Microfoundations of organizational growth

Abstract

Profitable growth is a key objective for organizations. In practice, however, the seemingly reasonable objective has been hard to achieve due to the potential tradeoff between profits and growth. Typically, one gets subordinated to the other. Strategy research is rich in terms of improving understanding of the drivers of growth (resources and routines) or the modes of growth (mergers, acquisitions and alliances). Despite these advances, the internal functioning of firms has remained a black box and we know little about how firms grow. Put differently, our understanding of the micro-mechanisms that underpin organizational growth is limited.