Our research was conducted over a three-year period at the Center for Organizational Excellence at the University of St. Gallen in Switzerland, in cooperation with 10 partner companies, including BMW, Deutsche Bank, Nestlé, Siemens and Swiss-based cement giant Holcim. We adopted a systematic, multiphase research design, consisting of interviews with top executives in multinational companies to refine our assumptions on growth thresholds; a large-scale analysis of Fortune Global 500 companies; and in-depth case studies of six Fortune Global 500 companies to derive strategies for changing to smart growth.
To examine a growth corridor’s importance for long-term performance, we collected data on the Fortune Global 500 companies’ growth between 1995 and 2004. We used archival data from annual reports as well as the Thomson World-scope Global database. As far as possible, multiple sources were used to increase the reliability of the data. Complete data was available for the 365 companies included in the final analysis. The company-specific growth thresholds were calculated by means of measures derived from the extant literature. A company’s competitive growth rate, for example, was determined by the weighted average increase in sales achieved by its major competitors. The sustainable growth rate was determined by equating annual capital requirements with capital generation potential. Next, we assigned companies to groups in accordance with their specific growth behavior. We compared the groups’ market performance by... To read the complete article, login or sign-up using the form below.
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