SCALE BARRIERS AND GROWTH OPPORTUNITIES: A RESOURCE-BASED MODEL OF NEW VENTURE EXPANSION

The concept of scale barriers is introduced to shed light on new venture growth. Growth is a process of overcoming resource deficiencies, or scale barriers, resulting from the liabilities of newness and smallness. New ventures employ a variety of resource accumulation strategies to surmount three types of barriers - competitive deficiencies, management and organizational deficiencies, and financial deficiencies. A theoretical model shows how environmental munificence and industry conditions influence barrier size while resource accumulation strategies and initial venture endowments determine a venture's ability to overcome these barriers. The difficulties of growth are illustrated as an extension of the difficulties of survival.