High-growth firms in the Swedish ERP industry

Svante Andersson

Introduction
Media, politics, and academia are increasingly interested in high-growth firms as high growth has been shown to be an important factor for creating employment (Storey, 1994). In spite of intensive research efforts, however, knowledge about high-growth firms is still limited because there are few common results regarding what factors are important for the creation of these firms. Some researchers claim that the entrepreneurs' characteristics are most important (Gundry and Welch, 1997), others the firms' strategy (Baldwin et al., 1994; Harrison and Taylor, 1996). Larson (1992) points out networks, whereas others claim that institutions in society at large (Porter, 1990) are the most important factors. Other researchers claim that firm growth is so complex that we need to view the growth phenomena from many different perspectives (Smallbone et al., 1995; Storey, 1994; Weinzimmer, 2000). This article is influenced by their research, and its aim is to contribute to our understanding of high-growth firms by analysing the phenomena from different perspectives. There is no common definition of what characterises a high-growth firm. Delmar and Davidsson (1998) addressed this problem, identifying seven different types of high-growth firms in an empirical study. Following that research, one type of growing firm identified by Delmar and Davidsson (1998), the super growers, will be further investigated. Super growers achieve higher growth than other groups in sales, organic employment and total employment in both absolute and relative terms. A theoretical framework is developed first in this article by using earlier research. The framework is then used to analyse the cases in this study. It is appropriate to use the case study approach in order to understand complex and dynamic phenomena such as firm growth (Eisenhardt, 1989). The case study method is further discussed in the method part of this article. Thereafter follows a short presentation of the ERP industry and of three Swedish firms in the industry. Then follows an analysis where the framework is used as structure. Different theoretical views are compared with the cases. After that follows a discussion and the study's conclusions. Finally, practical implications and future research are presented.

The author Svante Andersson is in the School of Business and Engineering, Halmstad University, Halmstad, Sweden. Keywords Small- to medium-sized enterprises, Growth, Enterprise resource planning, Sweden Abstract This paper analyses growth patterns in three high-growth Swedish firms (Intentia, IBS, and in the enterprise resource planning (ERP) industry. A multi-theoretical framework is developed and used to analyse the firms' growth. It is concluded that growth is a complex phenomenon that has to be viewed from different theoretical angles to be understood. It is shown that entrepreneurs' intentions, international growth strategies, organic organisations, industry structure and networks, and national cultures are all factors that influence firms' growth. Electronic access The Emerald Research Register for this journal is available at http://www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1462-6004.htm

Journal of Small Business and Enterprise Development Volume 10 . Number 2 . 2003 . pp. 180-193 # MCB UP Limited . ISSN 1462-6004 DOI 10.1108/14626000310473201

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Theorectical framework
This framework is based on earlier literature treating firms' growth. The research area is very fragmented and there is no consensus of opinion regarding factors leading to firms' growth. According to Weinzimmer (2000), there is no single theory that can explain firm growth, nor is there much likelihood of such a theory being developed in the future (Gibb and Davies, 1990; Smallbone and Wyer, 2000). Therefore a multitheoretical framework is developed, including the concepts of entrepreneur, firm, sector and external environment. The framework is strongly influenced by Storey (1994) and Smallbone and Wyer (2000) (Figure 1). Entrepreneurs Entrepreneurs are important to the understanding of firms' growth. This has been emphasised by many researchers, in classical work such as McClelland (1961) and Collins and Moore (1964) as well as in more recent work by Barkham et al. (1996) and Gundry and Welch (1997). These researchers have tried to find traits that differentiate entrepreneurs from non-entrepreneurs. Although some psychological traits are slightly more common among entrepreneurs, they constitute a very heterogeneous group (Davidsson, 1992; Landstrom, 1999). Gartner (1988) claims that asking the question ``Who is an entrepreneur?'' is unfruitful. He proposes a behavioural approach that focuses on what the entrepreneur does and not on whom he is. Gartner (1988) defines the entrepreneur as
Figure 1 Theoretical framework

the individual who creates an organisation. However, this definition focuses only on the inception stage of the organisation. If Gartner's definition is used, presently growing firms led by innovative individuals will not be defined as firms led by entrepreneurs, and therefore his definition is not suitable for this study. Bruyat and Julien (2000) define the entrepreneur as the individual responsible for the process of creating new value (an innovation and/or a new organisation). This definition focuses on the close connection between innovation and entrepreneurship. This study is strongly influenced by their definition. Innovation is regarded as a new combination, following Schumpeter's (1934) definition. Not only product and product innovation are important, but also innovations on the market side, such as international expansion in new markets (Andersson, 2000). The focus on innovation and creation of new value is important when it comes to studying high-growth firms. Most individuals who start new organisations do not want to create growing firms. They are satisfied with small businesses and will not grow even if they have the opportunity. Many researchers have found that entrepreneurs' intentions and motivations are important to an understanding of firms' growth (Ajzen, 1991; Kolvereid and Bullvag, 1996; Orser et al., 1998; Wiklund, 1998; Mattsson, 2001). However, there are different views regarding the importance of the entrepreneurs' intentions (Huff, 1997). Mintzberg (1978) and Jenkins and Johnson (1997) observed that outcomes are emergent and often do not correlate with entrepreneurs' intentions, while others find a close connection (e.g. Lafuente and Salas, 1989). Bruyat and Julien (2000) point out that not only the entrepreneur but also the entrepreneur's environment is important to an understanding of entrepreneurship. Rotter (1966) maintains that entrepreneurs have an ability to control the environment. The entrepreneurs interpret the environment in different ways and are part of the creation of the environment (Penrose, 1959; Weick, 1969). This interpretation gives rise to different ways of thinking and different mental models (Hellgren and Melin, 1993). The mental models shape the entrepreneurs' visions and are the basis for the choice of different strategies.

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Firm The firm level is important for understanding firm growth. Here firm strategy is important. Which products and markets should be developed is an important strategic decision for a firm (Ansoff, 1965). For firms in a small country like Sweden, international expansion is an important part in a growth strategy (Andersson, 2001). A classical factor in firm strategy is the fit between the firm and its environment (Andrews, 1971). One group of researchers, however, emphasises the firm and its resources as the most crucial issue in the firm's strategy (e.g. Barney, 1991) while another group focuses on the firm's environment (e.g. Porter, 1980). There is also a debate on the importance of planning. Some advocate a planned strategy and emphasise the importance of structure, planning and analysis (Baldwin et al., 1994), while others emphasise the importance of action and flexibility (Ahrens, 1992; Stromqvist and Ahrens, 1993). Another debate in the strategy literature is on the opportunity to make strategic decisions. Is the organisation determined by the situation or environment, or is it possible to choose different strategic actions (Child, 1972)? According to Smallbone et al. (1995), active push strategies according to product and market strategies are necessary to achieve growth. According to Tzokas et al. (2001), both an entrepreneurial and a marketing-oriented strategy are of importance for growing firms. Ahrens (1992) and Stromqvist and Ahrens (1993) have also found causality between profitability and growth. Furthermore, Welbourne (1997) found that valuing employees could be a success strategy for fast-growth firms. Empowerment and flat organisational structures are regarded as important elements in high-growth firms (Burns and Stalker, 1961; Cooney and O'Driscoll, 1999; Hambrick and Crozier, 1985). However, empowerment without strategic intent may cause anarchy (Hamel and Prahalad, 1989). Sector The sector concept includes the firms' networks and industries. Fast-growing firms are common in fast-growing industries such as the computer and telecom industries (Davidsson and Delmar, 1998). The strategy literature that emphasises industry structure is an important theoretical influence for

understanding why firms grow. Economies of size and of scope are important factors that influence decision-makers to choose growth strategies (Porter, 1980, 1985, 2001). The competitive situation within an industry is regarded as important for the industry's development. Another view, the so-called network view, emphasises co-operation as a source of development and growth (Hakansson and Snehota, 1995; Larson, 1992). An important aspect of strategy in the network view is to draw different network boundaries from those drawn by other actors in the field, and then link new networks to each other (Forsgren and Johansson, 1992). Financiers are important players in growing firms' networks. Growth needs investments in technology, markets and personnel, and financing is crucial to the implementation of a growth strategy. Macro environment The firm's macro environment, i.e. laws, taxation and capital availability, is important to the firm's growth. Many researchers have found that a high level of education is important for sustainable economic growth in a nation (Storesletten and Zilibotti, 1999). Porter (1990) argues that competition within a region is crucial. Governments should create laws and institutions that further this competition. Other governmental actions, such as taxation and regulation, are also discussed here. Culture on a national level is also treated (Hofstede, 1980). According to Hofstede, Sweden is a feminine country, that is, co-operation is regarded as important and individuals undersell themselves rather than oversell. The power distance in Sweden is low and organisations have few hierarchical levels.

Methodology
Case selection Delmar and Davidsson (1998) identified seven different types of firms, based on secondary data. The elite of the elite of these groups, the super growers, achieved higher growth than almost all other groups in terms of relative and absolute growth in sales. They also achieved total and organic employment growth in relative and absolute terms. The super growers were over-represented in young and growing industries. This contradicted

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earlier results from Sweden that have found high-growth firms in any industry (Blixt, 1997). In this study, deep case studies are conducted to get a deeper understanding of why firms in a young and growing industry are growing. The cases are not randomly chosen, but are carefully chosen as good examples of super growers (Eisenhardt, 1989). In focusing on one industry, variations among the cases cannot be explained by industry factors (Andersson, 2000). Three Swedish companies in the business system industry, IBS, IFS and Intentia, were chosen as case companies. The firms could all be categorised as super growers in accordance with Delmar and Davidsson's (1998) definition. These firms are the largest and most high-growth Swedish players in the ERP (Enterprise Resource Planning) industry and the only companies in this industry that are quoted on the Stockholm stock exchange. As these firms are public companies it is easier to obtain data from them. Information collection Personal interviews and secondary data were used. By using many different data collection methods the study's validity and reliability can be improved (Miles and Huberman, 1994; Yin, 1994). Historical and real-time information were collected. First secondary data was collected. Secondary data, such as annual reports, were requested directly from the firms. All articles in available databases were scrutinised. From these sources quantitative data about the firms' revenues, incomes, employment, etc. could be collected, as well as more qualitative information. Thereafter key personnel in the firms, such as founders, CEOs and market directors were contacted. The information obtained from the secondary data was used to discuss the different growth patterns in the firms. A semi-structured interview guide was used and all interviews were taped. Case analysis Case descriptions of the development in each firm were written. The interviewees have had the opportunity to read and comment on these descriptions. Thereafter the different cases were compared with each other and different theoretical approaches were applied to the cases (Yin, 1994). As an analytical tool, the framework developed earlier was used. As

firms' growth is a complex phenomenon, the framework includes many theoretical perspectives.

Cases
The following is a short description of the ERP industry and the chosen case firms that will be analysed in the following section. Due to space limitations the cases are short and the aim has been to highlight factors that were crucial to the growth in the firms. The enterprise resource planning (ERP) industry The enterprise resource planning (ERP) industry consists of companies producing business systems software. The software is used to make business processes in, for example, manufacturing and distribution more efficient. The industry is fragmented with many local suppliers. However, the dominant player on the global market is SAP, a German company. The market is growing by more than 30 per cent per year due to continuing rationalisation and increased efficiency in industry, helped by IT solutions. In Sweden there are three companies in the industry listed on the Stockholm stock exchange: Intentia, IBS and IFS. These three are among the 20 largest in the world, and they are all aiming for an international growth strategy. IBS started as early as 1976 as a spin-off from IBM's Swedish operation, while Intentia and IFS started in the middle of the 1980s. The trend is towards fewer but larger and increasingly international players, which have the capacity to invest in geographical expansion and product development at the same time. Customers encourage this trend by buying ERP systems globally for their whole business. IBS In 1969 four system engineers from IBM Sweden started a company called Errpege. The company developed software for large companies. Their reason for starting their own company was that IBM was criticised for having an overly dominant position in the industry. They did not believe that software should bring as much revenue as hardware, and chose to focus on hardware. By 1976 the company had grown; it had 20 employees, and was acquired by the largest management

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consultant in Sweden, EF. In 1978 EF's computer division became an independent company and took the name IBS. The company developed administration systems for large and medium-sized companies. In 1985 an administrative system developed for Alfa-Laval became the basis of a standardised system that could be sold to other customers. The system was called ASW, and was developed to be used with IBM's AS/400 hardware. In May 1986 the company was introduced on Stockholm's stock exchange. It grew fast in the late 1980s, both in Sweden and abroad. IBS started subsidiaries abroad. In the early 1990s the company profitability went down. IBS stopped its plans for new acquisitions, sold its American subsidiary, closed one office in Finland and cut back on personnel in other parts of the organisation. In 1994 the strategy changed and the company started expanding again. It bought back the American company and started to buy medium-sized European companies (Figures 2 and 3). IFS In 1983 five engineering students from Linkoping Institute of Technology founded IFS. One of the founders was Bengt Nilsson, and he is still CEO and an important
Figure 2 IBS' sales and profit/loss 1983-1998

shareholder. Most of the other founders are also active in the company. IFS started as a consultancy firm, developing computer systems for other companies. After a while it developed its own system, SYSTEM 4. IFS has always been known for advanced technology, and R&D is a priority area. To be able to finance R&D its strategy is rapid global growth. A new system was introduced in 1995, called IFS Application. The system can be used on many different kinds of hardware. In 1991 its international expansion started with a subsidiary in Norway, and fast international expansion has followed. Even though the recession in Sweden during the early 1990s also influenced IFS it still went on with a growth strategy. The company was built with an entrepreneurial spirit with few hierarchical layers, and education of the employees was seen as an important investment. In June 1997 the company was introduced on Stockholm's Stock Exchange in order to get access to more capital. The capital was mainly used to increase its international expansion by new acquisitions. IFS has growth as priority before revenue. This has had the consequence that financiers have lost confidence in IFS during some periods (Figures 4 and 5).

Figure 3 Number of IBS employees 1988-1998

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Figure 4 Intentia's sales and profit/loss 1992-1998

Figure 5 Number of Intentia employees 1993-1998

Intentia In 1984 four students from Linkoping's Institute of Technology founded Intentia in Linkoping as a consultancy company. One of the founders, Bjorn Algkvist, became CEO. In 2001 he was still the company's CEO and one of its major shareholders. After a couple of years the company bought a company called Movex. Movex became the brand of its own system. Intentia's system is made to be used with IBM's AS/400 hardware. Intentia's strategy is to be one of the largest players in the industry, and growth is a priority goal. The organisation has a flat structure. To be able to educate the personnel, Intentia has started an internal organisation called Intentia University. Bjorn Algkvist has been the company's driving force ever since its founding, and his emphasis on growth has been crucial to Intentia's development. International expansion is important to gain advantages of size, and is also a consequence of multinational customers' demand for local presence all over the world. Since Intentia's introduction on the stock exchange, its international strategy has become even more

aggressive, with a focus on international acquisition on strategically important markets (Figures 6 and 7).

Analysis
Entrepreneurs The entrepreneurs' characteristics are crucial to an understanding of the different firms' growth patterns. It is these individuals who interpret the firms' resources and environments and formulate the firms' visions and plans. They had an ability to utilise the opportunities in the environment and control the threats (Rotter, 1966). IFS and Intentia have had a more risky strategy than IBS. IFS' and Intentia's managements have seen growth as the best strategy for the firms during all periods. They have had to convince financiers, customers and the staffs of their organisations that this was the best strategy. IFS and Intentia have always put growth before profitability. They have also succeeded in their growth aspiration, but have had problems with profitability. IBS has put more

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Figure 6 IFS' sales and profit/loss 1993-1998

Figure 7 Number of IFS employees 1993-1998

emphasis on profitability, and has also been more profitable. However, the firm has not grown without interruption. In the early 1990s IBS had some problems with profitability, during an economic recession in the Nordic countries. IBS downsized its organisation and stopped some planned acquisitions. In 1994 IBS started a new aggressive growth strategy. This shows how companies within the same industry in the same country can make different interpretations of their environments, and choose different strategies (Figure 8).
Figure 8 Sales development in the ERP industry

In this study, the entrepreneurs' intentions are seen as one of the most important factors for understanding their firms' growth patterns. This supports Orser et al.'s (1998) and Wiklund's (1998) findings that growth is a consequence of the intentional actions of entrepreneurs. Their motivation and actions were especially important early on in the firms' development. The entrepreneurs' decisions to develop their own products were crucial for the firms. Large companies have a competitive advantage, as there are economies of scale in product development. However, in this study, only firms with high growth were chosen. In other words, entrepreneurs with growth intentions that were not successful with their strategies were not studied. Firm level When it comes to the question of planned strategies or flexibility, these companies show a mix. All companies have clear visions and goals of where they are heading (Hamel and Prahalad, 1989). Intentia has a strategic five-year plan with a growth goal of 30 to 50

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per cent per year. The other firms have also declared goals regarding the firm's growth rate. The profitability goal is secondary to the growth goal. However, the way to reach the goal is not planned in detail. The organisation is decentralised and the number one control instrument is to implement a culture in the company built on dedication, freedom and responsibility. This confirms the findings of Tzokas et al. (2001) that both marketing orientations (including planning) and entrepreneurial orientations (including flexibility) are critical to achieving growth. All firms in the study invest a lot in their employees, and Welbourne's (1997) findings about valuing employees as a strategy for fast-growth firms are confirmed in this study. Internationalisation is important in the companies' overall strategy. Sweden has a small home market, and in order to be able to grow and serve international clients the firms put a lot of resources into international expansion (Andersson, 2001). In this study no causality is found between profitability and growth. Growth and profitability are seen as consequences of strategic choices (Child, 1972) and there can be a trade-off between the two parameters. Of course the firms cannot disregard profitability and cash flow since that course would lead to bankruptcy. However, there is a choice between short-term profitability and investments that can lead to profitability in the future. IFS and Intentia have chosen growth instead of short-term profitability, while IBS has paid more attention to profitability. This result contradicts the results of Ahrens (1992) and Stromqvist and Ahrens (1993), who maintain that profitability and growth are closely connected. Having a competitive product is essential in order to be able to compete in the ERP industry. Lots of resources are put into product development. It is important to be big to spread the development costs out over many units, and this also makes marketing important. Resources are therefore directed into expanding the firms' market channels around the world. The ERP industry is a knowledge industry where the competence of the staff is essential. In 1996, 70 per cent of the fixed costs in Intentia were related to personnel, and IBS and IFS have a similar personnel-intensive structure. To recruit and keep competent

personal is crucial. All three companies recruit a lot of young academics and let them take part in trainee programs. Personal development is essential even later on, and Intentia has formalised this in the Intentia University. This is in line with the findings of Welbourne et al. (1999). The firms try to implement a company culture that will guide personnel's decisions instead of rules and regulations. The firms have very flat organisational structures. To make personnel feel that they are a part of the organisation, there are many organised activities and options programs available to them. This corroborates findings that maintain that it is difficult to control firms in a turbulent environment using only strict control methods such as budgets (Burns and Stalker, 1961; Hambrick and Crozier, 1985; Mintzberg, 1979). Sector The structure of the industry creates a favourable atmosphere for individual firms to grow big. The technology is changing fast, and it is essential to invest in product development to be at the forefront of technology. It is also important to build a reputation as a reliable supplier of ERP systems. The structure of the industry drives the individual firms to grow. As a member of the industry put it, ``go big, go niche or go under''. The economies of scale when it comes to R&D and international marketing drive the firm to choose growth strategies (Porter, 1980, 1985, 2001). The industry structure has developed over time and no one knows exactly if there will be dramatic changes. Some believe that the industry will change with the new object technology, that is, that the systems will be built of parts that the firm will specialise in. This means that the industry might turn into a multilevel industry with suppliers and subcontractors, as in the automotive industry. Some firms might turn into assemblers and some will turn into specialists in parts of the system. The technology is growing very fast. IBS started as a spin-off of IBM Sweden in 1969. IBM, believing that software was not the future, decided to focus on hardware. It is obvious today that that decision may not have been the best one. IFS and IBS claim that relations with customers have been critical during the firms' development. In the mid- and late 1980s the

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industry structure changed. Previously it was common to develop systems for each customer instead of standard solutions. For example, IBS developed a system for Alfa-Laval that IBS was also allowed to sell to other customers. Luxor Datorer, Inter Innovation and Forsmark were important customers of IFS in the company's early years. Intentia maintains that IBM was the most important player outside its own organisation. Intentia uses IBM's hardware and they co-operate in many markets. IBS also has a close co-operation with IBM, while IFS has a system that is not connected with IBM's hardware. Oracle was an important supplier to IFS in the 1980s but is a competitor nowadays. The discussion above highlights the importance of the firms' networks and of co-operation with other actors in the network such as customers (Hakansson and Snehota, 1995; Larson, 1992). Financiers Growing firms need extensive capital to finance their growth. All firms have had banks that believed in the firms and have lent them money. Here we can see a difference in relation to IBS, which started earlier and was introduced on the Stockholm Stock Exchange earlier than Intentia and IFS. IBS was a large player on the Swedish market before Intentia and IFS were founded. Different sources of financing had different importance over time. IFS was founded in 1983. In the beginning the most important financiers were the customers who gave them their orders. In the beginning they did consultancy work and did not have any software of their own. The same pattern was also seen in IBS and Intentia. Products that were first developed for a single client were later on important in the development of standard products. This is in line with the financial bootstrapping behaviour found in many other small businesses (Winborg and Landstrom, 2001). The first few years the founders worked hard and had low salaries. They reinvested as much as possible in the firm. However, they were dependent on bank loans to be able to invest in their own software. In the beginning of the 1990s there was a bank crisis in Sweden, and the Swedish government had to intervene and restructure some of the dominant players. In this era it was impossible

to secure loans from the bank. Nonetheless IFS was able to obtain a 14 MSEK loan from ``Industrifonden'' (The National Industrial Development Fund), whose mission was to invest in more risky projects than the banks could take on. In 1996 Intentia was introduced on the Stockholm stock exchange, as was IFS in 1997. Both companies also issued new stocks in 1998 to finance the continued expansion. Introduction on the stock exchange made it possible for IFS and Intentia to grow faster internationally. The development shows that different financiers are crucial in different stages of a firm's development. Macro level It is difficult to find any direct connections between the firms' macro environments and their growth patterns. There is an ongoing debate in Sweden about the tax system and its negative consequences for growing firms. The tax system in Sweden is built on high taxes and a generous welfare system. However, high taxes are concentrated on individuals, while firms have relatively lower taxes. (Firm taxes are 28 per cent while income taxes for individuals go up to a maximum of 55 per cent. An employer also has to pay a payroll tax of around 35 per cent. Taxes on capital are 30 per cent and VAT is up to 25 per cent.) However, the three firms in this study have been able to grow in Sweden in spite of the high taxes, and the different interviewees had different opinions about the tax system. Some had the opinion that growth and entrepreneurship are built on an attitude that outside barriers such as taxation have little impact on growth, while others argued that the tax system destroys the economic incentives to creating growth. However, one of the interviewees claimed that the high taxes on individuals made it unprofitable to cash in on a firm's early success. It was more attractive to let the money stay in the firm and let the firm grow. The high taxes should in this case not be a barrier to growth, but rather an incentive. The overall conclusion is, however, that the tax system had not been an important factor in the three firms' growth patterns. However, the high taxes in Sweden made it hard to attract foreign experts to Sweden. Most criticised were the high taxes on remuneration and share options (which are taxed as income). This may be a barrier to future growth in Sweden.

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There is also an ongoing debate on laws about employment contracts. If a firm has to downsize, the firm cannot choose whom to discharge on its own. The law says that the last in should be first out, and if you want to divert from that rule you have to negotiate with the labour union. The firms in this industry have, however, no problem with that law. Their big problem is to find people, not to discharge them. The importance of education is emphasised by the interviewees. The firms need to employ educated people. The founders of IFS and Intentia have different educational backgrounds in management and technology from the Institute of Technology in Linkoping. Some interviewees stressed the fact that the Institute was rather newly established and a newcomer in the academic arena, with teachers who were building a new type of education. The environment in the newly-established Institute inspired the students to do something new and not to go to the large multinational firms in Sweden, as most students from Swedish institutes of technology do. The fact that English is taught early in the school system was also mentioned as important, as English is the world language in this industry. The industrial tradition in Sweden was important, with large multinational companies such as Asea, Ericsson, Volvo, Astra, SAAB as well as many local suppliers to these firms. The Swedish firms had an early interest in computers and IT as a way to rationalise their activities. Sweden has a high cost level in general, as well as a flat salary structure, and rationalisation has been extensively used. The Swedish unions have also been positive to technological innovations. As Sweden is a small country, all firms were aware early on of internationalisation as an important part of a growth strategy. Sweden has a very small home market, which makes internationalisation necessary if growth is a goal. Technological change is fast. The firms have to be at the forefront of technology to be competitive on the world market. Government investments in infrastructure influence growth, which also influences the ERP industry. The nuclear power program, strongly influenced by political decision, was important for IFS' early development.

Some of the interviewees also mentioned the Swedish culture as a positive factor for the firms' development. In Hofstede's (1980) investigation, the Swedish culture was especially different in the masculinity dimension. Sweden was the most feminine country of all countries (a masculinity index of five on a scale from one-100). Relations are regarded as important (e.g. relationship marketing has strong popularity in Sweden). Managers strive for consensus of opinion, and striving for equality is also important. IBS, Intentia and IFS all have process views of business activities. This view stresses that a firm and actors near the firm should be seen as processes. This is in line with management technologies such as JIT, time-based management, TQM, BPR, etc. which are all process-oriented. Process orientation was popular early on in large Swedish firms. The process view downsizes the importance of hierarchies, and also emphasises decentralisation. The three Swedish ERP firms have developed systems that focus on different processes. The Swedish culture's characteristics of equality, decentralisation and responsibility have also been used in the ERP firms' own cultures. To be able to grow and act in a volatile industry such as the ERP business, the firms have chosen a decentralised organisation with responsibility reaching far out in the organisation. Domestic rivalry (Porter, 1990) may also have influenced the growth of the companies. The firms can follow each other's development very carefully and are well aware of the others' moves. This makes the competition very intense and pronounced. The extensive use of IT and computers in Sweden has also been favourable for the firms' Swedish location. As one of the interviewees said:
In Sweden it is dark and cold, and there are long distances between individuals, so we have nothing better to do than to sit in front of our computers.

Discussion and conclusion

This study confirms earlier research that firm growth is a complex phenomenon that is influenced by many different factors. This study does, however, point out some factors as being more important than others, one of

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which is the commitment of the entrepreneurs of the companies to achieving growth (Smallbone et al., 1995). In this study it is shown that firm growth is a strategic decision and that entrepreneurs have a choice of different strategies. It is also shown that profitability is not a condition for growth. On the contrary, an entrepreneur sometimes has to make a trade-off between growth and short-term profitability. The entrepreneur has to convince outside financiers that this strategy will create a growth of value in the firm and profitability in the long run. This result has consequences for further research, as profitability sometimes is used as a factor in measuring successful growth. This study highlights the importance of the individuals' strategic choices and confirms the finding that entrepreneurs can choose whether to make their firms grow or not (Ajzen, 1991; Kolvereid and Bullvag, 1996; Wiklund, 1998). In the firms' developments there have been critical moments when entrepreneurs have decided on different strategic actions. The firms' decisions to develop their own products in the late 1980s were crucial. By this strategy they entered an industry with economies of scale (Porter, 1980, 1985, 2001) and decided on a strategy that had growth as an important part. Other players in the industry have chosen other strategies. Some have chosen to remain local and have also been very profitable in a local market. Some of these players have later on been bought by more growth-oriented players in the industry. One factor that has been important in the creation of growth is that the top management has a vision and belief in growth. This vision has to be communicated as the best strategy to other important actors such as employees and financiers. In this study only successful growing companies are studied. Other studies have shown that not all entrepreneurs who have the intention to grow are successful, and that serious growth constraints exist (Barth, 2001; Saemundsson and Lindholm Dahlstrand, 2001). However, with the intention to grow the firm will have a much greater opportunity to be able to implement a successful growth strategy. This study confirms the findings of Storey (1994) and Davidsson and Delmar (1998) that younger firms have a higher growth rate than older ones. Younger firms have to grow if they want to catch up with older firms in

the industry. The growth strategy becomes an important part of the firms' strategy and culture. The younger firms also had younger owner/managers than the older firms, a factor that earlier studies (Storey, 1994) have found to be associated with growth. The founders of two of the firms have backgrounds in a young institute of technology and mixed educations in technology and management. As the institute was young, new technological aspects of computer science were dealt with. One of the interviewees argued that the fact that the institute was young gave rise to a positive attitude towards new ventures. Motivation and attitude are seen as more important for the growth-oriented strategy than background (e.g. type of education). To create growth it is important to have growth objectives. Active strategies, particularly with respect to products and markets, are important to achieving growth (Smallbone et al., 1995). The organisations were guided by the growth goal and decision-making was decentralised. The organisational structures were flat and culture was the primary control instrument (Burns and Stalker, 1961; Hambrick and Crozier, 1985). The Swedish culture has been important for the growth of the firms. Growing firms have no time to build hierarchies and rules to govern their expansion. Decision-making has to be decentralised and the organisation has to be flat. This is in line with the Swedish feminine culture (Hofstede, 1980). All firms in the study invest a lot in their employees, and Welbourne's (1997) findings of valuing employees as a strategy for fast-growth firms are confirmed in this study. However, the feminine culture can also be an obstacle to the growth and dynamism of the economy at large. Values such as equality, relationships and consensus of opinion can be obstacles to entrepreneurs who want to be innovative and challenge old values in society. The firms in this study are growing both organically and through acquisitions in Sweden and abroad. Organic growth brings employment growth within the firms, and thus they also need new buildings and supplies of services and goods, etc. The personnel in the studied firms are well-paid and create growth with their expanding demands. The successful growth of the three Swedish firms may also have influenced

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competitors to establish themselves in Sweden (Porter, 1990). And last but not least, the successful growth of these firms can be an inspiration for other entrepreneurs to choose growth strategies.

Implications
This study points out the importance of managers and their strategic choices to an understanding of firm growth. Growth is one strategy of many that a manager can choose from. It is important that the manager is convinced that growth is the best strategy for the firm, otherwise he can not convince financiers and personnel to go for a growth strategy. A vision about the firm's future is important to control the firm's activities and to motivate the employees. To grow, it is also important that a firm has active strategies regarding both products and markets. It is not enough to react to changes in the environment. To be able to grow as a Swedish company, internationalisation has to be an important and integrated part of the overall strategy. Attracting competent employees is also crucial, as the firms are growing and constantly need new personnel. It is also important to upgrade the employee's competence and know-how, as the pace of change is fast in the industry. This study concludes that the following characteristics are those that are important to a high-growth firm: . ambitious entrepreneurs who can convince others (customers, financiers, employees); . competitive offers; . visions of growth; . active market and product strategies; . internationalisation; and . soft control systems and few hierarchical levels in the organisation. This study can be useful for governments. The interviewees claimed that governmental decisions had not been crucial for their own companies. However, the interviewees agreed on one point, namely that rules and taxation made it hard to attract foreign expertise to Sweden, which was negative for the firms' future growth in Sweden. They all have opinions about growth in the economy at large but these were more varied. They were all positive about having more resources spent

on education, as they all needed well-educated personnel for their future growth. However, there were different views of the education system; some advocated an elite system while others were in favour of the more democratic system that is in practice today. This study shows that the entrepreneurs' attitudes towards growth are indeed crucial for growth. If the government wants to further growth it should target entrepreneurs and firms with growth aspirations and help them. This is not uncomplicated, though, as one interviewee pointed out. If an entrepreneur cannot grow without help from the government, then this can be an indication that the project is not good enough. However, in this study one firm had to borrow money from a state institute at a critical juncture, which was very important for that firm at that time. Interviewees from that firm had a positive attitude towards that institute, while an interviewee from another firm was very negative towards all government interventions. Many managers have not chosen growth strategies. Why? The managers have found other strategies to be better for their companies or for themselves. In Sweden most large firms are active in mature industries and few of the larger firms are high-growth firms. As these firms are the most visible ones in the media there are no role models for growing firms in Sweden. By highlighting growing firms in the media, positive examples and role models can inspire more entrepreneurs to choose growth strategies.

Future research
The discussion in this article shows that firms' growth is a phenomenon that is influenced by many different factors. More research that combines different factors and theoretical angles is therefore encouraged to enhance our understanding of the complex phenomena of high-growth firms. This article limits its investigation to successful highgrowth firms in one industry and in one nation. Studies that include different industries and different nations are encouraged, as are studies of firms that have failed with their growth strategies.

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Further reading
Blixt, L. (1997), Tillvaxtforetag i Sverige stora som sma och fran norr till soder, Nutek, Stockholm. Delmar, F. (1997), ``Measuring growth: methodological considerations and empirical results'', in Donckels, R. and Miettinen, A. (Eds), Entrepreneurship and SME Research: On its Way to the Next Millenium, Ashgate, Aldershot, pp. 199-216.

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