Engines of entrepreneurial growth: Resources, complexity, capacity, and emergence

What leads to entrepreneurial growth? In addition to all the known variables - skills, resources, opportunity, capital, environment, technology, and so on - are there internal processes that spur performance and success? Drawing on a longitudinal indepth analysis of three fast-growth ventures, this study applied causal loop modeling as a tool to explore for internal processes of growth and performance. We identify several reinforcing processes in these firms - "engines of entrepreneurship" - including feedback loops between performance and resources, pressure to manage resources, and organizational complexity. These engines are highly influenced by whether fundamental shifts occur through endogenous emergence or externallyimposed change. Whereas the former leads to more appropriate focus and a reduction of unnecessary resources that generates higher performance, the latter leads in the opposite direction, as well as causing a negative spiral of decreased capacity that requires increased change that decreases capacity and so on. Thus, emergence through endogenous change appears to increase capacity and decrease instability, thereby fueling morale, performance and growth. Implications for research and practice form the body of the conclusion.