The researchers are investigating how Europe’s potential entrepreneurs struggle to grow because they lack financial, human and material resources. “We are finding out how start-up enterprises can best acquire and manage these resources,” says Jeroen Kuilman, OrgGrowth research fellow and member of the EU’s Marie Curie programme of training for postgraduate researchers. “For instance, should a new taxi company start out with a car park of brand new cars, or should it save up money and purchase second-hand cars and then update its car park step by step?,” he comments.  

So far, Kuilman has found that starting out with a very diverse set of resources poses a significant management challenge to young firms. This leads to a spread of managerial attention over a wider range of resources, and customers might not always appreciate the wider range of resulting products or services offered. “Younger firms may be better off with a more uniform set of resources,” he advances.

Xavier Martin, OrgGrowth’s project coordinator and Professor of Strategy, International Business and Innovation at Tilburg University’s School of Economics and Management in the Netherlands, illustrates the growth dilemma through the difficult decisions firms take when it comes to purchasing equipment: do they use a single type of machine - which is simpler but riskier in terms of the markets the firm can serve; or use different types - which is less efficient, but means the firm can adapt better as the market changes. “So far, the research shows that for new ventures it is better to invest in a single type of equipment, taking the risk of putting its eggs in the proverbial one basket,” explains Martin.

OrgGrowth research draws lessons from the British airline industry between 1919 and 1975. This was a start-up sector and over 350 mostly small airline companies existed throughout this period, with some 3,500 aircraft on their books. In the words of Kuilman “their experience as entrepreneurial firms, stimulating innovation and breaking through old-fashioned ways of doing business, provides lessons for today.” “With Europe still recovering from the economic downturn, stimulating entrepreneurship assumes critical importance,” he says.

Kuilman, who was in Hong Kong when he began his Marie Curie fellowship, says the grant helped him secure his current position as an associate professor – and colleague to Martin - at the Tilburg School of Economics and Management. Martin adds that “the grant helped accelerate his career, and bring him back to Europe. This is an excellent example of reversing a brain drain from Europe in business academics.”

Until now, there has been little research into how to optimise assets for start-ups, even though managing these resources successfully is widely seen as critical to organisational growth.