Growing Pains of Venture Firms and Performance

Ever since Flamholtz and Randle (2000) propose the importance of managing growing pains which cause a fatal problem to the fast growing firms, the topic of growing pains have been explored in various contexts. Growing pains are blamed as an important factor which makes many successful venture firms that have grown rapidly at their early stage, and disappear suddenly after undergoing an abrupt internal challenge. There has been some empirical research on this topic, but limited. Causes of growing pains have only been limited to the personal-level variables, mainly entrepreneur himself. We believe that organizational level and leadership style also contribute to the growing pains. In this paper, we extended research on this phenomenon and empirically prove the negative impact of growing pains on firm performance and also suggest other causes of growing pains, using data collected from Korean high-growth venture firms. Contrary to the conventional belief, individual level factor of leadership style is found to have no significant effect on growing pains, while organization level factor, culture, has. Out of dimensions in organizational culture, task, role, and person oriented cultures are found to have negative relationship with growing pains of Korean venture firms, whereas power oriented culture has augmented growing pains. This result shows the importance of building a proper corporate culture, even from the early stage.