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Financial Determinants of
High-Growth Companies
A Conceptual Model
Blaž Frešer
Karin Širec
Polona Tominc
Financial Determinants of High-Growth Companies
Blaž Frešer • Karin Širec • Polona Tominc
Financial
Determinants
of High-Growth
Companies
A Conceptual Model
Blaž Frešer Karin Širec
Slovenska Bistrica, Slovenia Faculty of Economics and Business
University of Maribor
Polona Tominc Maribor, Slovenia
Faculty of Economics and Business
University of Maribor
Maribor, Slovenia
ISBN 978-3-030-59349-0 ISBN 978-3-030-59350-6 (eBook)

https://doi.org/10.1007/978-3-030-59350-6
© The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer
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Acknowledgements
The authors acknowledge the financial support from the Slovenian

Research Agency (research core funding No. P5–0023).
v
Contents
1 Introduction 1
2 High-Growth Companies: Origins, Characteristics,

Growth Determinants and Performance 7
3 Multidimensional Model of High-Growth Companies’

Performance 45
4 Empirical Research: Case of Slovenia 73
5 Policy Implications for the Real World127
6 Where We Go from Here135
Bibliography139
Index159
vii
List of Tables
Table 2.1 Overview of research on high-growth enterprises 11

Table 4.1 EFA results for entrepreneurial orientation 83
Table 4.2 EFA results for intangible capital 84
Table 4.3 EFA results for measures taken to overcome financial
constraints86
Table 4.4 Indicator loading in CFA 92
Table 4.5 Reliability and validity of the factors and observed variables
of the first order 95
Table 4.6 Quality of the model as a whole—first order factors 97
Table 4.7 Quality of the model as a whole 99
Table 4.8 Validity and quality of established constructs 100
Table 4.9 Correlation matrix between constructs 101
Table 4.10 Verifying hypothesis 1 102
Table 4.11 Verifying H1.1 103
Table 4.15 Verifying H2.1–H2.6 107
Table 4.17 Verifying H3.1 and H3.2 110
Table 4.22 Verifying H5.1 and H5.2 116
ix
x List of Tables

Table 5.1 Growth factors that form access to an individual financial
resource131
CHAPTER 1
Introduction
Abstract High-growth company (HGC) research is diverse and hetero-

geneous in nature, as HGCs seeking to create growth must deal with a
number of factors that affect their performance from both a financial and
a growth perspective. The growth of companies is thus an effect of appro-
priate motivation, growth opportunities and a harmonious organization
of tangible and intangible means of production and financial resources.
This book is therefore intended to contribute to the understanding of the
specificity of the financing of HGCs, since the accessibility of financial
resources is one of the key factors in the process of development and
growth of the company.
Keywords Growth • Financial performance • Production resources •

Conceptual model
The study of corporate growth is a phenomenon in entrepreneurial the-

ory, the beginnings of which date back to the 1950s, more precisely 1959,
when author Edith Penrose (1959) published her theory on the growth of
the firm. Nevertheless, researchers only placed more importance on high-
growth companies (HGCs) in the late 1970s, when David Birch presented
his then-controversial findings on the economic significance of small
HGCs (Landström 2010, p. 159 and 164). Lately, HGC research has
been diverse and focused mainly on the interpretation of the importance
© The Author(s) 2020 1

B. Frešer et al., Financial Determinants of High-Growth Companies,
https://doi.org/10.1007/978-3-030-59350-6_1
2 B. FREŠER ET AL.
of entrepreneurship, the characteristics of companies (demographic fac-

tors) and the impact on the creation of employment and economic growth
(Henrekson and Johansson 2010, p. 127).
HGCs seeking to create jobs and economic growth must manage a
number of factors that affect their performance, both from a financial per-
spective and from a growth perspective. With the conceptual model design,
we wish to contribute to understanding the specificity of the financing of
HGCs, as the accessibility of financial resources is one of the key factors in
the development and growth of small and medium-sized enterprises
(SMEs) (IFC 2011), which include a large proportion of HGCs.
Insufficient or inadequate sources of financing may lead to the inability to
operate properly and to realize business opportunities or to reduce the
growth and development of companies (Beck and Demirguc-Kunt 2006;
Kim-Soon et al. 2017). On a sample of HGCs, Brüderl and Preisendörfer
(2000, p. 62) found that the amount of financial capital invested in com-
panies had a significant impact on the likelihood of rapid growth, which is
also in agreement with Hambrick and Crozier (1985). This leads us to the
realization that financing is especially important for HGCs, since these
enterprises certainly require substantial financial resources in order to
achieve high growth rates, while at the same time they may be subjected
to more financing restrictions (Moreno and Casillas 2007; Hambrick and
Crozier 1985). Access to relevant financial resources is also important for
future access to financial resources, as the possession of a sufficient amount
of financial resources is perceived as a measure of stability, reliability and
reputation of the company/entrepreneur in the eyes of the investor
(Neville et al. 2005; Baum 1996). This aspect is particularly important for
HGCs, which can be slightly smaller in comparison to other companies,
since an extensive part of theory and empirical research suggests that
growth rate decreases with the size of the company, or that smaller com-
panies grow faster (Calvo 2006; Yasuda 2005; Audretsch 1995; Reid
1995; Evans 1987a, b). Additionally, HGCs are, on average, also younger
than non-growing companies, since the age of a company is negatively
linked to the achieved growth rate (Delmar et al. 2003, p. 196; Henrekson
and Johansson 2010, p. 237), and they are also more prone to risk
(Davidsson and Delmar 2006) but to greater innovation as well (Shane
2009). As a result, there are differences between the financing of HGCs
and the financing of non-growing (static) companies, relating mainly to
the extent of the necessary financial resources (Brüderl and Preisendörfer
2000) and the use of different sources of financing, since HGCs,
1 INTRODUCTION 3
compared to other companies, are more likely to use a “cocktail” of vari-

ous financial resources (Brown and Lee 2014, p. 1). Financial resources
and their accessibility represent a key aspect/challenge of the modern
entrepreneurial process (Grichnik et al. 2014), especially among HGCs.
According to the theory on the growth of the firm (Penrose 1959), the
growth of companies is not inherently present (Močnik and Širec 2016,
p. 300) but is rather an effect of appropriate motivation, growth opportu-
nities (promoted by the entrepreneurial orientation) and harmonious
organization of production resources, including human and social capital
(Gilbert et al. 2006). As past research suggests, entrepreneurial orienta-
tion, human capital and social capital (particularly networking and organi-
zational networking capacity) also have an important role in the selection
and formulation of access to financial resources (Lukkarinen et al. 2016;
Carter et al. 2007; Freel 2007). On the basis of the past theoretical knowl-
edge, we have created our own conceptual model that links multidimen-
sional variables—growth factors (entrepreneurial orientation, human
capital, organizational networking capability—as a key aspect of the struc-
tural dimension of social capital) that affect perceived accessibility to the
various forms of financing and the measures that the HGCs implement in
regard to perceived financing constraints or in order to ensure optimal
access to financial resources, and consequently also the financial perfor-
mance of the company. Financial performance is crucial for HGCs; Penrose
(1959) pointed out that excessive growth can compromise financial per-
formance. Financial performance is also highlighted in connection with
the possibility of maintaining jobs by Davidsson and Delmar (2006), who
consider that a significant proportion of jobs are lost in HGCs as a result
of extremely high and sometimes significantly risky growth and the diffi-
culties that such growth brings about. We use the designed conceptual
model that we have empirically verified on a random sample of HGCs in
the Republic of Slovenia to supplement a deficit and heterogeneous field
of research, thus creating an important scientific publication. The impor-
tance of the original scientific contribution is also reflected in the implica-
tions of the results for the needs of economic (entrepreneurial) policies,
both at company level and at the national economy level.
The book is based on a doctoral dissertation (Frešer 2020) and consists
of several parts. The introductory part is followed by the theoretical plan-
ning and design of the theoretical conceptual model by formulating rele-
vant research hypotheses. Next, there is a demonstration of the empirical
verification of the conceptual model on a sample of HGCs from the
4 B. FREŠER ET AL.
Republic of Slovenia. We conclude the publication with a discussion and

the implications of the results for the needs of economic (entrepreneurial)
policies as well as our concluding thoughts.
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CHAPTER 2
High-Growth Companies: Origins,

Characteristics, Growth Determinants
and Performance
Abstract High-growth companies (HGCs) are different from non-

growing (static) companies. The main differences may be due to their
demographic characteristics, the financial resources required, the intensity
of entrepreneurial orientation or their intangible capital. Although much
is known about the origins, characteristics, growth determinants and per-
formance of HGCs, there is no generally accepted definition of these
firms, as corporate growth is a very complex phenomenon, which leads to
greater heterogeneity and diversity in the definition of HGCs. In this
chapter, an attempt will be made to illustrate the heterogeneity of the field
in a systematic analysis of the results to date.
Keywords High-growth company • Growth determinants •

Heterogeneity • Entrepreneurial orientation • Intangible capital •
Financial performance
2.1 High-Growth Companies

The definition of high-growth companies (HGCs) dates back to the
1970s, more specifically 1979, when David Birch triggered a fairly contro-
versial discussion of the importance of HGCs with his publication The Job
Generation Process (Landström 2010). Birch defined a very small propor-
tion of companies as HGCs—up to 4% of all companies that consistently
© The Author(s) 2020 7

B. Frešer et al., Financial Determinants of High-Growth Companies,
https://doi.org/10.1007/978-3-030-59350-6_2
8 B. FREŠER ET AL.
achieved high growth rates in the time period researched (Brnjas et al.
2015, p. 45). Despite numerous findings on the importance of HGCs, a
generally accepted definition of these companies does not exist (Henrekson
and Johansson 2010), and researchers have used a wide range of defini-
tions of growth and various methods to determine HGCs. This leads to
the existence of a pronounced heterogeneity among the existing research
relating to HGCs. According to Širec (2011, p. 21), as a result of hetero-
geneity in previous HGC research, the issue of establishing a consistent
theoretical basis is that empirical research is very difficult to compare
directly because of the inconsistencies and diversity of growth criteria used.
Growth of the company is a very complex phenomenon that has a wide
range of definitions due to its nature. Growth can thus be absolute or rela-
tive, where absolute growth is linked to the variation of the selected cate-
gory in the selected time period, and relative growth is linked to the
variation expressed on the basis of the comparative category or expressed
as a percentage (Davidsson and Wiklund 2000, p. 54). Both absolute and
relative growth can be measured in different ways, from very simple to
slightly more demanding mathematical models (ibid., pp. 54–56). The
decision between absolute and relative growth is particularly important in
terms of taking into account the (initial) size of the company. Absolute
growth measurement enables better outcomes for large companies
(growth measured in cash units, number of employees, etc.), while relative
measurement of growth allows for a better position of small enterprises
(growth measured in percentage, growth recalculation to the selected
unit) (Delmar et al. 2003). The next important element of heterogeneity
is reflected in the selection of the growth indicator. The most commonly
used growth indicators are employee growth and sales growth (Delmar
et al. 2003, p. 193; Delmar 1997). Other growth indicators have also
been used in past research, including performance indicators, market share
indicators, company resource growth and other indicators, which have
proved to be more subjective and more subject to the impact of the activ-
ity—thus, for example, the growth of resources is not an appropriate indi-
cator for service companies that only have a small share of long-term
(fixed) resources (Delmar 1997, pp. 65–67). On the basis of the above,
Brnjas et al. (2015, p. 46) anticipated that the following options were
available for measuring the growth of a company:
2 HIGH-GROWTH COMPANIES: ORIGINS, CHARACTERISTICS, GROWTH… 9
• absolute growth of the indicator, which measures the absolute

change in the value of the indicator (employee or sales growth) in
the selected periods.
• relative growth of the indicator, which measures the relative change
in the value of the indicator (employee or sales growth) in the
selected periods.
• the Birch index, also called the DaBeg index. It measures the change
of the indicator (primarily employee growth) as a combination
(product) of absolute and relative growth between the selected peri-
ods. HGCs are defined on the basis of the calculated index for all
companies and the subsequent definitions of the top 10% or 5% of
the population of the companies in relation to the calculated index.
An important aspect of heterogeneity also stems from the study of the

different time periods used in defining growth. Growth is most commonly
defined as the difference in the selected category between two time peri-
ods (Delmar 1997), which has a number of weaknesses, since this way
ignores changes within the period (Delmar et al. 2003, p. 195). Delmar
(1997, p. 70) examined 55 surveys of research in the field of growth study,
and the selected period of time in these studies encompassed from one to
eight years, or the time period was not stated at all. The heterogeneity of
existing research is also affected by the selection of the studied unit. Thus,
growth can be examined from the perspective of individuals (i.e. entrepre-
neurs), activities, organization and management of companies (Davidsson
and Wiklund 2000, p. 51), and in recent research, growth was also studied
in terms of entrepreneurial orientation (Wiklund et al. 2009), resources
(Wiklund and Shepherd 2003), and the tendency and motivation for
growth (Delmar and Wiklund 2008).
In the above paragraphs, we presented a number of factors affecting the
heterogeneity of research in the field of HGC. As mentioned above, this
strongly complicates the comparison of findings and the creation of gen-
eral theories relating to HGCs. Despite numerous inequalities (differ-
ences), McKelvie and Wiklund (2010, pp. 262–273) managed, at least to
a certain extent, to standardize the three main branches of the study
of growth:
• Growth as a result. This is the most extensive branch of research in

the field of company growth. The common point of this aspect of
growth study is that growth is defined as a dependent variable, and
10 B. FREŠER ET AL.
researchers attempt to identify factors with the most important

impact on growth by integrating a wide range of said factors. The
objective of this branch of research is to clarify as much as possible
the proportion of growth variance, thus finding the most important
factors that shape and influence the growth of the company.
• The outcome of growth. This branch of growth study focuses on the
study of growth outcomes. In contrast to the previous aspect, growth
in this case is considered an independent variable in explaining other
factors. Growth is considered as an existing circumstance, so in this
aspect there is no tendency to look for factors that could affect
growth itself. The aim of this branch of study is to explain, in par-
ticular, how growth affects the various aspects of the functioning of
entrepreneurs and businesses.
• Growth as a process. Unlike previous aspects where growth was
treated either as an independent or as a dependent variable, this
aspect of the study of growth is primarily considered a process. If, in
the previous aspects, the main objective of finding an answer to the
question is why growth arises or why growth affects a particular cat-
egory, this aspect presents mainly the question of how companies
grow, what is happening within companies when they grow
and the like.
The presented heterogeneity of the definition of growth results in

ambiguity in the formulation of the definition of HGC. The first direction
in the design of a definition of HGC is oriented towards the design of key
criteria in advance (anaerobic conditions). For example, Birch et al. (1995)
and Birch and Medoff (1994) used an annual sales growth rate of at least
20% as a benchmark for the definition of fast growth, while Autio et al.
(2000) opted for a criterion of 50% of sales growth in a three-year period.
The researchers also considered employee growth—Brüderl and
Preisendörfer (2000, p. 54) used 100% employee growth as a benchmark
for classifying a company as an HGC, while Halabisky et al. (2006) decided
on a criterion of 50% employee growth within the selected period. The
second direction of the design of the definition of HGC started to evolve
with Kirchhoff (1994), who included in the definition of HGCs those
companies that were ranked in the upper decile (10%) of the fastest-
growing companies in the population based on each criterion. For exam-
ple, the above reasoning was also followed by Schreyer (2000) and
Davidsson and Delmar (2003, 2006). The HGC measurement overview
is shown in Table 2.1.
Table 2.1 Overview of research on high-growth enterprises

Research/ Indicator Period Definition of HGC State Objective of
author study
Birch and Absolute 1988–1992 A company with United Employment

Medoff growth an annual growth States
(1994), Birch level of over 20%
et al. (1995) and annual
revenues
exceeding
100,000 USD
Kirchhoff Relative 1977–1978 The upper decile United Employment
(1994) growth to 1984 (10%) of the States
fastest-growing
companies in the
population
Storey Absolute Definition based Great Employment
(1994) and relative on employee Britain
growth growth
Autio et al. Absolute 1994–1997 The growth of Finland Employment
(2000) growth sales in three
consecutive years
is greater than or
equal to 50% and,
at the end of the
period, at least 1
million monetary
units in sales
Brüderl and Absolute 1985–1986 Companies whose Germany Employment
Preisendörfer and relative to 1990 employee growth
(2000) growth is greater than
100% (or more
than 5 employees)
Littunen and Absolute 1990–1997 Doubling sales Finland Employment
Tohmo and relative during the period;
(2003) growth While sales also
exceed 500,000
monetary units
(continued)
Table 2.1 (continued)

author study
Schreyer Composite 1985–1994 The upper decile France Employment

(2000) index (10%) of the
fastest-growing
companies in the
population of
companies
employing at least
20 employees
1989–1996 The top 5% of the Canada, Employment
fastest-growing Italy, The
companies in the Netherlands
population of
companies
employing at least
20 employees
1990–1994 The upper decile Spain Employment
(10%) of the
fastest-growing
companies in the
population of
companies
employing at least
10 employees
Logarithmic 2000 The upper decile Germany Employment
function (10%) of the
fastest-growing
companies
Davidsson Absolute 1987–1996 The upper decile Sweden Employment
and Delmar growth (10%) of the
(2003, fastest-growing
2006), companies in the
Delmar et al. population of
(2003) companies
employing at least
20 employees in
1996
(continued)

author study
Halabisky Relative 1985–1999 Employee growth Canada Employment,

et al. (2006) growth by more than 50% wages
in the selected
period
Fritsch and Absolute 1984–2002 The top Germany Employment
Weyh (2006) growth proportion in the
population in
terms of
employment (the
population are
start-up
companies
employing
between 1 and 20
employees)
Moreno and Relative 1998–2001 Definition based Spain Sales
Casillas growth on sales growth—
(2007) growth greater
than 100% over a
given time period
(3–4 years)
Acs et al. Absolute 1994–2006 Companies that United Employment,
(2008) and relative doubled sales States sales revenue
growth during the
four-year period
and employed at
least 2 employees
Acs and Relative 1990–2003 New HGCs United Employment
Mueller growth employing States
(2008) between 20 and
499 employees
Deschryvere Absolute 2003–2006 Defining HGCs Finland Employment
(2008) and relative on the basis of the
growth OECD definition
(continued)

author study
Anyadike- Composite 2002–2008 Overview of past Great Employment

Danes et al. index research Britain
(2009)
Bravo-Biosca Relative 2002–2005 Definition of Europe Employment,
(2010) growth HGC based on compared productivity
annual growth of to the
employees during United
the three-year States
period—
determination of
HGC based on
the top part of the
population
Hölzl and Composite 1998–2000 The definition of 16 countries Employment
Friesenbichler index HGC based on of the (addressing
(2010) the top part (5 European only organic
and 10%) of the Union growth)
population
Stangler Relative 2007 Definition of United Employment
(2010) growth HGC in terms of States
employee growth
Bjuggren Absolute 1993–2006 Compliance with Sweden Employment
et al. (2013) and relative the OECD
growth definition and the
Birch index
Source: (adapted from Daunfeldt et al. 2014, pp. 343–344; Henrekson and Johansson 2010, pp. 231–234)
According to Širec and Crnogaj (2010, pp. 46–47), we can conclude

on the basis of the determined definitions for the definition of HGCs that
these are dynamic companies that grow and evolve rapidly, employ inten-
sively and are always a step ahead of the competition, because their goal is
not to survive but to succeed. As such, the term dynamic company can be
used as a common term to all related terms relating to HGCs. High-
growth (dynamic) companies will therefore be companies that will have to
properly organize their internal environment and entrepreneurial team.
They will have to focus on innovation and the implementation of changes,
growth and harvesting strategies, business and management systems,
human resources and also financing strategies (Pšeničny 2009,
pp. 278–279, Pšeničny et al. 2012). HGCs differ from static (non-grow-
ing) companies, in particular, by the way in which the company itself is
managed and organized, oriented towards a branched organizational
structure that provides support in the management of all growth factors.
Likewise, extensive analytical support enables the adoption of the most
appropriate measures that are reflected in the conditions for achieving a
high growth rate (Ray and Hutchinson 1983). The important conclusion
is that, in principle, HGCs are not only production-oriented but are
defined by their ability and desire of organizing the production process in
such a way that it can be exploited and that it may achieve the developed
growth strategies (Tajnikar et al. 2016). Such companies must develop an
appropriate internal structure of the organization that will enable the del-
egation of operational tasks to employees, while key persons can devote
themselves to strategic-level planning (Smallbone et al. 1995). If the com-
pany wishes to achieve high growth rates, many factors should be success-
fully managed. HGCs thus differ significantly from static, non-growing
companies, since by creating conditions for successful growth they have a
significant impact on the strategic orientation of the company, its organi-
zational structure and its functioning.
2.1.1 Demographic and Factual Characteristics

of High-Growth Companies
Size of High-Growth Companies
When defining growth in relation to the size of the company, we reach
back to 1931 and the so-called Gibrat’s law, which presupposes the exis-
tence of proportional growth and thus assumes that the likelihood of pro-
portional growth will be the same regardless of the initial size of the
company (Calvo 2006; Sutton 1997). The law was confirmed by various
surveys but also rejected by some. Past research shows results in favour of
the law, rejecting the law and those somewhere in between:
• Part of past theory and empirical research does not reject the law,
since no link has been identified between the size of the company
and its growth—there is no evidence that smaller companies grow
faster than larger ones or vice versa that larger companies grow faster
than smaller ones (Lensink et al. 2005; Wagner 1992).
• A considerable part of past theory and empirical research rejects the
law, as it supports the thinking that the growth rate decreases with
the size of the company, or that smaller companies grow faster (Calvo
2006; Yasuda 2005; Audretsch 1995; Reid 1995; Dunne and
Hughes 1994; Evans 1987a, b).
• However, the remaining part of past theory and empirical research is
not decided in terms of this law; it does not reject or support it, or it
rejects/supports it only in certain cases of addressing of specific com-
panies (Park and Sydnor 2011).
As initially noted, the results of some HGC research show that HGCs,
in contrast with other averagely growing companies, may be slightly
smaller (Moreno and Casillas 2007, p. 69; Jovanovic 1982), since, accord-
ing to the authors presented in the second indent of the above paragraph,
the growth rate may be reduced with the size of the company. On this
basis, smaller companies would grow more rapidly, which is contrary to
Gibrat’s law. The tendency for a small company to grow rapidly can come
from achieving greater efficiency and competitiveness as well as from the
desire to exploit the benefits of the economy of scale. Moreno and Casillas
(2007, p. 73) state that according to the theory of Edith Penrose on the
growth of the firm, smaller companies will simply have to grow if they
wish to take full advantage of all the benefits of the superior production
resources they possess in the business process.
Rodriguez et al. (2003) note that if a company wants to grow success-
fully, it must first reach a certain size that ensures an acceptable degree of
efficiency. Širec and Crnogaj (2010) agree with this as well.
Age of High-Growth Companies

Past research suggests that HGCs are somewhat younger, as the age of
companies can be negatively linked to the growth rate achieved (Henrekson
and Johansson 2010, p. 237; Delmar et al. 2003). Delmar et al. (2003,
p. 196) thus consider that there is a clearer connection to be found
between the age of a company and its growth than between the size of the
company and its growth. Tajnikar et al. (2016, p. 31) also agree that the
low age of companies is more strongly linked to achieving a high growth
rate than to the size of a company. Due to their allegedly lower average
age, HGCs are more prone to risk (Davidsson and Delmar 2006) but also
to greater innovation (Shane 2009).
This leads to the realization that age, as well as the size of the company,
can affect the growth rate achieved. Zimmermann (2017, p. 2), for
example, presented the realization that a young company (compared to a

company that has been operating in the market for many decades) is more
than twice as likely to achieve high growth. Younger companies are more
likely to achieve high growth rates, regardless of their baseline definition
(Daunfeldt et al. 2014).
Activity of High-Growth Companies

The company’s activity can have a significant impact on its growth and its
financial performance (Mason and Brown 2013; McPherson 1996;
Lumpkin and Dess 1995). Among HGC support policy makers, there is a
belief that high-tech “new” sectors are responsible for the emergence and
generating of a large number of HGCs (Mason and Brown 2013, p. 214).
However, the findings indicate that this is not so and that HGCs can be
present in any activity (sector) (Mason et al. 2009; Acs et al. 2008). The
high technological development and the overall deviation from existing
sectors can be very risky for companies. Thus, HGCs can also employ
slightly smaller innovative technological changes within existing sectors,
enabling them to gain wider access to customers by retaining existing and
potentially acquiring new customers (Mason and Brown 2013). The above
leads to the realization that HGCs can originate from all sectors, that is
even where high-tech innovations are not possible. The fact is that HGCs
are not only predominant in the most modern activities (sectors) such as
biotechnology and nanotechnology but can also be found in traditional,
capital and labour-intensive sectors, including in the field of construction
(Gundry and Welsch 2001) and metal industries (Littunen and Tohmo
2003). Thus, HGCs can be found in all activities (but significantly less so
in some than in others).
2.2 Financing of High-Growth Companies

The importance of financial resources as one of the production resources
has already been stressed by Shane (2003) in his model of the entrepre-
neurial process. Among all production sources, Shane (ibid., p. 161) is
particularly focused on financial resources and the process of their acquisi-
tion, which is closely linked to the exploitation of entrepreneurial oppor-
tunities. Accessibility to sources of financing represents one of the most
important factors of growth and development of each company (IFC
2011), as insufficient or inadequate financial resources can lead to
difficulties in the operational business of the company relating to the lack

of financial resources for investing in research and development and the
ongoing settlement of all financial obligations towards stakeholders. At
the same time, it can significantly reduce the capacity of the company to
achieve growth (Beck and Demirguc-Kunt 2006). Shane (2003, p. 162)
and others (e.g., Grichnik et al. 2014) consider that financial resources are
indisputably one of the key issues of the entrepreneurial process that both
high-growth and other companies are faced with in their process of man-
aging and organizing production resources and ultimately in the process
of management itself. In line with the resource-based theory, sufficient
financial resources allow a company to purchase adequate long-term and
short-term assets as well as allow for the retention of key personnel in the
company by creating a good working environment and the conditions for
appropriate remuneration, which enables the creation of competitive
advantages and the preservation of the company over a longer period of
time (Eisenhardt and Martin 2000). Adequate and relevant financial
resources thus have a significant impact on the performance of companies
and their existence (Fatoki 2011; Gimeno et al. 1997; Bates 1995; Cooper
et al. 1994). It should be noted that empirical research relating to financial
resources and the existence of companies is largely related to SMEs and
companies in the early entrepreneurial phases (start-up companies), as
their operations are considered to be the most risky. Nevertheless, the
study of the importance of financial resources is also key to addressing
HGCs. For example, Brüderl and Preisendörfer (2000, p. 62) found that
the amount of financial capital invested in companies had a significant
impact on the likelihood of fast growth, while Lee et al. (2001, p. 615)
found that the network connections of companies with financial institu-
tions and thus financial resources have an important role in terms of fast
growth—according to the sales indicator, which, in the case of that survey,
was considered a fundamental benchmark. Other surveys also highlight
financial resources as one key determinant to enable companies to achieve
growth (Gupta et al. 2013; Barbero et al. 2011). Access to relevant finan-
cial resources is also important for further access to financial resources, as
the possession of a sufficient amount of financial resources is perceived as
a measure of stability, reliability and reputation of the company/entrepre-
neur in the eyes of the investor (Neville et al. 2005; Baum 1996), which
also makes it possible to further improve the position of the company in
accessing financial resources.
There are a number of differences between high-growth (dynamic) and

non-growing (static) companies, which will also be reflected in the financ-
ing of companies. Dynamic (high-growth) entrepreneurs will require
extensive financial resources to realize the business opportunities that will
enable the achievement of high growth rates. In fact, Brüderl and
Preisendörfer (2000, p. 62) found that the amount of financial capital
invested in companies had a significant impact on the likelihood of fast
growth, which is also in agreement with Hambrick and Crozier (1985).
However, HGCs are more often regarded as companies that face financing
constraints (Moreno and Casillas 2007; Hambrick and Crozier 1985).
Some studies show that, contrary to other, average-growth companies,
HGCs may be slightly smaller (Moreno and Casillas 2007, p. 69; Jovanovic
1982) and younger, since the age of the company negatively affects the
growth rate (Henrekson and Johansson 2010, p. 237; Delmar et al. 2003,
p. 196), as well as more prone to risk (Davidsson and Delmar 2006) but
also to greater innovation (Shane 2009). This, in conjunction with the
increased need for financial resources in HGCs, may lead to financing
constraints. This leads us to the first of the specificities of financing HGCs,
that is more pronounced requirements for financial resources (Brüderl and
Preisendörfer 2000) parallel to potential increases in the limitations (con-
straints) of financing (Moreno and Casillas 2007; Hambrick and Crozier
1985). HGCs have to implement different financing strategies than other
non-growing companies. The next key feature of HGC financing, which
concerns the use of external sources of financing, is also derived from the
discussions presented above. If, in particular, start-up companies are con-
sidered to more often use the entrepreneur’s own savings and non-formal
financial resources, it is characteristic that these sources become slightly
less important with the growth of the company (Abdulsaleh and
Worthington 2013). Loans from family, friends and co-workers, along
with own savings, are some of the most common sources of financing for
start-ups, but with growth, the central role is assumed by other sources of
financing—mainly retained profits and bank loans as the most common
sources of financing for the high growth rate of companies (Pšeničny et al.
2012). Although retained profits are an important source of financing for
HGCs, HGCs also need to pay more attention to external sources of
financing, as their financial needs are more pronounced. In terms of the
financial lifecycle of the company, Damodaran (2015, p. 296) points out
that HGCs are most likely not able to cover their financial requirements
using only their own sources of financing (retained profits). On the basis
of the foregoing, Brown and Lee (2014, p. 1) believe that HGCs, in com-
parison with other companies, are more likely to use a “cocktail” of finan-
cial resources from various providers, as they use both their own and
external sources of financing, whereby they tend to use debt financing, as
this also lets them obtain a tax benefit (Luigi and Sorin 2009, p 316;
Green and Hollifield 2003).
According to the research by Pšeničny et al. (2012), HGCs in the
Republic of Slovenia most often want to use retained profits (30.6%) in
their operations, followed by debt financing (28.4%) and grants and sub-
sidies from the state (7.3%). There are also a smaller proportion of busi-
ness angels, risk capital and financial resources of suppliers and buyers. We
should note that as much as 8.6% of the HGCs from the survey sample did
not plan additional financial investments. The survey on the access to
finance of enterprises (SAFE) indicates that, unlike in the case of HGCs,
the financing for all SMEs is dominated by bank limit overdrafts, leasing
and bank loans. According to this study, financing from retained profits in
SMEs is only in the fifth place among the financial resources examined
(ECB 2018, p. 14). This represents an important distinction between
HGCs and SMEs in regard to financing from retained profits, which is
consistent with Damodaran’s (2015) understanding of the financial life
cycle of the company, since a rapid growth period brings about more
favourable circumstances for partial financing from internal resources
(retained profits). The financing of HGCs is also in line with the pecking-
order theory. According to the latter, the companies follow a specific
sequence for financing, where they first seek to exploit internal (own)
financing opportunities (retained profits), then focus on financing in the
form of debt (external resources) and only ultimately financing in the form
of capital (Abeywardhana 2017, p. 136). This theory applies to both
growing and non-growing companies; however, high-growth (dynamic)
companies, due to their increased requirements for financial resources, will
likely have to look for more (quantitative or qualitative) financial resources
among external sources of financing. This is in line with the findings of
Brown and Lee (2014), who state that HGCs are the companies that will
more likely ask for external sources of financing. In defining the differ-
ences in the financing of a growing (dynamic) and non-growing (static)
company, we can start from the definition of passive and active financing
strategies, where the passive strategy is more specific to non-growing com-
panies and the active strategy is specific to growing companies. The passive
and active financing strategies are related to the theories of strategic
management and corporate governance. Thus, companies following a pas-

sive strategy build on the exploitation of existing production resources
and (financial) capacities (Kim and Mauborgne 1997, p. 106), while those
following an active strategy are not limited by their holdings but instead
attempt to realize projects regardless of their starting baseline. The active
strategy can thus be seen as an entrepreneurial growth-oriented strategy
that focuses more closely on business opportunities and not so much on
the effective use of existing financial resources (Brown et al. 2001). Thus,
instead of first determining how much financial resources it has at its dis-
posal and deciding on which business opportunity to use (passive strat-
egy), the company will first perceive the business opportunity and then
start looking for and collecting financial resources for its exploitation
(active strategy). The company’s business strategy is thus important in
developing the motivation and desire to acquire external sources of financ-
ing, and it also co-creates the circumstances for retaining financial resources
within the enterprise (Xiang and Worthington 2015, p. 516).
2.3 Entrepreneurial Orientation

The phenomenon of entrepreneurial orientation as the driving force of

organizational tendencies for the achievement of entrepreneurial activities
has become one of the fundamental aspects of the study of entrepreneur-
ship (Covin and Wales 2012) in recent decades. There are several defini-
tions of entrepreneurial orientation (ibid., p. 678), which are more or less
related to Miller’s (1983) definition of entrepreneurial orientation
(Hughes and Morgan 2007, p. 652). Miller has defined companies with
an entrepreneurial orientation as companies “which are involved in
product-marketing innovations, take up high risks in their ventures, and
which overcome competition through proactive innovations and action”
(Miller 1983, p. 771). The core of understanding entrepreneurial orienta-
tion thus lies in the assumption that entrepreneurial orientation originates
from the factor (variable or group of variables) on the basis of which com-
panies are distinguished for being more or less successful according to
their entrepreneurial capability (Covin and Wales 2012, p. 677). Thus,
past theory suggests that companies can demonstrate different levels of
entrepreneurial orientation, whereby they can assume the position of a
defender—that is, companies that resist risk, experimentation, innovation,
so conservative companies—or they can take a more aggressive approach

to entrepreneurial orientation and thus be proactive pioneers in the cre-
ation of business opportunities (Avlonitis and Salavou 2007). In order for
the company to achieve this, entrepreneurial orientation is important from
the company’s perspective as an organization, involving at least innova-
tion, risk-taking and proactivity (Miller 1983). Upon further development
of this way of thinking, the concept of entrepreneurial orientation also
included competitive aggressiveness and autonomy (Lumpkin and
Dess 1996).
Innovation and entrepreneurship are closely related concepts, which is
why innovation is often seen as an important influential growth factor of
the company (McGrath et al. 1996). Innovation, as the most common
benchmark of novelty (Garcia and Calantone 2002, p. 112), can cause
radical changes, that is changes that strongly sway and alter the status quo
on the market, thus creating market imbalance, and it can also be directed
at lesser changes (Dyer et al. 2011) related to changes in business pro-
cesses, productivity, minor improvements in existing products and the
like. Innovation is thus often seen as one of the key characteristics having
an impact on entrepreneurial behaviour and success (Teece 2007). The
delimitation of innovation for the needs of entrepreneurial orientation is
illustrated in the case of a measuring instrument developed by Hughes and
Morgan (2007), where innovation is measured on the basis of three state-
ments relating to the active deployment of novelties and innovations in
business, creativity in the business model and the search for new ways of
conducting business. The baseline measurement scale by Miller (1983)
also addresses innovation in conjunction with other dimensions of entre-
preneurial orientation. Despite the fact that it was measured in conjunc-
tion with other dimensions, innovation, in terms of it being a dimension
of entrepreneurial orientation, was identified by Miller (1983) as being
“demonstrative of experimentation, exploitation and creative behaviour; a
reflection of new products or services, new technologies and processes,
new work methods and new business strategies” (Covin and Wales 2012,
p. 694). In terms of entrepreneurial orientation, Rauch et al. (2009,
p. 763) consider innovation a “predisposition for integration, creativity
and experimentation through the introduction of new products or services
as well as technological leadership through research, development and
new processes”. It should be noted that innovation, in combination with
other dimensions of entrepreneurial orientation, is considered to repre-
sent the strategic entrepreneurial orientation of a company, where the
dimensions of the entrepreneurial orientation are interconnected (Covin

and Wales 2012; Miller 1983), but past theory (Kreiser et al. 2013;
Lumpkin and Dess 1996) also provides possibility for the individual study
of the dimensions of the entrepreneurial orientation and therefore also the
exploration of the specific context of innovation as one of the dimensions
of the entrepreneurial orientation. Innovation as a dimension of entrepre-
neurial orientation is often addressed in relation to the growth of the com-
pany. For example, North and Smallbone (2000) found that the most
innovative SMEs are those companies that have historically achieved the
fastest growth rates. Innovation is thus one of the key dimensions for the
emergence and existence of HGCs (Coad and Rao 2008; Freel 2000),
regardless of the size of the company, as Scherer (1965) also found, when
studying a sample of large companies, that innovation (measured in the
survey by the number of patents) has a positive impact on the growth of
sales achieved and thus on the profitability of the company. Additionally,
Georski and Machin (1992) found that innovative companies are the ones
that grow faster than non-innovative. Although past research suggests that
innovative companies will outgrow non-innovative companies, it is never-
theless necessary to note that the effects of innovation on the company’s
growth can be seen only over a long period of time (Bourke and Roper
2017). This can lead to difficulties in studying the relationship between
the innovation and growth of a company in the long term due to less vis-
ible causal links.
The next important element of entrepreneurial orientation is risk-
taking. Risk-taking represents the willingness of individuals or key
employees in the company to engage in risky activities (Shane 2003,
p. 103). This dimension of entrepreneurial orientation (risk-taking) was
defined by Rauch et al. (2009, p. 763) as “making bold moves, delving
into the unknown, when acquiring (borrowing) large amounts of financial
assets and/or providing significant amounts of resources for the realisa-
tion of undertakings in uncertain environments”. Developing new prod-
ucts or services, technologies and processes (innovation), proactively
exploiting opportunities, the tendency to give incentives for market
change and lastly also adapting to competition require company to com-
mit certain (often extensive) financial and other production resources
whose profitability cannot be fully predicted due to uncertain circum-
stances (Stambaugh et al. 2017, p. 720). This means that companies face
higher or lower levels of risk in their operations. Although historically risk
has generally been studied at the level of individual decision-making—in
terms of entrepreneurship, in particular the decisions between self-

employment and employment in an organization—with entrepreneurial
orientation, risk is largely implemented at the level of the company or the
decisions taken by the company (or upper management on behalf of the
company) in the distribution of production resources to various uncertain
undertakings (Schillo 2011, p. 21). This definition of risk-taking is also in
agreement with Miller (1983), who defines risk-taking as “willingness to
devote production resources to projects, ideas or processes whose out-
comes are uncertain and for which the cost of failure could be high”
(Covin and Wales 2012, p. 694). Kreiser et al. (2013) believe that there
are positive links between risk, business orientation and success of the
company and thus support the findings of Schumpeter (1926, in Taatila
2010, p. 49), who identified risk-taking as one of the key factors of suc-
cessful entrepreneurs (alongside innovation and creativity). Kreiser et al.
(2013) nevertheless point out that, in examining risk-taking, particular
attention should be paid to the costs that may arise if the expectations are
not realized. In their view, the company must carefully consider the cost-
benefit balance of the risk and decide on the optimal risk on the basis of
that (ibid., p. 279). Risk-prone companies combine the search for oppor-
tunities with taking risks by creating strategic conditions for their exploita-
tion. Although this may cause additional costs to the company, taking risks
as an element of entrepreneurial orientation on markets where buyers
expect changes has proven to be one of the key areas where the company
can ensure its success (Hughes and Morgan 2007, p. 653), either in terms
of the financial situation or in terms of growth (Cassia and Colombelli
2010). Ward (1997, p. 326) pointed out that without taking risks, the
opportunity for a company to grow can be denied. Although risk-taking is
important for the creation and preservation of growth (Rabelo and Speller
2005), the importance of taking risks as a standalone dimension of entre-
preneurial orientation is slightly less prominent in past literature. Risk-
taking is also often seen as a dimension that promotes the development of
other dimensions of entrepreneurial orientation (especially innovation and
proactivity), to which past research (in relation to growth) attributes a
more pronounced importance (Naldi et al. 2007).
Proactivity, as a dimension of entrepreneurial orientation, refers to the
company’s view of the future in which the company wants to actively
search for opportunities that will enable it the benefit of making the first
move and changing the competitive environment (Hughes and Morgan
2007, p. 652). Proactive companies thus try to anticipate future
opportunities, both in relation to their existing/potential production

range and in relation to technology, market and demand (needs) of cus-
tomer—such proactive companies are companies that prefer to be a leader
in testing and implementing changes rather than merely following and
adapting to competing companies (Schillo 2011, p. 21). In accordance
with the definition of proactivity, Rauch et al. (2009, p. 763) define pro-
activity as an “aspect of searching for opportunities and looking into the
future by introducing new products or services before the competition
and action based on future demand expectations”. Thus, from a short-
term point of view, the fundamental objective of a company’s proactive
activity is to exploit the advantages enabled by having the first move and,
from a long-term perspective, to shape and influence the direction of the
development of the industry (Hughes and Morgan 2007, p. 653;
Venkatraman 1989). However, despite the undisputed benefits of proac-
tive action for companies, Kreiser et al. (2013, p. 277) point out that, as is
the case for innovation, proactive action also requires extensive investment
in production resources. Companies must first invest in the development
of capabilities that will enable the development of perceived opportunities
in the future. The positive effects of proactivity will only be perceptible in
the company when the benefits derived from proactive operation exceed
the initial/advance costs. Kreiser et al. (ibid.) thus point out that when
changing (reinforcing) the proactive operation of a company from a lower
level to a medium level, weaker effects are expected in terms of the perfor-
mance of the company. In changing (reinforcing) proactive operation
from the middle to the high level, however, it is expected that there will be
positive effects of proactive performance on the company’s performance—
and because of this, proactive companies will be addressed more often,
along with companies with potential for growth. Research (Cassia and
Colombelli 2010, pp. 453–454; Du et al. 2010; Davidsson and Delmar
2006, p. 173) shows a positive link between proactive operation and
growth of the company, while at the same time pointing to a number of
pitfalls that companies may encounter when acting too proactively or tak-
ing too much risk by trying to create a new market—the first move.
Subsequent competitors are not subjected to such a risk in their subse-
quent inclusion in the market and thus in their exploitation of the already
somewhat verified business opportunity (Min et al. 2006).
Competitive aggressiveness is defined as an aggressive way for a com-
pany to face its competitors in the pursuit of business opportunities
(Schillo 2011, p. 21). Stambaugh et al. (2017, p. 720) define competitive
aggressiveness as a “willingness to challenge and overcome competing

companies”, which fundamentally separates it from proactivity, which is
more focused on market opportunities. Similarly, Rauch et al. (2009,
pp. 763–764) define competitive aggressiveness as the “intensity of a com-
pany’s effort to overcome competition with a strong offensive stance
against competing companies and with aggressive responses to the risks
posed by competing companies”. Hughes and Morgan (2007, p. 652)
define competitive aggressiveness as an “expressed intensity by which the
company will decide to compete with and strive to overcome the competi-
tion, which will be reflected in the desire to out-manoeuvre it”. Competitive
aggressiveness is thus regarded as an important dimension for the survival
and growth of companies in a changing competitive environment (Oliveira
2015, p. 156; Antončič and Hisrich 2001; Covin and Covin 1990).
The next dimension of entrepreneurial orientation, which was not
included in the basic definition of entrepreneurial orientation by Miller
(1983), is the dimension of autonomy. The concept of autonomy was
presented in conjunction with competitive aggressiveness by Lumpkin and
Dess (1996), who define autonomy as the independence of an individual
or a group in designing and pursuing an idea. Thus, autonomy refers to
the ability and desire to be autonomous in the pursuit of opportunities,
which could be applied to the situation of the company as an organiza-
tion—taking measures without stifling organizational constraints (ibid.,
p. 140). Lumpkin and Dess (1996, p. 140) point out that the degree of
autonomy may vary between companies according to their size, manage-
ment and managerial style as well as their ownership structure. In this
respect, it is necessary to realize that autonomy does not develop by itself
and that maintaining autonomy in the company will require effort
(Gelderen 2016) in terms of committing a sufficient amount of resources
and therefore additional costs. It should be emphasized that autonomy
creates a solid foundation for internal entrepreneurship (Kuratko et al.
2014; Simon et al. 1999) and is therefore important to the entrepreneurial
orientation of the organization. We also wish to note that autonomy in
entrepreneurial orientation, unlike other dimensions of entrepreneurial
orientation that can be adjusted to the level of the company (organiza-
tion), is slightly more focused on the autonomy of individual employees
and their independence in the performance of work tasks (e.g. the scale by
Hughes and Morgan 2007). It is necessary to distinguish between the
autonomy of the individual at his workplace and the autonomy of the
company as an organization, which is particularly exposed in the early
start-up periods of establishment and operation of the company (Gelderen

and Jansen 2006). Antončič and Hisrich (2001, p. 499) addressed and
attempted to overcome this obstacle by incorporating autonomy at the
level of the organization in the entrepreneurial orientation. Despite the
fact that autonomy, either from the perspective of employees (Hosie et al.
2013) or as organizations (Groves et al. 1994), is important for the devel-
opment of the company, the excessive desire for the company’s autonomy
can reduce accessibility to financial resources. In so far as the company
wishes to operate autonomously, it must rely on external sources of financ-
ing as little as possible, which could negatively reflect on the potential for
growth. Likewise, companies (entrepreneurs) can knowingly give up
growth if they believe that they will lose their independence or autonomy
(Davidsson 1989). Because of this, we do not discuss autonomy in more
detail in the developed conceptual model.
2.4 Intangible Capital of High-Growth Companies

HGCs’ intangible capital includes human capital in the form of “knowl-
edge, ability, competences and attributes embodied in individuals, to pro-
mote and create personal, social and economic welfare” (OECD 2007,
p. 29) and social capital, which is defined by Nahapiet and Ghoshal (1998)
as structural, relational and cognitive social capital. A particular focus in
terms of the organizational networking capability of HGCs is aimed at
structural social capital, that is social (network) bonds and interactions.
In the opinion of Vidotto Frasson et al. (2017, pp. 316–317), human
capital is a key production resource that can be even more important than
natural resources (land) and financial capital, as it plays an important role
in the innovative and strategic orientation of the company. Bozbura et al.
(2007) define human capital as a key dimension of intellectual capital,
which, as such, covers not only formal education but also experiences and
learning arising as a result of life as well as informal education acquired
through additional training (Davidsson and Honig 2003, p. 306).
Although human capital is often addressed at the level of an individual, it
is permissible to adapt the use of the term human capital to companies,
that is the human capital held by employees in a particular company.
OECD (2007, p. 30) also defines human capital as the “quality of the
workforce”. As a result, Schultz (1961, p. 4) defined human capital as the
level of knowledge, skills and education, based upon which he built the
discussion on the impact of human capital on the separation between qual-

ified and unqualified employees in companies.
In addition to human capital, social capital is considered to be one of
the fundamental driving concepts of the development of a modern society
that is subject to continuous market, technological and innovation changes
that enable economic progress and development. Social capital is of utmost
importance in entrepreneurship research and for the perception and
exploitation of business opportunities (Shane 2003), as it can be seen as
one of the key elements that enable individuals to perceive, implement and
exploit business opportunities. By exploiting social capital, individuals can
access useful information (Doh and Zolnik 2011, p. 4962), and the qual-
ity of an individual’s social capital also dictates the quality, quantity and
speed of obtaining useful information to use as the basis for making appro-
priate decisions (Shane 2003, p. 49). The area of social capital is very
broad and diverse, which was also presented by Nahapiet and Ghoshal
(1998, p. 251), who defined social capital in the framework of three
dimensions:
• The structural dimension of social capital, which comprises network

connections and their arrangement (configuration) and appropriate
organization. A key understanding of the structural dimension of
social capital stems from network connections, which must be prop-
erly managed and organized in order to ensure access to resources
(ibid., pp. 252–253). The structural social capital is thus built on
network connections, which, due to their nature, provide the indi-
vidual with certain advantages. Individuals (including entrepreneurs)
can take advantage of their connections as well as the connections
within the system (organizations) in a way that allows them to obtain
information or access to production resources (Tsai and Ghoshal
1998, p. 465).
• The cognitive dimension of social capital comprises a shared system
of values that enable a general understanding of social objectives and
promote appropriate practices in the social system (Tsai and Ghoshal
1998, p. 465). Nahapiet and Ghoshal (1998, p. 254) highlight the
importance of a common language and culture in the cognitive/
social capital dimension, which can have an important effect on the
way of understanding individual pieces of information and knowl-
edge arising from potential network connections, reflecting the cul-
tural dimension and the conditionality of social capital. Social capital
and social ties therefore should be addressed in the social context,

since this is the only way to obtain a comprehensive insight into
understanding them.
• The relational dimension of social capital, which comprises trust
based on past relationships, norms and values, mutual expected com-
mitments and rights and affiliation (identification) with the social
group (Nahapiet and Ghoshal 1998, pp. 254–256).
We focus primarily on the structural dimension of social capital, which

we address in the conceptual model in conjunction with organizational
networking capability. Mu and Di Benedetto (2012, p. 5) define organiza-
tional networking capability as the “capability of the company/organiza-
tion to exploit its existing network connections (weak and strong) and
explore new network connections (weak and strong) with external enti-
ties, in order to achieve a (re)configuration of resources and strategic com-
petitive advantages in the periods of establishment, transformation,
development and termination of markets”. On the basis of the above,
Parida et al. (2017, pp. 96–97) subsequently identified organizational net-
working capability as “the central capability of the company to develop
and use a network of actual and potential interorganizational relations,
through which it acquires access to the production resources held by other
actors; and the capacity of the company to develop the aforementioned
capabilities by incorporating (integrating) these resources into the organi-
zation or into units and employees with the help of which the network
connections will be coordinated and which will create value from the
knowledge of network partners”. Organizational networking capability
thus has a decisive impact on the performance of the company, both in
terms of innovation (Parida et al. 2017; Mu et al. 2017) and in terms of
export orientation (Mort and Weerawardena 2006). Organizational net-
working capability also represents a key dimension of structural social
capital—exploiting network connections to achieve the set objectives and
benefits. Shane (2003, p. 49) points out that the network connections
that a company (or key employee) can possess play a key role in the access,
quality and quantity of information on potential markets, opportunities,
employees, ways of organization and opportunities for financing.
Past research addresses intangible capital as an important determinant
that shapes the conditions for achieving growth in companies. Human
capital, as a dimension of intangible capital, is treated as an important
determinant for forecasting the company’s growth (Rauch et al. 2005), as
the company can improve productivity and achieve shifts in strategic and
technological innovation by investing in human capital. Cooper et al.
(1994) and Kangasharju and Pekkala (2002) linked human capital to
higher growth rates on a model of small and emerging companies, while
Coleman (2007), in examining human capital (in the case of research on
work experience) and growth, perceived negative impacts. For a company,
investing in human capital constitutes a loss of certain production sources,
from financial resources to opportunity costs (loss of time) intended for
human resources. Lee and Tsang (2001, p. 583) believe that the link
between the investments in human capital and the growth of the company
can be negative for smaller companies but will be positive for larger com-
panies that already have a more developed human resource management
system. Similarly, in the case of human capital, the social capital and orga-
nizational networking capability are important to achieve the desired level
of growth. Thus, Lee and Tsang (2001) confirmed that networking activi-
ties were positively linked to the growth rate achieved by the company.
Social capital in conjunction with networking will also positively shape an
individual’s (entrepreneur, manager) desire for growth (Liao and Welsch
2003). On the basis of the above, management skills with human capital
(Barbero et al. 2011), in addition to the ability to network and exploit
network connections (Chaston 2000) as well as the entrepreneurial orien-
tation and financial resources, will be one of the key dimensions of the
creation of fast growth for the company. Although the importance of
intangible capital in achieving a high growth rate of the company remains
undisputed, it should be noted that there is a possibility of a situation
where investing in non-tangible capital will not result in the expected
growth/profitability rate, which is more specific to younger companies
(Tajnikar et al. 2016, p. 44).
2.5 Financial Performance

Financial performance, as the fundamental objective of the economically

oriented company, is particularly important for HGCs, which, in compari-
son with other non-growing companies, have usually been shown to be
younger (Delmar et al. 2003), more innovative (Shane 2009) and more
prone to risk (Davidsson and Delmar 2006). This may negatively affect
the financial performance of such company, which Penrose considers a key
prerequisite for further growth and expansion, since financial and invest-
ment decisions are largely linked to the desire to influence the long-term
financial performance of the company (Penrose 1959). On the basis of the
above, financial performance represents an important dimension that all
HGCs should strive towards. The financial performance of the company
could be defined as the profitability of a company, which will enable the
company to survive, succeed and develop (Kaplan and Norton 1992).
Thus, financial performance relates to a successful strategy of a company
that allows it to survive and succeed at a given moment as well as in the
future (ibid., p. 77). It should be noted that the measurement of financial
performance in the company is a very diverse field, which partly stems
from the fact that performance is not necessarily merely linked to the
accounting aspect but also to the economic, psychological, sociological,
marketing and managerial aspects (Neely 2007, p. 7). Orlitzky et al.
(2003, pp. 407–408) also point out that the financial performance of a
company can be measured by three aspects, that is (i) the market aspect
(the aspect of the return of investors—e.g. yield per share), (ii) the
accounting aspect, which focuses mainly on the internal financial perfor-
mance of the company, that is the effectiveness of adapting to various
management decisions, and (iii) the aspect of perception (assessment of
the financial position of the company, financial objectives and financial
success through a survey questionnaire). In this chapter, we focus mainly
on accounting criteria as Cochran and Wood (1984, p. 47) believe that
these are the best criteria to measure financial performance and on the
perception of these accounting criteria. Measuring financial performance,
in terms of “accounting”, can be carried out on the basis of a large number
of indicators, including the profit of the company in a wide variety of
forms, the returns from capital and debts (Return on Investment or ROI)
and the Economic Value Added (EVA) indicator, which can also be
addressed in relation to profitability (Otley 2007), as it represents the
benchmark for the value generated by the company from the amounts
invested into it. Other commonly used indicators are the indicators of
Return on Assets (ROA) and Return on Equity (ROE) (Maditinos et al.
2011; Makni et al. 2009). In addition to the ROE and ROA indicators,
Chen et al. (2005, pp. 164–165) also proposed using the increase in rev-
enue and the measure of employee productivity in measuring the financial
performance of the company, by which they measured the value added per
employee. The financial performance of the company is often discussed
together with the business performance, but in this case, the criteria are
slightly more demanding. Thus, financial performance can also be mea-

sured in the framework of the balanced scorecard (Kaplan and Norton
1992). This confirms the belief that there is a wide range of indicators and
criteria available for measuring financial performance, depending on the
point of view from which the financial performance of the company is
being studied (Cochran and Wood 1984, pp. 44–45). In the past, the
financial performance of a company was usually studied in relation to its
growth. Thus, according to Capon et al. (1990, p. 1143), the growth of a
company is positively linked to its financial performance in most past sur-
veys. The aforementioned is supported by the previously presented real-
ization that, for example, HGCs in the Republic of Slovenia in 2017
despite their small number (4.4%), generated a significant share of the net
profit of all companies (29.2%) (AJPES 2018). However, some surveys
note that financial performance and growth can be mutually exclusive. For
example, Jang and Park (2011, p. 1027) found that the company’s profit-
ability in the previous year was positively linked to its growth in the cur-
rent year, while past and ongoing growth were negatively linked to the
ongoing profitability of the company. Penrose (1959) had already
addressed the risk of excessive and too rapid growth for companies, regard-
ing which Davidsson and Delmar (2006) also agree. A possible reason for
the mutual exclusivity of objectives (financial performance and growth)
can be seen in the fact that HGCs are more often faced with constraints
and obstacles in financing (Moreno and Casillas 2007) and potential prob-
lems with solvency (Tajnikar et al. 2016).
The research also linked other financial performance criteria with the
growth of the companies. Thus, the ROI indicator can facilitate and boost
the achievement of a company’s objectives (Rico 2006) and therefore also
the objectives associated with its growth. Heikal et al. (2014, p. 101) also
found that the ROE and ROA indicators, together with other financial
performance indicators (or separately, each on its own), shape the growth
rate achieved by the company. Soininen et al. (2012) also found a link
between financial performance (measured by ROA) and growth, particu-
larly when entrepreneurial orientation is being addressed in parallel.
Blažkova (2016, p. 59) points out that the value of the ROA indicator can
coincide with the size of the company, which would mean higher indicator
values for larger companies. The economic value added indicator also
proved to be important in enabling company growth (Mouritsen 1998).
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9th.—This morning Musa was very feverish, so the men asked me
to stop a day to collect provisions. To this I unwillingly assented, but
they did little else than lie down. About nine a.m. five of the men
proposed that I should allow them to leave their muskets and all their
baggage, and push on as fast as possible to the boats, while I
moved on quietly with the sick and sore-footed. I consented, on the
condition that they would stay at the boats no longer than would be
necessary to cook a meal; that then they were to return laden with
provisions. To this they agreed, and then left us. The two who stayed
behind the day before yesterday came up with us; it was for them I
was anxious. During the ascent of the steep mountain on the 8th the
last remnant of my shoes was carried away, and yesterday I
attempted to protect my feet by fastening some goats’ skin over
them in the form of moccassins. To-day I am trying to improve them,
but with very little success.
10th.—Musa having shaken off his fever, was enabled to start; but
all the men are weak, and many are ailing. Though perfectly well in
health, I find that, having only had for yesterday’s dinner a glass of
rice-water with the palm-cabbage, I am not fit for very long walks,
particularly as my moccassins are cut to pieces by the rough stones
and thorns, and I am compelled to walk bare-footed. My greatest
torment are the leeches getting between my toes and crawling up my
trousers, reaching even to my waist, where the tight belt prevented
their farther progress. Squeezing a little tobacco-juice made them
drop off, but I could not be continually stopping to do this.
11th.—We stopped all day. The industrious cut down some Loba-
palms, and made a little sago; the lazy collected a few cabbages. I
tried a little of the former; it was indeed delicious.
Some of the men, who wandered farther than the others in search
of wild fruits, reported seeing some very large monkeys, which they
said might be orang-utans, and whilst speaking of them I was
reminded of the various stories told of people being carried off by
them. I have referred to this subject in my account of my journeys
among the Sea Dayaks, but although many stories are related of the
male orang-utan carrying off young Dayak maidens into the jungle,
yet it is seldom that we hear of the female orang-utan running off
with a man. But the Muruts of Padas tell the following narrative,
which, they say, may be believed. Some years ago, one of their
young men was wandering in the jungle, armed with a sumpitan, or
blow-pipe, and a sword. He came to the banks of a pebbly stream,
and being a hot day, he thought he would have a bathe. He placed
his arms and clothes at the foot of a tree, and then went into the
water. After a time, being sufficiently refreshed, he was returning to
dress, when he perceived an enormous female orang-utan standing
between him and the tree. She advanced towards him, as he stood
paralyzed by surprise, and seizing him by the arm, compelled him to
follow her to a branching tree and climb up it. When he reached her
resting-place, consisting of boughs and branches woven into a
comfortable nest, she made him enter. There he remained some
months jealously watched by his strange companion, fed by her on
fruits and the cabbage of the palm, and rarely permitted to touch the
earth with his feet, but compelled to move from tree to tree. This life
continued some time, till the female orang-utan becoming less
watchful permitted the Murut more liberty. He availed himself of it to
slip down the trunk of the tree and run to the place where he had
formerly left his weapons. She, seeing his attempted escape,
followed, to be pierced, as she approached him, by a poisoned
arrow. I was told if I would ascend the Padas river as far as the
man’s village, I might hear the story from his own lips, as he was still
alive.
12th.—Walked on a mile, the men excessively lazy. Finding the
river smooth, they proposed trying rafts; so we stopped to construct
them. One of the men, observing that I was dining on a cabbage-
palm boiled in a little rice-water, presented me with a cup full of
uncooked rice. I was very grateful to him for it; but we put it by, in
case the palms should fail us, as they do in some districts.
13th.—About nine, we pushed off, and got on very well for two
hours. Found one of the rafts smashed up against a rock, and the
men away walking. Continued till about one o’clock, when ours also
became fixed on a rock, and our men were too dispirited to get it off;
and saying that the rapids ahead of us were dangerous, they
proposed walking to-morrow. We should have thought nothing of
such paltry difficulties a week ago, but the men were losing their
courage with their strength. I refused, however, to stop till to-morrow,
and walked on for a couple of hours. In crossing a ravine to-day, we
disturbed a female bear, which, however, dashed with her cubs into
thick brushwood, so without dogs it was useless following her. She
roared in a manner worthy of an animal double her size.
14th.—The river still full of rapids; but the hills are gradually
receding from the banks, giving it more space, and it sometimes
spreads out into extensive sheets of water, with immense pebbly
flats. Islands are also beginning to appear. It was again proposed to
build rafts, but I steadily refused, and kept walking till nearly five.
After sunset, the last stragglers overtook us. We continually came
upon the traces of the advance-party. At one of their resting-places,
we found the bones of a fine fish, which by some means they had
secured. Our old Pakatan declared they had either found it stranded,
or else had startled a kite from his prey. It proved to be the former,
though the latter had happened to us once.
15th.—Yesterday and to-day the character of the forest has
altered. We are now marching through the old farming grounds of
the Muruts; found some of their fruit trees; among others, one
covered with fine-looking oranges, but intolerably sour. I secured the
opium bottle to-day, intending to take a dose to deaden the pangs of
hunger, but I put it off till the evening, thinking it might interfere with
my walking. I noticed near the orange-tree above mentioned that the
whole ground was a mass of water-worn pebbles, evidently the
ancient bed of the stream; it was now at least a hundred feet above
the water’s edge.
At half-past four p.m. I brought up for the night, and after bathing
stretched myself on my back, munching a great lump of cabbage,
when my eyes, wandering over the scene, fell on a hill about three
miles ahead of us. I sat up and looked at it again; and, turning to my
companions, said, “Why, that reminds me of the high land near the
mouth of the Madihit;” but we agreed that it was impossible, as our
five men had been gone six days, and we felt assured that we
should have met them ere this if we were so near our boats as that,
particularly as we, both yesterday and to-day, had made very long
walks. Since we have had a bearing of Molu, we have been keeping
generally in a west course, but the river has taken some very
extraordinary windings.
Having secured some fruit of the Jintawan, or Indian-rubber plant,
and some cabbages, I was enabled to satisfy my hunger before
going to sleep, so put off taking any laudanum, to which I had a very
great dislike. The Jintawan fruit is very pleasantly acid, about the
size of a very large pear, and of a deep orange colour. It consists of
a thick rind full of Indian-rubber, surrounding some pulp-covered
seeds. One of the plants we came across was very handsome,
growing in the most luxuriant manner over a lofty tree with few
branches. The Jintawan is a creeper, and this one had extended
itself at least forty feet up the trunk and had covered the
outspreading boughs. It was loaded with fruit, but my men had so
lost heart that not one would climb the tree, but contented
themselves with picking up the over-ripe produce which had fallen on
the ground below. We had another very happy find to-day, for while
passing under a fine tapang-tree, we noticed the remains of a bees’
nest scattered about, and every particle was eagerly appropriated.
From the marks around it appeared as if a bear had climbed this lofty
tree and torn down the nest to be devoured by its young below, as
there were numerous tracks of the smaller animals around, but
whether the comb had been sucked by the bears or not was very
immaterial to our men, who rejoiced in securing the little honey still
clinging to it.
16th.—Started early. About half my followers had so delayed us
by their constantly lagging behind, that I determined to wait for them
no longer, but to push on with such men as would follow me with all
their strength. We felt that it would be impossible to walk many days
farther on our scanty fare. The lazy ones having heard of our
arrangement, tried to keep up with us, and did do so till eight, when I
heard a shout from the foremost man, “Bandera! bandera!—the flag!
the flag!” We rushed down the side of the hill like madmen, the
fellows shouting for joy. Sure enough, there was the British flag
hoisted, and our small boats at the mouth of the Madihit, with our five
men looking fat and well beside my pale and famished followers. The
rascals having left my guns and all the baggage in the jungle, and all
being in good health, had managed to reach the Madihit in three
days, and then set to work to eat and drink as much as possible.
We arrived to find the provisions nearly gone; they said the bears
had found out our cache and destroyed everything, and the only
provisions left were those we put into the garei. I could only divide a
cupful of beans to each man, as the five had managed to consume
thirty pounds of sago and forty-two pints of beans in the course of
four days, and they confessed to have daily caught very fine fish. But
what angered the men most was the signs of waste around, where,
having only half finished a plate of sago, they had thrown the rest
away. I saw some picking up the burnt pieces that had not been
washed away by the rain. I asked why, according to their agreement,
they had not come back to meet us, knowing that we had several
sick men. They put the blame on each other: one man, a Javanese,
had left his sick son with us, but he unfeelingly observed that he was
old enough to look after himself; that son had given us more trouble
than any one else, both in going and returning.
I searched their baskets, and found that they had not only hidden
some more beans, but had stolen some of my cloth, though I could
not fix on the man. I determined to punish them, so told them to go
back and fetch the things they had left in the forest; or, on my return,
I would submit the case to the Sultan, whether they had not forfeited
wages by their unfair abandonment of their sickly companions. They
started off, but their cowardly hearts failed them, and before night
they came back.
The ravages of the bears were distressing. They destroyed a
Deane’s pistol-case, tore open my box of books, and ruined them;
reduced the cloth to shreds, and tumbled it into the mud, where the
white ants afterwards finished the spoiling; opened the tin boxes
containing the sugar and biscuits, and of course devoured them; so
that I have nothing left but coffee and arrack. After Musa had cooked
a meal, a very frugal one, he went off with a party to fetch the garei,
hoping to find a little sago left, but was disappointed.
In the evening caught a few fish, but they were not much among
so many. About seven, a most satisfactory savour rose to my
nostrils. I found that Ahtan, having discovered a jar of pork fat, was
preparing some cakes. I divided them, but he said, “No; you, sir,
have the larger body, therefore should have the larger share.” I am
not much given to emotions, but I never felt so thankful as when,
stretched in the old Kayan hut, I watched them preparing an evening
meal, and thought of all the dangers we had gone through without a
single accident. True, we had lost guns, and goods, and ruined
instruments of some value; but what of that?—there was no one the
worse for his exertions. What was hunger now we were so near
home?
17th.—Started early; and, as we have had no rain for two days,
the river was quiet, and we only reached an island about fifteen
miles from the Madalam. It shows the difference, however, between
ascending and descending a river. About two a.m., our garei being
well ahead, we saw before us a herd of wild cattle, quietly picking at
a few blades of grass on a broad pebbly flat. I landed with a couple
of men, to get between them and the jungle. I was within twenty
yards of the nearest, a piebald, and was crawling through the
tangled bushes to get a sight of him, whom I could hear browsing
near me, when there arose a shout, then a rush, and the cattle were
off dashing close to me, but perfectly concealed by the matted
brushwood. It was the crew of one of the newly-arrived boats that,
regardless of the warnings of their companions, had thus lost us a
chance of a good dinner. I felt that, if my gun had been charged with
shot, I could almost have peppered them. Shortly after I shot a pig
through the back as he was crossing the river; but as all my men
were Mahomedans, it was not worth while tracing him in the jungle.
He bled so profusely in the water that he could not have run far.
About five, we were passing down a rapid at a great pace, when
one of the men touched me and pointed. I looked up, and there was
a magnificent bull, three parts grown, standing within fifteen yards of
me. To put up my gun and let fly was the work of a moment; but,
before we had dashed on many yards, the beast, which had fallen on
his forehead, was up and away. After a little time, we managed to
stop the garei; and, landing, found traces of the beast’s blood. My
feet were so painfully wounded that I could not manage to follow it,
but left it to my men. A couple came up with him, as he stood with
his legs well stretched out, bleeding profusely. He took no notice of
them, even when they were within spearing distance; but all their
nerve was gone, and they were afraid to thrust their weapons into
him. They waited till the whole mob of hunters arrived, when the bull
apparently recovering himself, dashed away into the jungle.
Having secured the boats under the islands, I divided a
tablespoonful of beans each, with a little pork fat to those who would
take it. Musa told me that most of the men wanted to stay behind
and follow the wounded Tambadau; but that, if I wished to go on,
there were five volunteers who would pull straight to Brunei, now
about a hundred miles off by river. To this I agreed.
18th.—I get away at daylight in a sampir with five men. Ahtan with
an attack of fever and ague. The reaction was too much for him, so I
stopped at an island about five miles from the Madalam to cook. I
now produced my secret store of beans, and the cupful of rice that I
had treasured up since it was given us on the 12th. The beans I
gave to the men, and the rice I had boiled into a thin sort of gruel for
Ahtan. I thought his feverish symptoms arose principally from over
fatigue and hunger. In fact, after he had swallowed a strong dose of
quinine, and taken half the gruel, he felt much better; the rest of it I
gave to the men, as I wanted to give them sufficient strength to pull
to Pengkalan Jawa. I would not take anything myself, as I did
nothing but sit all day. I reserved my powers for the food I knew the
Chinese trader there would quickly prepare for us.
As we approached the more frequented parts of the river, we met
some Muruts, who told us that the report of my death had brought
forty steamers to the capital to revenge it, and that if I did not turn up
the place was to be burnt. I knew this was one of the usual stories
that arise from very little, but still I was anxious to get home; but with
all our exertions we did not reach the Chinese trader’s house till 7
p.m. He received us most hospitably, produced tea, sugar-candy,
biscuit, and dried fish, to stay our appetites, while a proper meal was
prepared. In about an hour this appeared, and we managed to
consume a very large fowl each, with an amount of rice that even
startled the Baba. Before leaving at midnight, I made arrangements
that a plentiful meal should be provided for the garei’s crew.
19th.—After pulling about fourteen hours, we reached Brunei by 2
p.m., to find the people beginning to wonder at our absence. The
forty steamers proved to be Captain Cresswell, of the Surprise, who
had visited the capital about ten days before with Mr. Low. The latter
was beginning to be uneasy about my absence, and was preparing a
party to come and search for me.
20th.—My boats now arrived, having failed to get the Tambadau.
They said they followed him by the blood till mid-day, when they lost
his traces among those of a herd which he had joined. I suspect they
did not follow him very far.
Thus ends my journal.
As I have now made many journeys in Borneo, and seen much of
forest walking, I think I can speak of it with something like certainty. I
have ever found, in recording progress, that we can seldom allow
more than a mile an hour under ordinary circumstances. Sometimes,
when extremely difficult or winding, we do not make half a mile an
hour. On certain occasions, when very hard pressed, I have seen the
men manage a mile and a half; but, with all our exertions, I have
never yet recorded more than ten miles progress in a day through
thick pathless forests, and that was after ten hours of hard work. Of
course we actually walk more than we record, as one cannot
calculate the slight windings of the way; but allowing for all this, I
have the strongest suspicion that Madame Pfeiffer measured her
miles by her fatigue. She talks of twenty miles a day as a common
performance of hers; and another visitor to this island beats her,
recording walking thirty miles in one day through Bornean forests—
an utter impossibility.
There was an Adang man among the wax-hunters, the one who
accompanied our guide for a short distance, who was pointed out to
me as a model of activity, and he certainly appeared so; well built,
strong, but light, he skimmed the ground; and the story is told of him,
that on receiving information of the illness of his child, he started
home, leaving everything behind him but his spear and a little food,
and walked from forty to forty-five miles in two days. No European
that I have ever seen would have had a chance with him in his own
forests.
Six miles a day is quite enough for any man who wishes to take
his followers long journeys, unless specially favoured by the ground
and the paths; Galton, in speaking of African travelling, says three
miles a day with waggons, horses, and cattle, and he is of some
authority. I have often thought that we must have walked twenty
miles, but the bearings have always proved to me that we have
seldom done half that distance. It requires great experience not to
judge distance by the fatigue we feel.
Whilst referring to the mistakes in the estimates of distance, I may
notice the very remarkable errors into which two visitors to the
Limbang have fallen. Mr. Motley[9] mentions exploring that stream to
an estimated distance of one hundred and fifty miles, by the
windings of the river, and about fifty in a general south-west
direction. He reached the Limbuak village, which by my
measurement is under twenty miles in a straight line from the mouth:
fifty miles in a direct line to the south-west, would have nearly
brought him to the Baram, across numerous ranges of hills, and
several navigable streams, and a hundred and fifty miles up the river
would have brought him nearly to the farthest point I reached, long
past the limestone districts. It proves how impossible it is to trust to
estimates.
The next curious mistake I may notice, was made by Mr. de
Crespigny; he ascended the river Limbang as far as the river Damit. I
have seen a sketch map of his, and he places the mouth of that
stream in north latitude, 3° 48’, and the mountain of Molu to the
north-east of it, in latitude 4° 3’, whereas Molu Peak is a little to the
westward of south from the Damit, and nearly twenty-five miles
distant in a direct line.
In drawing attention to these errors, I by no means claim immunity
from them in the map of the Limbang and Baram rivers which
accompanies this volume; but I think they will be found free from
gross errors. The course of the latter river was taken down by
Captain Brett of the Pluto, and observations of the latitude and
longitude of the town of Lañgusan were made by many of the
officers on board. In my land journeys, I had very inferior
compasses, as I was unable to take with me the valuable levels and
other instruments obligingly lent me by Dr. Coulthard, on account of
their weight and size; but I used them as long as I was in my boats,
to lay down the position of the mountains; and in order to enable me
to correct my own errors, I put down the day’s observations on a
rough map every evening during the journey, except after we had
shot the cascade and wetted the paper too much to permit it being
handled roughly.
I may add, that of the whole party of nineteen, none after our
return suffered severely from the exposure and privations we had
undergone, and I believe the real reason was, that we always were
dry at night. For many years we trusted during our expeditions to the
leaf huts the natives are accustomed to construct for us and for
themselves; but although with sufficient time, and when good
materials are plentiful, they manage to make them tolerably
watertight, yet they are never so good as the simple tents we always
took with us during our later expeditions. With proper ropes and
everything fitted to enable us to raise these tents on cross poles in
ten minutes, the two did not weigh more than twenty pounds, and
afforded comfortable accommodation for our whole party of nineteen
people, with all our baggage, and on occasions our six guides took
advantage of them also.
I had suffered severely from exposure on former expeditions,
particularly when we ascended the Sakarang, and were eight days
sleeping in the leaf huts hastily erected by our followers. Of the
seven Englishmen who slept on shore, I believe only one escaped
without some severe attack of illness, and I remember the late Mr.
Brereton mentioning that on his return from a visit to the Bugan
country, where his men had been greatly exposed, a fourth of his
party died of various diseases. Another precaution I took was to
carry myself a few night things, as a light silk jacket, a pair of loose
sleeping drawers of the same material, a jersey, and a dry towel, so
that if my men lagged far behind, I was not kept for hours in my wet
clothes; and whilst travelling in these forests you are always wet, as
if there be no rain there are sure to be many rivers to ford.
On my return, I tried to remember the geographical information
that was given me before starting. I was told it would take six days
from Blimbing to Madihit: leaving out the two days’ detention from
freshes, it took us about three hours over the six days. Even the
walking distance was really correct; it was only two days from the
Adang landing-place, and seven from Madihit; as, although we took
ten, yet for the first five days we did not do a fair half-day’s work on
any of them. We were warned that it would be impossible to use
rafts, and that the banks were almost impassable, and we indeed
found it so.
Many months before starting, I was told that if I wished to
penetrate far into the interior, to try the Trusan, and not the Limbang,
as the former was inhabited, the latter not. I went up the Trusan a
few miles, but found it so small, I had no idea it penetrated to so
great a distance. The fact is, that the rains run off very fast, and that
the ordinary states of the rivers give no idea of the amount of water
they bring down, but had we taken that route, we should have
reached our farthest point with comparatively little fatigue.
The Orang Kaya Upit arrived at his house November 13th, twenty-
five days after I reached Brunei; so that it is fortunate I did not wait
for him. I may add, that on November 20th, some Bisaya chiefs set
upon pañgeran Makota, the shabandar, and killed him. They were
wearied with his exactions. The immediate cause of his death was
seizing the daughters of seven Orang Kayas, one of whom he had in
his curtains when attacked, and this caused his death. The girl
pointed him out to her father, trying to escape in a small canoe. The
alarm was given, and his boat tilting over while he tried to avoid the
shower of spears and stones, he fell into the stream and was
drowned; for he was the only Malay I ever heard of who could not
swim. Such was the end of this clever bad man. The Sultan was
furious, but his fury was not shared by his four viziers; so that the
affair ended by a dozen lives being taken, instead of the hundreds
the Sultan desired.
Brunei, February 8th, 1861.—Above two years have passed since
I wrote this journal. The scheme of building a fort at the Madalam
mouth did not succeed, as the Sultan, after the shabandar’s death,
was very unwilling to assist any of the aborigines. I was away during
the year 1860, and in the course of that time, a party of the Muruts,
from the upper Trusan, came over and encamped at the mouth of
the Salindong stream, and from thence sent on three men in a bark
canoe to tell their friends of their presence. These men met the
Orang Kaya Gomba, a Bisayan, at Batang Parak, and were
treacherously slain by him. The Muruts waited a long time at
Salindong, hoping to be fetched away by their friends. They could
not walk the whole distance, as they had their women and children
and all their worldly goods with them, intending to remove to the
lower Limbang, and live with the Orang Kaya Upit.
While thus detained, they were surprised by a large party of
Kayans, and every one taken or slain. However, one of the prisoners
afterwards managed to get away, and reached his friends, bringing
this sad tale. The Orang Kaya Gomba declares that he mistook the
three for Kayans, which is almost impossible, as no head-hunter
would have been found paddling down a hostile stream in a bark
canoe. Neither the Sultan nor any of the viziers will make the least
inquiry into this affair, but the memory of it is treasured up in the
hearts of the Muruts, and Orang Kaya Gomba may yet meet with a
bloody death.
I have remarked that during all our wanderings near Kina Balu we
only at one place found the dried heads of enemies hung up in the
villages there, and during my journeys up the Limbang, I do not
remember noticing any, and yet Orang Kaya Gomba’s murderous
action shows they do value them, which is confirmed by pañgeran
mumin making a present of the head of the man he killed to the
Gadang Muruts; and during my stay in Brunei, I have met small
parties of head-hunters, but seeking only the heads of their real
enemies. Yet I have always avoided spending a night in their
immediate neighbourhood, and have kept our arms ready for instant
service.
One evening, during a heavy squall, we took shelter in a little river
to the south of Point Kitam, in the Limbang Bay, and to our
exceeding discomfort found a Murut boat with eighteen armed men
in ambush round a short turn of the stream; we knew they were not
waiting for us, but having only four men, and a couple of fowling-
pieces, we did not feel secure in their neighbourhood. As we rowed
past them they took no notice of us, but no sooner had we anchored,
than they pulled off towards our boat; but we should have felt little
discomfort, had they not had their mat coverings stowed away, while
all the Muruts had their arms ready for action. I told my men to show
no sign of alarm, but keeping our guns within reach, waited their
coming.
It was a great relief to find that they only came to ask for a little
tobacco, but some of us had been accustomed to the neighbourhood
of the Seribas and Sakarang Dayaks, who on head-hunting
expeditions spare none, if of a weaker party. We found they were on
the look-out for some of the Tabuns, who, flying before the Kayans,
had established themselves at Batu Miris, near the entrance of the
Limbang river, and with whom they had an ancient feud. To show the
apathy of the Bornean Government, I may mention that it permitted
these skirmishes to take place close to the capital, and one day
some of my men who were cutting wood near the Consulate, were
startled by seeing two Tabuns rushing frantically past them; in a few
minutes five Trusan Muruts appeared in full chase, and eagerly
inquiring the direction taken by the fugitives, hurried at full speed on
a false track purposely pointed out by my Manilla men.
Another fact I may mention is that many Bisaya labourers who go
over to our colony of Labuan to seek for work have actually
attempted to disinter the bodies of those of our countrymen and
women who have been buried there. They have tried this to the great
grief and discomfort of their surviving friends, but the Bisayas have
generally, if not always, been disappointed by the great depth of the
graves, and their inefficient tools. It appears a disgusting thing that
there should be any necessity to watch over the graves of one’s
friends to prevent them being desecrated.
I shall have occasion hereafter to mention the Secret Societies
established by the Chinese, but as an illustration of the influence the
members exercise over each other, I will tell the following story:—
Perhaps those who have read my journeys to Kina Balu, and this
Limbang journal, may be interested in the fate of my boy Ahtan, and
I am sorry to say his conduct ultimately made me lose all interest in
him. In the year 1858 the Chinese in Brunei started a Secret Society,
called there a Hué; they said they were a branch of the Tienti, or
Heaven and Earth Society, that has ramifications in nearly all the
countries in which the Chinese have spread. At first but few joined it,
but by threats and cajolery they at last induced nearly all but the
head traders to enter it, and on one of the great Chinese religious
feasts, Ahtan asked my permission to go to it.
When he returned, it appeared to me he had a very hang-dog
look, and next day I noticed he was very busy about my medicine-
chest, and I found my laudanum bottle on the table. Being very much
engaged at the time preparing my letters for the mail, I took no
particular notice of his movements, but immediately after dinner,
having taken coffee, I felt drowsy, and had scarcely entered my
mosquito room, when I fell on the sofa, and remained in a stupefied
sleep for thirteen hours. On my recovery, Ahtan came with a scared
look, and said somebody had stolen my heavy iron chest, and it
proved to be the case, but as I had six dogs, one of whom was a
savage mastiff, my suspicions instantly fell upon my own people, and
passing over my household servants, I fixed on my boatmen as the
culprits.
The Sultan, however, sent and begged I would leave the matter in
his hands, and on my expressing my willingness, instantly arrested
two of my servants, Ahtan and a Manilla Christian named Peter.
They were separated, and at dead of night the Sultan went himself
with a drawn kris in his hand to the latter, and said if he would
confess he would save his life, but if not——; he did not finish the
sentence, as Peter instantly fell on his knees, and clinging to the
Sultan’s feet, begged that his life might be spared and he would
explain all. It appeared that while he held and quieted the mastiff,
Ahtan had taken a blacksmith and a carpenter to the chest, and they
had carried it off. As these men were constantly employed by me, it
explained the silence of the other dogs; but though he could tell how
the chest was carried off, he knew nothing of what had since
become of it. The Sultan then left him and went to Ahtan, but no
threats or entreaties had the slightest effect on him, as he had sworn
in the most solemn manner to be faithful to the members of the Tienti
Hué, and would confess nothing. The two accused were seized, and
as they also belonged to the Secret Society, suspicion was directed
to it. I sent for the chief and the other officers of the Hué, and told
them the whole story, and said, if the chest unbroken, with the 80l. in
it, and all the papers, were not placed on the ground before my
house within forty-eight hours, I would turn the Sultan’s attention on
them. They protested their utter ignorance of the robbery, which was
probably true, but they well knew how to influence all their members,
and before the forty-eight hours were over, the chest, untouched,
was thrown on the mud just above my house. Finding after a
fortnight that the prisoners were receiving treatment totally at
variance with English ideas of justice, I sent and begged the Sultan
to pardon them, and turn his attention to getting rid of the Secret
Society from his dominions. He complied, and it merely required a
warm recommendation on his part to the chief officers to break up
the society, to induce them to do it, as he declared that every
robbery in future should be laid at their door, and every crime
committed should be avenged on them. As the officers were men
doing a good business at the time, they quickly got rid of their
banners and meeting house, and I heard no more of the Hué during
the rest of the time I remained in Borneo, but during my last visit I
found the chief officers of the society reduced to comparative
poverty, as their partners and agents in Singapore, happening to be
real British subjects, had refused to have anything further to do with
them when they knew of their conduct.
I requested the Sultan to let the prisoners go, as all except Ahtan
were kept in the stocks in an open verandah, exposed to sun and
rain, and tormented the whole day by boat boys, who delighted in
torturing those whom they considered as infidels: in Brunei they have
no prisons whatever. Ahtan was better treated, as he was known to
have been a favourite servant, though his conduct was very bad,
particularly in dosing me with opium, yet I could not forget his
kindness to me during our wanderings in the interior, and asked for
his liberty on that plea. The Sultan’s answer was,—“The plea is
good, but the stubbornness of that boy in refusing to confess when
all the others had acknowledged their crime, deserves death.” I
heard a few months ago that he was keeping a small shop in
Labuan.
A man in whom I felt a very great interest, and was very sorry to
part with, was Musa, my Manilla steersman and coxswain; as a boy
he had been educated as a Christian, but having been captured very
young and sold by the Balignini pirates to the Mahomedans, he had
been circumcised, and joined their communion. He had a particular
antipathy to Signor Cuarteron, who returned the dislike, and used
gravely to assure me that my quiet, respectful follower had a design
to massacre him. When the priests first came to Brunei, all my
Manilla men attended mass, but were suddenly disgusted with
something which took place; and on my inquiring the cause, one of
them said, “We don’t like to be told that if we don’t again join the
Padre’s religion, he will send for a Spanish man-of-war to take us all
off prisoners to Manilla.” If he really did threaten them, he made a
great mistake, as some of them never went near the church again.
Musa, though modest and gentle in his manner, was as brave as a
lion, and would have followed me anywhere. Though very short, he
was squarely built, and exceedingly strong; a very powerful
swimmer, and good boatman. Many of these men excite a personal
regard, and I have always felt that for Inchi Mahomed, my Malay
writer, who was entrusted with the charge of the Consulate during
my lengthened absences, and he well deserved the trust.
CHAPTER VIII.
THE SULU ARCHIPELAGO.
FIRST VISIT.
Picturesque Islands—Balambañgan—An old English Settlement—

Large Monkeys—Optical Illusions—Flights of Birds—The Curlew
—The way we shot them in Sarawak—Game—Banguey—Mali
Wali—Cleared Hills—Fine Water—Sweet-smelling Jasmine—
Cagayan Sulu—Intercourse with the Inhabitants—Appearance of
the Country—Lovely Scenery—Market—Inhabitants—Insolent
Traders—The Crater Harbour—Wall of Evergreen—Inner Lake—
Climb the Cliff—Scenery—Alligators numerous—Sulu—
Appearance from the Ship—Sugh, the Capital—Mr. Wyndham—
The Watering-place—Suspicious Natives—Fugitives from
Balignini—Reports—A Market—The Mountaineers civil—Walk to
the Palace—The Stockades—Armed Crowd—Audience Hall—
Absurd Reports—The Sultan and his Nobles—Dress—Politeness
of the Sultan—Return to the Ship—Datu Daniel—The
Racecourse—Effect of Dutch Shot—Tulyan Bay—Alarm of
Villagers—Sulu Government—Laws—Feuds—The Mahomedan
and the Pork—Population—Fighting-men—Slave Market—
Dignified carriage of the Nobles—Dress—The Balignini—Dutch
Attack—Appearance of the Country—Good Position of Island—
Tulyan—Basilan—Numerous Islets—Samboañgan—Spanish
Convict Settlement—Description of Country—Fort—Town—
Shops—The Church—The Men—The Women—The Corner Shop
—A Ball—Dancing difficult—Waltzes—Supplies at Samboañgan
—A lonely Grave.
During all the voyages I have made, I have never beheld islands
so picturesque as those scattered over the surface of the Sulu Seas,
or whose inhabitants more merited notice. I will therefore give a short
account of the visits I made thither, before the attacks of the Spanish
forces had altered the ancient state of affairs. I have already
delineated the north-west coast, and will therefore commence my
description from the island of Balambañgan, to the north of Maludu
Bay, which must always be of some interest to Englishmen from our
two unsuccessful attempts to form a settlement there.
We dropped anchor off Balambañgan, which at night appears a
low wooded island. I visited it in the morning in a cutter, and vainly
sought any fresh traces of human beings, though we found some old
deserted huts of the fishermen who frequent this shore for tripang.
Continuing our explorations, we noticed something moving along the
beach, and there were various conjectures among our party, some
affirming it to be a buffalo, others a man; I never was more deceived
in my own estimate of the size of an animal, as it proved to be a
large monkey, which with its companions was seeking shell-fish on
the sands; it was certainly very large, but not of such dimensions as
to warrant its being compared to a bull, but there appeared to be
some optical illusion caused by its looming over the water.
Pursuing our path along the beach, the seamen at last thought
they saw houses among the trees, but on landing we found we were
again deceived by a row of white rocks, prettily overhung with
creepers. Though no traces of inhabitants were to be found, yet
animal life was well represented, innumerable monkeys swarmed at
the edge of the jungle, while flights of birds of every kind kept rising
before us. I never saw more monstrous pelicans, but after having
been so deceived by the monkeys, I must not attempt to estimate
their height. The best birds, however, for culinary purposes, were the
curlews, some of which are as large as small fowls: unfortunately we
were not provided with shot, and ball fell harmlessly among them.
They are wary birds, but may yet be readily circumvented. There
is a spot at the entrance of one of the minor branches of the
Sarawak river, where the curlews congregate in thousands, but only
at the height of spring-tides can you get profitable shots at them.
There are broad sands there, and the birds spread over them to
feed; by degrees the rising waters gradually press them back
towards the wooded shore; and as beach after beach is covered,
they fly screaming above in wide circles, gradually narrowing till they
all settle on the spot near which the sportsmen lie concealed, either
behind scattered bushes, or in a prepared bower of leafy branches.
The evening has well closed in before the tip-top of high-water; and
the loud scream of the myriads of birds deadens the detonation of
the guns as they send their iron shower among them, enabling us to
load and reload without completely scaring the birds. We once
obtained ninety-five of the largest kind, and hundreds of smaller
ones, to feast the crowd who were assembled near preparatory to a
great tuba-fishing.
Balambañgan is admirably situated to command the China seas;
however, if its position be superior to Labuan, the latter has coal to
counterbalance that advantage. While strolling along the beach we
came upon the tracks of cattle, deer, and pigs, and another party
from the ship had the good fortune to secure a large supply of
excellent fish with the seine. This island, as well as the neighbouring
coast of the mainland, appears to swarm with game; I landed on the
latter, and found an extensive open plain, diversified with a few low
eminences, backed by some cleared hills, and there the tracks of
wild cattle, deer, and pigs were innumerable. The rhinoceros is also
reported to be occasionally seen, but we came across no traces of it.
Continuing our voyage, we passed the island of Banguey, in the
northern part of which there are fine peaked hills, with inhabitants,
and plenty of good water, therefore far preferable to Balambañgan
for a settlement; as if the harbours be not good, there is sufficient
shelter against both monsoons.
The next island is Mali Wali, and here we anchored to examine it.
We tried at many places, but found the little creeks shallow and lined
with mangrove swamps; but by landing on the south side, at the east
end of the stone beach, there is but a few minutes’ walk in dry forest
between the shore and the cleared land. The appearance of the
island is remarkable; for miles the hills apparently are clothed with
grass, with only a narrow belt of jungle skirting the shingly beach; the
reality, however, disappointed us, as we found that this verdant-
looking land was but a heap of soft sandstone, with long coarse
grass growing up between the crevices. However, there is a good
supply of clear water from tiny streams and springs, and the tracks of
deer were observed in many places, while on all sides a species of
wild jasmine grew in luxuriance, bearing a very sweet-scented
flower.

Financial Determinants of High Growth Companies A Conceptual Model Blaz Freser Full Chapter

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Financial Determinants of High Growth Companies A Conceptual Model Blaz Freser Full Chapter

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Financial Determinants of High-Growth

Companies: A Conceptual Model Blaž

ISBN 978-3-030-59349-0 ISBN 978-3-030-59350-6 (eBook)

Cover pattern © Melisa Hasan

The authors acknowledge the financial support from the Slovenian

2 High-Growth Companies: Origins, Characteristics,

3 Multidimensional Model of High-Growth Companies’

4 Empirical Research: Case of Slovenia 73

5 Policy Implications for the Real World127

6 Where We Go from Here135

Table 2.1 Overview of research on high-growth enterprises 11

Table 4.24 Verifying H6.1–H6.7 119

Abstract High-growth company (HGC) research is diverse and hetero-

Keywords Growth • Financial performance • Production resources •

The study of corporate growth is a phenomenon in entrepreneurial the-

© The Author(s) 2020 1

of entrepreneurship, the characteristics of companies (demographic fac-

compared to other companies, are more likely to use a “cocktail” of vari-

Republic of Slovenia. We conclude the publication with a discussion and

High-Growth Companies: Origins,

Abstract High-growth companies (HGCs) are different from non-­

Keywords High-growth company • Growth determinants •

2.1 High-Growth Companies

© The Author(s) 2020 7

• absolute growth of the indicator, which measures the absolute

An important aspect of heterogeneity also stems from the study of the

• Growth as a result. This is the most extensive branch of research in

researchers attempt to identify factors with the most important

The presented heterogeneity of the definition of growth results in

Table 2.1 Overview of research on high-growth enterprises

Birch and Absolute 1988–1992 A company with United Employment

Table 2.1 (continued)

Research/ Indicator Period Definition of HGC State Objective of

Schreyer Composite 1985–1994 The upper decile France Employment

Table 2.1 (continued)

Research/ Indicator Period Definition of HGC State Objective of

Halabisky Relative 1985–1999 Employee growth Canada Employment,

Table 2.1 (continued)

Research/ Indicator Period Definition of HGC State Objective of

Anyadike-­ Composite 2002–2008 Overview of past Great Employment

According to Širec and Crnogaj (2010, pp. 46–47), we can conclude

2.1.1 Demographic and Factual Characteristics

Age of High-Growth Companies

example, presented the realization that a young company (compared to a

Activity of High-Growth Companies

2.2 Financing of High-Growth Companies

difficulties in the operational business of the company relating to the lack

There are a number of differences between high-growth (dynamic) and

management and corporate governance. Thus, companies following a pas-

2.3 Entrepreneurial Orientation

The phenomenon of entrepreneurial orientation as the driving force of

so conservative companies—or they can take a more aggressive approach

dimensions of the entrepreneurial orientation are interconnected (Covin

terms of entrepreneurship, in particular the decisions between self-­

opportunities, both in relation to their existing/potential production

aggressiveness as a “willingness to challenge and overcome competing

start-up periods of establishment and operation of the company (Gelderen

2.4 Intangible Capital of High-Growth Companies

discussion on the impact of human capital on the separation between qual-

• The structural dimension of social capital, which comprises network

and social ties therefore should be addressed in the social context,

We focus primarily on the structural dimension of social capital, which

2.5 Financial Performance

2 High-Growth Companies: Origins, Characteristics,

3 Multidimensional Model of High-Growth Companies’

4 Empirical Research: Case of Slovenia 73

5 Policy Implications for the Real World127

6 Where We Go from Here135

Table 2.1 Overview of research on high-growth enterprises 11

Table 4.24 Verifying H6.1–H6.7 119

Abstract High-growth companies (HGCs) are different from non-

Anyadike- Composite 2002–2008 Overview of past Great Employment

terms of entrepreneurship, in particular the decisions between self-