Supporting value creation in SMEs through capacity building and innovation initiatives: the danger of provoking unsustainable rapid growth

Abstract

Value creation comes in many guises, and may be achieved through expansion and efficiency, innovation and novel processes, and closer alignment with customer needs. This article examines the real dangers to firms, especially small firms, which pursue very ambitious capacity growth plans in order to chase market opportunities. Case analysis has unearthed a new phenomenon, which might be termed ‘business gigantism’ – a situation of rapid and unsustainable growth that places severe strains on the firm. This article briefly recounts two case studies where small firms secured substantial funding to support rapid expansion – in both cases via public agencies. In each case, funding was justified by formal business plans, but their static and mechanistic nature failed to foresee the perils when the firms attempted to grow too quickly and both experienced major crises. Simulation modelling explored more moderate, but still ambitious, growth options and showed that sustainable futures were feasible. © 2009 Inderscience Enterprises Ltd.