Not all companies grow, and even those that do grow don´t grow indefinitely. The factors that hinder companies' growth are often referred to as “growth barriers” or “barriers of growth”. All companies encounter them in their activities, but their impact varies from company to company. As growth is often a desired outcome, many stakeholders strive to reduce both the amount and the severity of growth barriers in companies. This is often done by identifying them and creating countermeasures to tackle them.
Companies' growth barriers are often identified by asking qualitatively from their owner-managers or management teams about their perceptions. These so-called “perceived growth barriers” help us to understand which factors the responders perceive as growth barriers, but don´t necessarily mean that those factors really prevent the company from growing.
According to the Theory of Planned Behavior (TPB), a perceived growth barrier can be understood as a "perceived barrier", which may either:
hinder the formation of growth intention, or
prevent growth intention from turning into growth behavior.
In other words, a company may have all the external prerequisites for growth, but its actors may still believe that growth is not possible (barriers hindering the growth intention). Growth-oriented actions may also seem too difficult or risky to carry out, making actors hesitant to pursue growth altogether (barriers hindering the growth behavior).
Perceived growth barriers are present in both large and small companies, but their impact is particularly pronounced in small and medium-sized enterprises (SMEs). SMEs are often owner-manager driven, so the role of the owner-managers is emphasized in SMEs. Therefore, stakeholders who wish to support the growth of SMEs should especially seek to understand what owner-managers´ perceptions of growth barriers are and how they influence the formation of their growth intention and growth behavior. This understanding can then help stakeholders to create positive interventions to foster growth intention and growth behavior.
The project “Study on growth barriers in North Ostrobothnia´s innovative companies” supports this goal by investigating the internal and external growth barriers that innovative SMEs in the region face, and how these barriers might be addressed. By examining owner-managers´ experiences of growth barriers through the lens of the Theory of Planned Behavior (TPB), the project aims to identify which "perceived barriers" prevent owner-managers from engaging in growth behavior, and whether these perceived barriers also represent actual obstacles to growth. In doing so, we aim to generate insights that can help address the challenges faced by companies in Northern Ostrobothnia more effectively.
Sources:
Doern, R. (2011). Understanding how perceived barriers influence growth intentions and behaviours: Accounts from small business owner‐managers in Russia. International Journal of Entrepreneurial Behavior & Research, 17(5), 488–514.
Read more about the “Study on growth barriers in North Ostrobothnia´s innovative companies” project.
Author: Peetu Virkkala, M.Sc. (Tech.) in Industrial Engineering and Management, Doctoral Researcher, Kerttu Saalasti Institute, University of Oulu
Photo: Peetu Virkkala
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