Grow, grow, grow? Stakeholder value creation by high-growth firms

Abstract High-growth firms are widely known to contribute significantly to economic growth; yet, their broader societal value remains underexplored. This study addresses this gap by offering a comprehensive analysis of the value creation of high-growth firms. Adopting a stakeholder capability approach, the paper examines how these firms create and destroy value for their stakeholders across five dimensions: economic, psychological, social, intellectual, and physiological. Based on an in-depth study of 23 high-growth firms in the Netherlands, drawing on interviews with founders and CEOs, alongside an archival analysis of news articles, the paper shows that value creation extends beyond economic aspects and is not uniformly positive. Building on the hybrid organizing literature, the analysis reveals that governance arrangements, reflecting different institutional logics (financial, social, or hybrid), shape the value creation of firms. Additionally, governance arrangements mediate the relationship between firm growth and firm practices, influencing both the motivation for firm growth and how firms manage stakeholder trade-offs associated with rapid growth. The paper makes two contributions to theory. First, the notion that the value creation of high-growth firms is not unequivocally positive challenges the current conceptualization of ‘productive entrepreneurship’ and encourages future studies to adopt a more nuanced understanding of the relevance of these firms. Second, revealing the important role of firm growth in shaping how firms balance financial and social value creation, the paper underscores the need for the hybrid organizing literature to explicitly address the dynamics of firm growth. A key implication for policymakers is that high-growth entrepreneurship is not neutral but has a ‘direction’.