Asset specificity and behavioral uncertainty as moderators of the sales growth - Employment growth relationship in emerging ventures

Gaylen N. Chandler, Alexander McKelvie, Per Davidsson

Research output: Contribution to journalArticle

49 Scopus citations

Abstract

Sales growth and employment growth are the two most widely used growth indicators for new ventures; yet, sales growth and employment growth are not interchangeable measures of new venture growth. Rather, they are related, but somewhat independent constructs that respond differently to a variety of criteria. Most of the literature treats this as a methodological technicality. However, sales growth with or without accompanying employment growth has very different implications for managers and policy makers. A better understanding of what drives these different growth metrics has the potential to lead to better decision making. To improve that understanding we apply transaction cost economics reasoning to predict when sales growth will be or will not be accompanied by employment growth. Our results indicate that our predictions are borne out consistently in resource-constrained contexts but not in resource-munificent contexts.

Original languageEnglish (US)
Pages (from-to)373-387
Number of pages15
JournalJournal of Business Venturing
Volume24
Issue number4
DOIs
StatePublished - Jul 2009

Keywords

  • New venture growth
  • Transaction cost economics

ASJC Scopus subject areas

  • Business and International Management
  • Management of Technology and Innovation

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