Abstract for: To Grow or Not to Grow? A Multiple-Cases Study on the Growth Dynamics in Medical Care Software Firms

This study empirically demonstrates that software firms in a niche market with relatively short-life cycle may experience a similar growth pattern that firm grows after a period of performance deficit. A system dynamics model is built to capture the essential interactions across industry- and firm-levels. It is found that the growth trajectory of worse-before-better offers an explanation of the high exit rate in software industry in which small and medium enterprises are the majority. Furthermore, it is also found that though activities of market development and service and activities of product development and enhancement were important in pursuing survival and growth, software firms with different attitudes towards growth emphasized differently on the these activities by different human resource management and allocation policies. In this paper, we argue, and show, that entrepreneur’s attitude towards growth and his or her adopted growth strategies determine how worse to experience and the extent to grow. This is significant to system dynamists because it shift our attention from traditional growth dynamics exploration to the observation and explanation of why firms experience growth or failure differently. The difference of growth among software firms and its implications is deliberately discussed.