University of Oulu

Resource allocation of high-growth firms in scale-up phase

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Author: Tuomaranta, Jöns1
Organizations: 1University of Oulu, Oulu Business School, Department of Management and International Business, Management
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 4.4 MB)
Pages: 87
Persistent link:
Language: English
Published: Oulu : J. Tuomaranta, 2019
Publish Date: 2019-06-10
Thesis type: Master's thesis
Tutor: Sipola, Sakari
Reviewer: Sipola, Sakari
Haapanen, Lauri


High-growth firms are important for economic growth and employment points of view, which have been recognized by multiple studies. The purpose of this research is to gain new knowledge of the resource allocation of high-growth firms in general and especially during their scale-up phase. The specific interest of this research is how functional resources, research & development (R&D) and marketing & sales, are allocated within Finnish high-growth firms. The world-level reference for the marketing & sales and R&D investment levels are US high-growth firms. Therefore, US high-growth firms, prior to their initial public offering, are used as a reference to compare resource allocation during the scale-up phase.

The previous growth literature inclined to bundle all small and medium-sized enterprises (SMEs) together and to also make conclusions based on caracterisation of their different growth factors. Firms internal activities during the high-growth period has received less attention on the previous growth literature. The focus on Finnish studies has been on employment impact of high-growth firms. The high-growth firms resource allocation in scale-up phase is a scarcely studied research topic.

The marketing & sales expenses are not itemized within the commonly used profit and loss statement, i.e. layout of the profit and loss account by nature of expenses, by the firms in Finland. The exact comparison between US and Finnish firms’ financial statements is currently not possible, since the Finnish SMEs do not report their marketing & sales expenses. Hence the firms’ marketing & sales expense data is not publicly available, the topic has been investigated by conducting a web-based survey within Finnish high-growth firms’ top management and board members. As a result, the approach of a quantitative research method was chosen for this study.

This research contributes on the scarcely populated field of high-growth firms’ resource allocation studies. Firstly, for the firms, which are currently in the scale-up phase, there is clear contradictions between budgeted resource allocation and what the allocation should be based on the survey respondents’ opinion. The emphasis of resource allocation is still within R&D while it would need to be focused more to the marketing & sales, based on the results. Secondly, the assumption or expectation that most of the management and board members in Finnish high-growth firms seem to have regarding the required resourcing in the marketing & sales in the scale-up phase is inadequate, when compared to the US references. Thirdly, the board members would invest more to the marketing & sales during the scale-up phase than the operative management. The operative management would in average keep the R&D resourcing higher than marketing & sales in the scale-up phase. Additionally, venture capital and banks are in average almost as important a source for high-growth firms’ financing as founders are.

The contributions of the study can be used to guide high-growth firms’ managerial attention toward importance of resource allocation decisions. Moreover, policymakers and public actors can use the contributions when they are assessing firms receiving public funding to evaluate if there is adequate balance between R&D and marketing & sales investments.

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Copyright information: © Jöns Tuomaranta, 2019. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.