Abstract

Existing research related to firm growth has not paid sufficient attention to the growth paths of online stores in e-markets. The linkage between growth path and firm size has not been built up. This paper aims to investigate evolutionary trajectories and their effects on firm size. Theoretically, conceptually define three types of distinguishable paths, namely the convergent, tepid, and sustained paths. We then propose related theoretical hypotheses that reflect the impacts of different types of growth paths on the resulting firm size. To empirically validate the proposed hypotheses, we applied the trajectory analysis method with a novel indicator, the relative expansion rate, based on a data set that consists of 5,582 online stores on Taobao.com, the largest e-commerce platform in the world. Testing results largely support our hypotheses and suggest that the sustained growth path is the ideal mode nascent online sellers should struggle for, since it is significantly positively related to the firm size that the sellers can achieve. To achieve their goal of firm expansion, new online sellers should aggressively pursue opportunities in the short term, which is a reflection of the “the growth of the fitter” principle. Our findings also suggest that E-commerce platforms may attempt to facilitate the sustained growth path of sellers through including growth path analysis in the evaluation system of online stores.

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