Capacity constraints as a trigger for high growth

Abstract High-growth enterprises (HGEs) have a large economic impact but are notoriously hard to predict. Previous research has linked high-growth episodes the configuration of lumpy indivisible resources inside firms, such that high capacity utilisation levels might stimulate future growth. We theorize firms reaching critically reach “trigger point” involving either broad-based investment in further growth or shrinking back previous levels. analyze EIBIS survey data (matched ORBIS) which features question on time-varying utilisation. Overcapacity is transitory state. Firms enter into overcapacity after period rapid sales and profits, years surrounding higher employment rates. operating at make incremental investments (e.g. expansion, process improvements modern machinery) rather than investing R&D new product development. find support for “fork road” hypothesis: some associated with launching massive subsequent growth, while other negatively related both