eThesis - School of Business electronic theses

Growth of the firm is one of the central topics in business related research. In the fundamental level, it is growth of the companies that creates new jobs and promotes economic growth. Therefore communities around the world are trying to identify and support growing firms. The importance of the growth of the companies is also seen in the massive amount of empirical research that has been conducted in the field. Despite of the large number of academic research the theoretical development in the field has been notably slow.

The objective of this research has been to explore how companies grow i.e. what factors have enabled the growth of the company and what kind of role management accounting and management control systems have in the growth process. This study also introduces the main developments in the literature about the growth of the firm and the role of management accounting in young growing companies. In addition this research examines the challenges of growth and how organizations account for these problems. This study contributes in particular to literature about growth of the firm but also to management accounting literature.

The study was conducted as a case study of Finnish based knowledge intensive growth company that operates in the field of IT. Theoretical part of the study consists of academic journals and the empirical material was gathered using semi-structured theme interviews with directors of the case company. In addition to interviews, supportive information was gathered from the companies financial statements and other related information available.

The result of the study suggest that Edith Penrose's Theory of the Growth of the Firm (1959) is still valid to explain the growth of the modern early stage growth company that operates in the field of IT. In addition this study found support for the previous research regarding the importance of management control systems (MCS) in the growth of the company. Especially budgeting and customer relationship management (CRM) were found to be important tools that facilitated the growth of the company.