THRESHOLD MENTALITY AND FIRM GROWTH: THE ROLES OF SOCIAL CAPITAL AND STRATEGIC ISSUE INTERPRETATIONS AMONG SMALL AND MEDIUM-SIZED ENTERPRISES (SME)

摘要

Why do some small firms stop pursuing growth while others continue to do so aggressively? There has been extensive work on small firm growth and failure, but what explains the decision to seek a path of stability after a period of growth? Or, to put it another way, what makes a firm achieve contentedness with its level of achievement? This paper seeks to present a theoretical explanation of these questions by specifically introducing a socio-cognitive perspective of managerial action. This paper proposes the term ‘threshold mentality’ in reference to the reluctance of small firms to grow beyond a certain organizational threshold. Specifically, this paper draws from the social network (capital) and managerial cognition literatures to argue that: (1) some small firms adopt a threshold mentality due to the composition of their social networks and the corresponding relational capital; and (2) this relationship between social capital and ‘threshold mentality’ is mediated by managerial interpretations of market cues. Implications of the proposed model are also discusse d.