Factors affecting the growth of small business: an analysis of the experience in new business streams
Gabriel Delbem Bellon, Dimária Silva e MeirellesPurpose
To investigate factors affecting the growth of small business through the analysis of the experience of new business streams, considering elements of diversification strategy while integrating specific entrepreneurship motivations.
Design/methodology/approach
This is a qualitative study of an interpretivist perspective. By interviewing 16 managers from 14 small businesses in Brazil, across various sectors (commerce, manufacturing and services), we analyse the interpretations of entrepreneurs about their experience of new business streams. The main categories analysed are the way entrepreneurs seize new opportunities, their motivation towards expansion and growth, their strategic thinking and strategic management.
Findings
The results indicate that new business streams are neither arbitrary nor intuitive; they are shaped by market opportunities aligned with customer demand, where diversification coherence emerges from iterative experiential learning rather than ex ante strategic planning. It was found that the pursuit of personal fulfilment and positive customer feedback act as mechanisms that help offset the inherent risks of expansion. The study reveals that success depends on the transition from a reflective management approach, where entrepreneurs leverage prior experiences to refine the selection of new business streams.
Research limitations/implications
Despite the variety of companies analysed in this study, similarly to all qualitative research, it has limitations regarding the generalisability of the findings. Although small business growth is largely centred on the entrepreneur and shaped by personal motivations, it is anchored in the company’s existing technological and market foundations. In this regard, future research should also include additional sectors, particularly knowledge-intensive or technology-intensive businesses.
Practical implications
The framework proposed categorises small business growth experiences according to different stages of evaluation and learning process (initial, limited and consistent) study provides small business managers with insights into the challenges involved in selecting new business streams, such as awareness of needs and their understanding of the project they currently manage and envision for the future. The typology of growth experiences presented here can turn into a practical contribution for small firms to self-diagnose their growth challenges.
Originality/value
This study departs from prior literature by explaining growth not as a function of resources or strategy, but as a process enacted through the interaction between entrepreneurial motivation, selection decisions and learning dynamics. By integrating the theory of corporate coherence, traditionally applied to large firms, with the micro-foundations of entrepreneurial motivation and behaviour, the main contribution is demonstrating that the coherence in small firms is a dynamic and emergent property, built through the entrepreneur's learning function and historical trajectory (path dependence).