Life cycles of growing organizations: A review with implications for knowledge and learning

Abstract

Conceptualizing growth trajectories of organizations in organismic terms describing transitions through a series of stages, from birth to maturity, has considerable intuitive appeal. Recently, the assumptions underpinning the life‐cycle perspective (growth is linear, sequential, deterministic and invariant) have been argued not to pertain to organizations. This paper reviews the literature on life‐cycle growth models, traces the development of a growing sophistication of conceptualizing growth and highlights some of the limitations of the literature. The authors make a contribution by proposing an alternative conceptual framework for thinking about growing businesses. The framework consists of two dimensions. First, a typology of key issues that are likely to be faced by all growing firms, and the discussion is shaped by M. Gladwell's (The Tipping Point: How Little Things Can Make a Big Difference. Boston: Little Brown, 2000) notion of ‘tipping points’. The second dimension is developed by drawing on the knowledge management literature and the concept of absorptive capacity (Cohen, W.M. and Levinthal, D.A. (1990). Absorptive capacity: a new perspective on learning and innovation. Administrative Science Quarterly, 35, 128–152). This concept is applied to a discussion of the state of an organization regarding its ability to absorb and use new knowledge. Further, it is suggested that the framework has value for both policy and practice and can be used for the design and specification of interventional support and, to identify and evaluate their impact. If interventions are to help firms to grow, they must provide the right knowledge or support in forms that the firm can utilize. Together, these two dimensions provide a framework to examine firm growth issues and to analyse the effectiveness of different interventions on firms in different states within this framework.