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Sustainable Business Growth : How May Decision-Making Guide The Transition Journey ?
Auteur(s)
Maison d'édition
Neuchâtel
Date de parution
2017
Mots-clés
Résumé
During periods of intense growth, bankruptcy is an imminent threat to the success of companies. Continuous adaptation of internal capacity, processes and operations is a challenging task that not all companies achieve successfully. Many small or medium-sized enterprises (SME) disappear as fast as they grow and managers often feel frustrated about practical recommendations towards growth; this is mainly due to the significant number of decisions that managers have to make on a regular basis when the company grows. Finding a way to reduce the risk of bankruptcy during intense periods of growth is therefore a great need. Sustainable business growth is a company’s appropriate pace of growth that increases its economic, social and environmental capital—or at least one of these—without decreasing any capital stock. The objective of this research is to provide solutions to growing firms’ managers in order to guide the transition journey of their SMEs towards sustainable business growth.
This research specifically investigates what type of decisions managers have to make during growth, what impact these decisions have on the growth trajectory of the firm and how the risk of bankruptcy can be measured during growth. The thesis is segmented in three research studies– each of them building upon the previous one.
First, the author proposes a classification framework of the main types of decisions to be considered by growing firms; by conducting a case study with several embedded units of analysis, the author zooms into specific decisions and identifies three main patterns (a series of steps that have to be followed by the decision-maker) of decisions and represents them visually.
Second, the author conducts a longitudinal case study in a Swiss family-owned SME wood construction company that has experienced a process of intense growth between 2010 and 2015; in total 492 decisions made during this period have been collected and analysed so as to investigate their impact on the growth trajectory of the company. Results show that growing SMEs can take advantage of their growth to improve their performance by being more efficient, by fully considering social aspects and by integrating stakeholders more comprehensively.
Third, the author builds a multi-method simulation model with the objective to represent a company’s operations evolution during growth as well as the decision-making process inherent to business growth. The model combines two major techniques, namely system dynamics (SD) and agent-based (AB) modelling. Calibration allows fitting the model behaviour to reality based on the empirical longitudinal case study data, thus enhancing its validity. Simulation output indicates that only 21,10% of the runs launched allow the company to maintain solvency; growing firms go bankrupt in 79,90% of the cases. Sensitivity analyses help with identifying that the efficiency of the decision-making process highly influences the risk of bankruptcy; several key performance indicators (KPIs) also influence the growth trajectory such as the credit limit allowed by the bank, the rapidity at which clients pay their invoices and the proportion between temporary and permanent employees applied by the firm. An ideal combination of parameters’ values increases the probability to sustainable growth to 69% - compared to only 21% in the initial situation.
Even if it seems as though luck is an important factor to experiencing sustainable growth, specific and tangible advice is provided to SME managers as well as to their financial partners, which can positively affect the growth trajectories of their firms. This thesis confirms that decisions made during growth periods have a strong impact on positively influencing the trajectory of growing SMEs and that this impact can be quantified. It allows measuring the probability of sustainable business growth and gives specific answers on how to increase it.
This research specifically investigates what type of decisions managers have to make during growth, what impact these decisions have on the growth trajectory of the firm and how the risk of bankruptcy can be measured during growth. The thesis is segmented in three research studies– each of them building upon the previous one.
First, the author proposes a classification framework of the main types of decisions to be considered by growing firms; by conducting a case study with several embedded units of analysis, the author zooms into specific decisions and identifies three main patterns (a series of steps that have to be followed by the decision-maker) of decisions and represents them visually.
Second, the author conducts a longitudinal case study in a Swiss family-owned SME wood construction company that has experienced a process of intense growth between 2010 and 2015; in total 492 decisions made during this period have been collected and analysed so as to investigate their impact on the growth trajectory of the company. Results show that growing SMEs can take advantage of their growth to improve their performance by being more efficient, by fully considering social aspects and by integrating stakeholders more comprehensively.
Third, the author builds a multi-method simulation model with the objective to represent a company’s operations evolution during growth as well as the decision-making process inherent to business growth. The model combines two major techniques, namely system dynamics (SD) and agent-based (AB) modelling. Calibration allows fitting the model behaviour to reality based on the empirical longitudinal case study data, thus enhancing its validity. Simulation output indicates that only 21,10% of the runs launched allow the company to maintain solvency; growing firms go bankrupt in 79,90% of the cases. Sensitivity analyses help with identifying that the efficiency of the decision-making process highly influences the risk of bankruptcy; several key performance indicators (KPIs) also influence the growth trajectory such as the credit limit allowed by the bank, the rapidity at which clients pay their invoices and the proportion between temporary and permanent employees applied by the firm. An ideal combination of parameters’ values increases the probability to sustainable growth to 69% - compared to only 21% in the initial situation.
Even if it seems as though luck is an important factor to experiencing sustainable growth, specific and tangible advice is provided to SME managers as well as to their financial partners, which can positively affect the growth trajectories of their firms. This thesis confirms that decisions made during growth periods have a strong impact on positively influencing the trajectory of growing SMEs and that this impact can be quantified. It allows measuring the probability of sustainable business growth and gives specific answers on how to increase it.
Notes
Doctorat, Faculté des Sciences Économiques
Identifiants
Type de publication
doctoral thesis
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