...challenges analyzed. In contrast to the rich body of literature available regarding the heterogeneity of managerial challenges and patterns during small business growth and development, this study finds that once small businesses begin to sustain high growth, their reported management challenges converge. We find that, controlling for location and performance, the high-growth small firms in our population experience similar management challenges regardless of the specific firm size, revenue level, or industry. Our results challenge the "received wisdom" that suggests the managerial challenges faced by small firms during their business growth and development always vary. Management implications and future research directions are discussed.

"All roads lead to Rome."
Author unknown


Introduction

Small business development has long been an important management research theme. The topic has significant appeal to small business owners, management researchers, business consultants, and economic development agencies (Huang and Brown 1999). Each of these distinct stakeholders has an interest in understanding how and why growth occurs, as well as the entrepreneurial, organizational, and strategic factors that influence a firm's ability to achieve sustainable economic development (Storey 1994).

A common objective of these research efforts is to understand more about the processes involved in becoming a successful small business. Recently, researchers have focused on successful high-growth small businesses and examined the styles and characteristics of the owner-entrepreneur (for example, Sadler-Smith et al. 2003; Wasilczuk 2000), firm strategies (for example, Delmar, Davidsson, and Gartner 2003; Qian and Li 2003), and, to a lesser extent, organizational characteristics (for example, Smallbone, Lieg, and North 1995). This research shines a spotlight on small businesses that have achieved the important goal of sustainable growth.

A dominant view has developed within this collection of research holding that successful small firms are more different than similar. That is, the path to sustainable high growth is heterogeneous (Delmar, Davidsson, and Gartner 2003), and the journey uniquely affects firms in individual ways (Orser, Hogarth-Scott, and Riding 2000; Huang and Brown 1999; Terpstra and Olson 1993). However, at the same time, a conflicting view of sustainable high growth argues that successful small businesses are actually quite homogeneous in strategy and style, and that a relatively small "repertoire" of skills and characteristics is associated with sustainable high growth (Sadler-Smith et al. 2003; Miller and Chen 1996; Smallbone, Lieg, and North 1995). Exploring deeper into these apparently contradictory views has practical, academic, and policy implications. From a practical standpoint, insight regarding how small businesses change during growth has the potential to provide useful guidance for organizational planning. In the spirit of scientific discovery, further refinement of the differences between achieving and maintaining high growth is a key step in understanding the subject as a whole. Finally, in light of the extent to which public policymakers have historically been concerned with assisting small business development, this research provides useful knowledge to guide policy regarding the specific needs of small firms. Conducting this exploration and making these contributions are the foci of our study.

One key division within the body of this research centers on the differences between small firms that are developing but have not yet achieved sustainable growth and those that have. For example, a recent study associates small business heterogeneity with samples of developing firms (for example, Delmar, Davidsson, and Gartner 2003) whereas homogeneity has been associated with firms that have achieved sustainable growth (for example, Smallbone, Lieg, and North 1995). In a further attempt to explore the heterogeneity versus homogeneity of high-growth small businesses, we pose the following general research question: "To what extent are small businesses which have achieved sustainable success more alike than different?" By "homogeneous," we mean similar in strategy, entrepreneurial style, skills, and organizational characteristics. Following the small business analysis typology of Storey (1994), we focus our research question on analyzing the organizational characteristics of successful small firms.

The thesis of this paper is that, though small businesses are quite heterogeneous as they grow and develop, those that achieve success become more alike than different. Our goal is to investigate this claim empirically. The paper proceeds as follows. First, a literature review examines prior work on organizational growth and development theory and briefly describes an analysis framework for small business growth. Three homogeneity hypotheses are then outlined. Next, we analyze responses to a survey of the managerial challenges experienced by high-growth companies. We close by discussing our conclusions as they relate to the homogeneity and heterogeneity of high-growth small businesses, and their research and practice implications.

Literature Review

In this section, we discuss the literature regarding small business growth and development, focusing on growth models, owner--entrepreneur influence, and organizational capabilities (Orser, Hogarth-Smith, and Riding 2000).

Organizational Growth and Development Models

Business growth models are a form of process model that represents the growth of a business enterprise as a progression through identifiable stages, typically characterized by three general assumptions: the stages are sequential; they occur in a hierarchical progression that is not normally reversed; and they involve changes to a broad range of organizational activities and structures (King and Teo 1997). Most of these models share three fundamental characteristics that assist in understanding how they differ from one another. First, each model is comprised of a number of distinct stages, or phases, typically numbering anywhere...

NOTE: All illustrations and photos have been removed from this article.



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