— Despite being an important tool in understanding organisations, most of the life cycle literature is conceptually rather than empirically developed. While a comparison among the life cycle models suggests a generally consistent and predictable sequence of firm development, these models suffer from a wide variance in the number of stages and the measures used to delineate the various development stages. A refined model for firm life cycle stages is proposed in this study that should fulfill two important selection criteria. Its ability to: (1) support a large sample size and (2) capture the relative mix between growth opportunities and assets-in-place to reflect firm value. This study is important because the value in understanding the firm life cycle lies in the ability to identify where the firm is in its life cycle and to recognise critical organisational transitions as well as pitfalls the firm should seek to avoid. This, in turn, will enable managers to make strategic and more informed decisions.
— Firm life cycle, firm value, methodology.
Hartini Jaafar and Hazianti Abdul Halim are with the Department of Accounting and Finance, Faculty of Management and Economics, Universiti Pendidikan Sultan Idris, 35900 Tanjong Malim, Perak, Malaysia (e-mail: email@example.com, firstname.lastname@example.org).
Cite: Hartini Jaafar and Hazianti Abdul Halim, " Refining the Firm Life Cycle Classification Method: A Firm Value Perspective," Journal of Economics, Business and Management vol. 4, no. 2, pp. 112-119, 2016.