workshop will involve the guest editors hosting roundtable sessions in an interactive format. Feedback from the guest editors and other participants will be provided, based on two-page paper summaries provided by each author team. These paper summaries will highlight the core research problem and expected contributions, as well as problem areas or questions that might be addressed by the editors in an effort to provide guidance during paper development. Workshop participation does not guarantee acceptance of the paper in the Special Issue. It is also not required for consideration or publication.
Autio, E., Nambisan, S., Thomas, L. D. W., & Wright, M. (2018). Digital affordances, spatial affordances, and the genesis of entrepreneurial ecosystems. Strategic Entrepreneurship Journal, 12(1), 72-95.
Baum, J. R. and Bird, B. J. (2010). The successful intelligence of high-growth entrepreneurs: links to new venture growth. Organization Science, 21, 397-412.
Coad, A., Cowling, M. and Siepel, J. (2017). Growth processes of high-growth firms as a four-dimensional chicken and egg. Industrial and Corporate Change, 26(4), 537-54.
Coutu, S. (2014). The scaleup review on UK economic growth. ScaleUp Institute. http://www.scaleupinstitute.org.uk/wp-content/uploads/2018/02/scaleup-report_2014.pdf
Coviello, N.E. (2019). Is a high-growth firm the same as a ‘scale-up’? 2019 Lazaridis Report, Lazaridis Institute for the Management of Technology Enterprises, Waterloo.
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