Entrepreneurship, Dynamic Capabilities And New Firm Growth

This paper applies the dynamic capability framework to the study of new firm growth. Using a longitudinal database of 354 firms over their first ten years, we provide an explanation of new firm growth in terms of new product development, R&D, inter-firm alliancing, and exporting, activities that have been identified as denoting dynamic capabilities. In addition, an overview of empirical studies on employment growth in new firms is provided. The empirical evidence for this study shows that general firm resources have a much stronger effect on growth than the dynamic capabilities measured here (mainly inter-firm alliancing). High levels of human capital of the entrepreneur or resource-munificence of the firm does not improve the value of dynamic capabilities for growth.