Choosing between Growth and Glory

Prior work has established that the financing environment can impact firm strategy. We argue that this influence can shape the earliest strategic choices of a new venture by creating a potential tradeo↵ between two objectives: rapid growth and reaping the benefits of a positive reputation (glory). We identify a simple reputation-building strategic choice, naming the firm after the founder (eponymy), that is associated with superior profitability. Next, observing that firms with high-growth aspirations are rarely eponymous, we argue via a formal model that the availability of/dependence on external financing can explain why. We find empirical support for the model’s predictions using large datasets of European and American firms. For example, eponymous firms grow considerably more slowly than similarly profitable firms. Eponymy is also less likely in regions with greater financial development and in industries with greater dependence on external financing. We discuss implications for the literature on new venture strategy.