How Can Start Ups Grow?

From HBS Working Knowledge by Sarah Jane Gilbert

"The track record is well known and sobering for any entrepreneur: 90 percent of all new ventures fail. It�s not hard to see why. Start-ups often lack vital resources, must compete against established companies, and have little or no track record with which to woo customers and investors. So how do those one-out-of-ten firms grow into successful, sustained enterprises?

Assistant Professor Mukti Khaire believes that small companies can grow by developing intangible social resources such as legitimacy, status, and reputation. In an interesting twist, her research on this insight is that these intangible resources may be best acquired by following a road of conformity in how your company is organized and presented to the outside world. In start-ups in established industries, conventional business titles such as Marketing Director work better than novel ones like Chief Evangelist.

'These social resources are acquired by mimicking the structures and activities of established firms, and by affiliating with high-status customers respectively,' she wrote in the abstract to her recent paper, Great Oaks from Little Acorns Grow: Strategies for New Venture Growth. The paper was published by the Academy of Management (August, 2005) as part of its Best Paper Proceedings."

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