Incremental or radical development? A dynamic approach to organisational changes and growth of Hungarian ICT SMEs

Abstract

This paper explores the dynamics of organisational change by building on firm life-cycle theory. Extant research assumed that the development of firms follows a certain sequence of stages. Based on the life-cycle model, this study evaluates the speed and extent of changes in organisational characteristics and firm growth during the development of ICT SMEs in Hungary. Hypotheses are tested using multivariate statistical methods. Results show that stagnant firms are not significantly different from the ones undergoing incremental changes, but significant growth coincides with radical organisational changes. Our findings highlight that team-based decision making, complex organisational structures and sophisticated information systems coincide with firm growth.