Influence of the Founding Conditions on the Growth of Firms

In this book the importance of the founding conditions of a firm has been examined and a set of constructs have been identified to represent the founding conditions of a firm. Two of the most important of these are Founding Time of a firm, and Sheltering of a firm. The concept of Founding Time of the firm has been conceptualized in this research and validated using data from 48 firms of the Indian IT services sector. The impact of founding time on the growth rate of a firm reveals that there is a certain zone of founding time, which seems to result in high firm growth rates. Similarly an optimum zone of sheltering was identified which resulted in high firm growth rates. The implications of such a research would be significant for both entrepreneurs and managers. The identified constructs could be used as initial indicators, amongst others, for recognizing the longevity and success of a venture. Managers could use them to time their divestments or spin-offs of divisions. This may also be of interest to venture capitalists who could appropriately stage their funding to new ventures by using them as possible indicators.