Relationship between company size and growing pain

The research made by Flamholtz, E.G. (1990) says that growing pains tend to increase until companies reach a significantly large size. There is no direct relationship between growing pain and company size. Growing pains still exist in large size organizations. It is not objective to say large organizations have less or no growing pain than small sized ones. The growing pain rate is varied from industry to industry, can not be judged by size.

When firms grow in size, sales volume become more important than profit. In small firms the managers can conceptualize the whole business and he can keep the profit in his mind in every transaction or decisions. But when the firms become huge in size the managers have certain goals. The goals are achieving the sales target instead of the profit. This happens because of the economic theory of diseconomies of scale. Growing pains exist both in small sized firm and big sized firms, and the pains might vary.

We have to bear in mind that growth is not the ultimate thing. Rather unnecessary faster growth might cause the unavoidable pain for the business and for the management. Therefore, the management should to find the optimum rate of growth for the business and they have to implement control mechanisms to control the rate of growth to optimum.

Reference:

Flamholtz, E.G.(1990). Growing pains: How to make the transition from an entrepreneurship to a professional managed firm(pp. 53-72). San Francisco: Jossey-Bass Inc.