STUDY | When growth hurts – researchers nuance the picture of fast-growing companies

Fast-growing companies have long been hailed as engines of the economy. They create jobs and contribute to regional development. But a new study shows that growth is not all good – at least not for everyone.

Researchers have studied fast-growing companies in the Netherlands and how they affect their key stakeholders: employees, customers, suppliers, shareholders and the local community. The results challenge the common perception that rapid growth automatically means social benefit.

Value, but for whom?

Using a framework calledthe stakeholder capability approach, economic, psychological, social, intellectual and physical value creation was examined.

The results show that growth creates both positive and negative effects. For example, when a company grows, more jobs are created and tax revenues increase. At the same time, rapid expansion often leads to increased workloads, stress, environmental impacts and conflicting objectives between different stakeholders.

For employees, growth can mean opportunities for development, new roles and an inspiring work environment – but also pressure, uncertainty and exhaustion. Customers may benefit from better products and services, but experience a decline in quality during intense growth phases. Suppliers benefit when volumes grow, but risk being left behind if they cannot keep up with the pace.

Three types of growth companies

All the companies in the study are growing rapidly, but for different reasons. The researchers identify three main categories:

1. Financially driven companies – focus primarily on profit and shareholder value.
2. ‘Conscious’ companies – try to balance economic goals with social responsibility.
3. Social enterprises – have a social mission where profit is seen as a means, not an end.

The type of governance and leadership companies have strongly influences how they deal with the downsides of growth. Those that combine social and economic objectives seem to be better equipped to create sustainable value over time.

Growth with direction

The researchers conclude that high growth is not a neutral phenomenon – it always has a direction. It’s not just about how much companies grow, but how and for whom.

For entrepreneurs, the results imply the importance of reflecting on the implications of growth for all stakeholders, not just owners and customers. For policy makers, the study shows that policies around business growth need to be nuanced. High growth does not automatically create societal benefits – what matters is the type of value generated and how it is distributed.

More about the article and the authors
Article “Grow, grow, grow? Stakeholder value creation by high-growth firms ” is published in the scientific journal Small Business Economics. The authors are Mirella Schrijvers and Jan Jacob Vogelaar at Utrecht University School of Economics.

Read also:
6 out of 10 employees in scaleups burn out