High Growth Private Companies: Values-Led and Profitable: An Abstract

More than 99% of the businesses in North America are private firms, and they account for nearly 59% of sales and nearly 49% of aggregate pretax profits (Biery 2013). A small percentage of these firms grow rapidly and are called gazelles (see Birch et al. 1989, 1994). Gazelles are those firms that have achieved a growth rate of 20% or more for at least three consecutive years. Private firms have been largely neglected in both the public press and academic literature. What has been uncovered represents a fragmented body of work (Gabrielsson et al. 2011). Typical explanatory variables for rapid growth that have arisen out of the extant research include founder characteristics, ownership type, firm size and age, strategic orientation, market environment, partnership development, customer orientation, innovation and new product development, and human resource practices. The research, therefore, was driven by two questions: (1) Why are some private firms highly successful in terms of rapid growth of their revenues, profits, number of employees and markets and (2) Are there common characteristics among the successful, fast growth firms that differentiate them from their less successful peers?

These questions were explored using elite interviews and secondary data from 40 private fast growth companies. One of the unexpected findings from the study was that the most successful private firms are values-led firms when compared to their less successful counterparts. The most common values among the successful firms were care for employees, customer obsession, fairness, respect for diversity, collaboration, and sustainability. Having a values-led orientation served to engage, motivate, and retain employees who in turn provided superior service and innovative products to a clearly defined set of customers in a differentiated niche marketplace. Values were also used to guide and sometimes control growth and market entry. Although there is an extensive literature related to firm performance, none could be found that link being led by a specific set of values with superior performance and growth. Thus, it is believed that this work makes a novel contribution to the literature.