Does a Long-Term Orientation Lead to Faster Growth? Firms’ Temporal Orientation and the Growth Process

Abstract

This article investigates how firms’ temporal orientation—operationalized through their investment horizon—influences the growth process. We propose that longer investment horizons reflect a forward-looking orientation that facilitates resource accumulation and capability development, ultimately supporting firm expansion. However, we also argue that excessively long horizons may lead to diminishing returns due to organizational frictions and coordination constraints. We find an inverted U-shaped relationship between investment horizon and growth in fixed assets, employment, and sales. These findings underscore the complex role of temporal orientation in shaping distinct aspects of firm growth.