ABSTRACT
The new business start ups that are typical of the evidence examined in this book often have entrepreneurs who are ambitious to see their firms grow rapidly. However, the growth process is fraught with uncertainty, and the possibility of re-trenching has also to be considered, as ‘market experiments’ may fail to be as successful as anticipated. In short, the entrepreneur must be adaptable, and has to be flexible in adapting the scale of operation of their small firm (either up or down) to changed economic conditions. This type of flexibility, to grow rapidly, but at possibly variable rates, or even to contract, depending on evolving opportunities, is the focus of this second chapter in the book’s Part 6 on Flexibility. In essence, it builds on the existing evidence, as presented first in Chapter 4, and develops a number of new empirical insights. The approach extends the emerging body of evidence that tests Gibrat’s Law (1931) for young small firms in specific national contexts, e.g. Almus (2000) for West Germany; Liu et al. (1999) for Taiwan; Weiss (1998) for Austria; Ganugi et al. (2005) for Italy and Chow and Fung (1996) for China.
