Abstract

Purpose: The purpose of this paper is to shed light on the challenges faced by Swedish micro-businesses and to explore the critical factor that hinders their growth. This will be done by identifying the deterrent factors that impact firms’ growth and the relationship between these factors. The study will focus on grouping the factors into different categories, such as external factors, internal factors, and entrepreneur attributes. Therefore, a conceptual framework was developed to identify previously studied factors better.

Method: The method that is utilized in this research is a multiple case study that is conducted on four micro-firms in Sweden. The interview guide was constructed based on a systematic literature review that provided adequate knowledge about the phenomenon of micro-firms’ growth and formed a theoretical basis that helped in constructing the conceptual framework. The interviews were semi-structured and involved an abductive approach with an interpretive philosophy.

Findings: The findings include (1) seven factors that influence micro-business and startups' growth. The factors were identified by four interviewed micro-companies, where two of the interviewed companies have failed to survive. (2) The relation between these seven factors was defined and how these seven factors influence each other and impact the company. This identification helped in exploring the key factor which has the most significant impact on the company’s growth. (3) Management and leadership skills were considered as the key factor.

Implications: Due to the limited research done in the area of micro-firms’ growth in Sweden, this thesis has contributed to the theory by accommodating all the potential factors that could grant or constrain micro-firms’ growth in a framework. This framework could be further developed by researchers to better understand the relationship between the different factors which are categorized into internal and external factors. However, this study has shown several managerial implications. Firstly, managers need to develop their managerial and leadership skills by learning and practicing to create a well-structured business plan that will lead the entrepreneur and the firm to grow. Secondly, all the possible and unpredictable factors that can affect the company’s growth and performance should be identified and evaluated prior to making a strategic decision. Hence, the entrepreneur should be aware of the relations between the factors and the outcome of these relations.

Limitations: This study has focused only on understanding the factors affecting micro-firms’ growth in Sweden, the relationship between these factors, and identifying the key factor that mainly affects micro-firms’ growth. Therefore, this study has overlooked the factors that influence bigger businesses than micro-firms in Sweden, i.e., SMEs. Due to the use of small sample and purposive sampling, the findings obtained from the multiple case study cannot be generalized. A better understanding and more generalizable findings could have been obtained if more micro-firms were included. Moreover, the different sizes of the firms and their existence in different market sectors was a limitation of this study.

Keywords: Business Growth, Barriers, Micro-firms, New Ventures, entrepreneur, deterrent factors