Kang, M. P., Chen, W. H., and Chen, P. Y. 2012. Managerial Limitations to a Firm's Growth: The Perspective of Managerial-capacity Constraints. NTU Management Review, 22 (2): 119-148. https://doi.org/10.6226/2012.(22-2).05
Min-Ping Kang, Associate Professor, Graduate Institute of Global Business and Strategy, National Taiwan Normal University
Wein-Hong Chen, Assistant Professor, Department of Business Administration, National Dong Hwa University
Po-Yuan Chen, Ph.D. Student, Department of Business Administration, National Chengchi University
Abstract
Managerial limitations constitute the primary internal constraint on the growth of a firm.Managerial limitations include managerial-capacity constraints, managerial-capability limitations, and managerial-supplement limitations. From the perspective of managerial-capacity constraints, we argue that the use of managerial capacities is diverse across firms and that managerial limitations imposed on growth are thus heterogeneous. Using a sample of 349 manufacturers in Taiwan, this study examines the effects of the use of managerial capacities on the growth of a firm. We propose that firms with a well-established set of program-coordinated routines and feedback-coordinated routines are more likely to economize the application of managerial capacities to authoritative communications than firms lacking such routines. Hence, firms can save unused managerial capacities for growth planning and avoid impediments to firm growth. In addition, firms that develop heuristics or rules to manage uncertainties are more likely than firms lacking such uncertainty-management tools to save managerial capacities regarding information collection and processing. Thus, managers will have more capacity for growth planning.
Keywords
managerial limitation Penrose effect limits on firm growth