The Case for Unbalanced Growth of the Firm

For successful long-term growth of the firm, its strategy has to be out of balance with the firms resources from time to time. In particular, the firm needs to overextend itself from time to time, by adopting such a strategy which is somewhat beyond its resources. This imbalance will force learning by doing, channels market pressure for better communication of organizational direction, and creates tension to rectify the situation. It thus economizes on the true scarce input, effort for resource accumulation, which is the cornerstone of the growth of the firm. Efficiency in resource accumulation is the basic rationale of the case for unbalanced growth. The paper tries to develop this argument conceptually.