Study Of Growth Of Firm And Capital Model Selection

Enterprise growth model、quality and speed have immediate influences on the progress of human society and the way and quality of economic development. Science and technology will be the primary productive force in the social productivity factors. Not only human resources, monetary capital, machinery and equipment, land and other natural resources, are essential factors of production; but also technology, information and knowledge are essential factors of economic development. On the whole, how is the configuration status of essential productive factors of Chinese enterprises, what is the allocation proportion of new production factors such as technology, information and knowledge in the total assets of Chinese firms, how to configure the elements capital to achieve the sustainable, rapid and healthy growth of the enterprises, what is the production factor that Chinese enterprises are most lack of. Such issues are closely associated with firm growth during China initial stage of market economy, and the capital configuration and capital investment in enterprises. Growth of firm has been a hot issue of the international academic research economy. However, currently in China, the study of firm growth is still in an early stage, there are diversity views in some associating research literatures, unified research hypotheses and academic consensus has not yet formed. The main representative of theory of growth of firm is Edith Penrose (Edith. T. Penrose) professor, in her important book "The theory of the growth of the firm", she explained and verified in comprehensive and deeply way that enterprise resource investment and optimal allocation are critical theories of the growth of firms. Professor Edith Penrose’s theory of firm resource growth is one of the important reasons for this article topic selected.My teacher, Professor Luo Fukai has been concentrated on studying the corporate capital theory in the past ten years; with the view of production factors capitalization, he utilizes corporate financial foundation theory and does a lot of researches of the association between growth of firm and new capital elements. He thinks that the key sustainable development of firms depends on firm numerous production elements effective capitalization and balanced configuration. Research shows that firm growth is the result of mutual effect of many elements capital. Based on this, this paper attempts to take the enterprise capital theory as the basis to carry out the study of enterprise growth. In this paper, the issue studied is internal association between growth of firm and configuration of many elements capital. Growth of firm need continuous inputs of human resource, financial resource, material, technology, information and other production factors, as firm is actually am aggregation of various factors of production. The differences in firm scale, growth stage and the way, will enable firms to change core capital and absorb other elements capital. This requires an explanation in theory, and given the strategic choice in practice. By absorbing modern economics, management regarding basic theory of growth of firm, the purpose of this study is to explore the intrinsic link of general corporate survival and sustainable development and corporate capital allocation approach. Thus from the perspective of corporate finance for enterprise sustainable growth theory, I try to explore the link between growth of firm and multiple-output from elements capital investment proportion and other capital allocation, thus demonstrate theory of growth of firm in China.This study has important academic value of financial theory and practical significance. First, the theoretical value of this research is to theoretically clarify the market economy under the background of economic transition, the objective existence of elements capital, and how to configure. Empirical methods will be used to illustrate the impetus effect of elements capital to firm growth, and clarify the important role of technology capital in the enterprise growth. Secondly, the paper studies the practical application values are as followed:(1) Firms can thus fully understand the basic rules of growth of firm, and understand it as a progress of the corporate capital structure optimization and configuration capabilities to enhance the value creation. Scientific and effective planning and configuring the amount of human capital, monetary capital, physical capital, technology capital, information capital and knowledge capital and other elements capital, measure and analyze the proportion of elements capital allocation, improve the quality and level of financial management. (2) Research on the relationship between growth of firm and capital allocation, can convince entrepreneurs that only by elements capital reasonable allocation, proper amount, and reasonable configuration, can make firms to grow healthy and sustainable. This allows entrepreneurs to pay attention to its all elements capital production input and output, and revenue costs. (3) This paper shows that it is the decisive or critical role to growth of firm by how much it has the emerging capitals such as technology, information and knowledge, regardless its size and industry.This paper is mainly taking the normative analysis method, at the same time closely linked with the reality of our country enterprise growth, prioritized with theoretical analysis, supplemented by case studies and the fact, combined theory with practice to complete this article writing. Theoretical literature summarized comparative study of different growth experiences of firm, which is the concrete analysis of the main research methods adopted. Involved case study will be tested with empirical methods, which is the direct reflection of the case analysis. Technical route used mainly two:the first is the theoretical analysis and discussion. It reviews and discusses the main theoretical studies of different schools of growth of firm, as well as many elements capital allocation issue in the growth of firm. I not only review extensive literature, summarize the current status of research national and abroad, find flaws and shortcomings, in order to provides direction and ideas for research and identify the innovation of this paper; but also careful study previous research study methods and experience in order to provide guidance and assistance for writing this paper. The second is research of firm actual situation, then analyze by case studies. As this article hopes to find relevance of growth of firm and elements capital, and this method can be applied in practice, it needs practice tests, so it is necessary to conduct research related firm samples to verify the conclusions of this paper.The paper has the advantages of novel topic and the research content of original nature. There are not many research papers about combining growth of firm and capital option in domestic scholars. Therefore, this paper has significant theoretical frontier living and innovation. Firms’ sustainable growth is the essence of multiple heterogeneous elements within the enterprise capital allocation balanced. The capital allocation approach and theory proposed in corporate financial management are original and frontier. The specific manifestations are:(1) Theoretical Basis of this paper. Although many factors related to growth of firm, its essence is the growth of value creation capabilities. Value creation is from all kinds of capital inputs and their rational configuration. Only by capitalizing production factors, it will create value. Manpower, money, equipment and plant, technology, information and knowledge are production factors. When these production factors are converted to the production capital, they can become a source of value creation. (2) Study of growth of firm and multi-elements capital allocation. The study links growth of firm with elements capital investment, to explore growth of firm by the configuration of elements capital, and solve problems facing of growth of firm in China with a new perspective. Only the rational allocation of production elements capital can maximize firm benefit. Differences of capital option will directly impact on firm development way and operation strategy. (3) Describe internal relations of growth way of firm and its corresponding configuration of multi-elements capital. Empirical analysis verified that our country enterprises are most lack of technology capital investment. Technology is the biggest obstacle to China’s economic development. So, on one hand, this paper extends the capital theory research, which combining with enterprise contract theory, to explain and rich enterprise sustainable growth theory. Firm growth is the result of a variety of heterogeneous capital allocation optimization. On the other hand, this paper enriches the connotation of assets, liabilities and owners’equities, which pilot capital into accounting theory vision. The heterogeneous elements capital’s accounting is the future direction of accounting research and development. This is mainly embodied originality and innovation in this paper. In addition, the study found that the main content of corporate financial strategy is the planning enterprise growth and the way of heterogeneous capital allocation. This study extends the company’s financial strategy research depth and width. Research shows that the company’s financial strategy is no longer a financial activity strategy, but multi-heterogeneous capital allocation strategy. Emerging technology capital、information capital and technology capital’s configuration optimization have replaced the financial strategy、investment strategy and profit allocation strategy.This paper is divided into seven chapter.The first chapter explains the reasons for the research topic selected、research background、 research issues、the purpose and significance、research ideas and research methods, expounds the main content and innovation. Chapter Two Literature Review, review and comment on the issue of the academic research results, describing the progress of academic research and growth of firm related to elements capital allocation, describes the theoretical basis of the research issues. Chapter three is to study relevance of enterprise growth and capital allocation approach. This is a basic theory analysis. This chapter is the core of the whole thesis. It mainly explores general rule of capital investment proportion and configuration way, as well as difference of benefit and cost from multi-factor capital allocation. Subsequent sections of this paper are essentially derivative of this chapter. The fourth chapter is the adjustment of business model and its corresponding capital configuration during growth of firm. At different stages of the life cycle, firm will take different business model, and it will be different of its corresponding capital configuration and amount. Chapter fifth is case study of capital configuration of growth of firm. This is a comprehensive analysis of the chapter discusses both theoretical and realistic examples of decomposition analysis. The sixth chapter is the study of technology and capital investment and other elements of capital allocation. This is because technology capital is the main capital in new capitals. Rapid growth of science and technology and extensive application of information technology makes fundamental changes in the mode of production. Technology capital investment and rational allocation with other capital is a fundamental financial work of growth of firm. Chapter seventh is the conclusion and inspiration. This chapter summarizes the main findings of the paper with its advantages and disadvantages.