Achieving scalability in incumbent firms: Testing and extending the four-stage development model

Abstract

Scalability—a firm’s ability to develop the conditions for potential hypergrowth—has typically been studied in start-ups. This study shifts the focus to incumbent firms, examining whether established companies can develop and leverage scalability. We empirically test and extend a recently proposed four-stage model comprising value recognition, organisational adaptation, strategic renewal, and scalability. Using survey data from over 500 Spanish firms, we employ structural equation modelling and causal inference via Python’s DoWhy library. Whilst our findings largely align with the four-stage model, some nuances emerge. We find that strategic renewal partially mediates the relationship between organisational adaptation and scalability. We also find that firm size strengthens the mediating role of renewal, while lower technological intensity diminishes it, highlighting conditions under which scalability is more likely to emerge. These findings advance understanding of scalability in established firms and provide practical guidance for managers and policymakers seeking to foster hypergrowth.