Drivers of performance of privately owned, rapid-growth firms: A reconceptualization of the trust–commitment model of relationship marketing

Purpose – The primary purpose of this chapter is to provide insight as to why some privately held small-to-medium sized firms (SMEs) have been able to outperform their peers in terms of their performance defined as revenue growth, profit growth, growth in number of employees and markets. Little is known about privately held firms and what drives their performance. The second purpose is to synthesize and provide clarity to the extant literature on rapid-growth SMEs (gazelles). The third purpose is to bring a unifying theoretical lens to the literature. Methodology – The research was conducted using elite interviews with 47 informants drawn from 21 rapid-growth, private companies. Qualitative methods were used to identify themes related to the strategies used by these firms to outperform their peers over a five-year period. Findings – The study organizes and summarizes the extant literature on rapid-growth companies, provides support for some findings, and clarifies equivocal findings. It also suggests that early strategic choices made by the owners of private firms along with their attitudes and capabilities positioned the private firms for rapid growth. The Morgan and Hunt (1994) trust – commitment theory of relationship marketing emerged from the data as the model used most often by rapid-growth private firms and the one that best integrates the factors driving private firm performance. A modified, two-stage model appears to be warranted. The first stage focuses on respect for the value employees bring, and building their trust and commitment is an essential first step that subsequently drives the second stage of the model – building customer trust and commitment. While some of the outcomes are similar to those suggested by Morgan and Hunt, new outcomes (collabora-tive innovation, citizenship behaviors, sustained growth, and premium prices) also emerged as important outcomes in this study. Practical implications – This study provides owners of private firms with insight on how to build and grow their firms in a rapid and sustainable fashion. Originality/value – Little research has been undertaken on private firms. This study addresses this knowledge gap. The modified trust commitment relationship marketing model that emerged from the data had not been utilized to date in the field of rapid-growth firms and it provides an integrating theory that explains the performance of rapid-growth private firms.