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Keywords:

  • business strategy;
  • system dynamics;
  • limits to growth;
  • sustainability;
  • dynamic decision making

Boom and bust patterns are omnipresent in the development of enterprises. An abundance of examples for businesses that grow at first and then collapse can be found. Although evolutionary economists tend to welcome the rising and vanishing of companies and believe in the survival of the fittest (based on competitive market forces), owners and managers of firms have a different concern: they strive for a sustainable business model. However, designing as well as implementing sustainable business strategies is a major challenge. Analysing data from a dynamic decision making experiment, we are able to show that participants struggle with successfully implementing a business growth strategy without either falling into the trap of overshoot and collapse or heavily underperforming in relation to potential success. We relate participants’ sub-optimal performance to the way they invest in and manage relevant business resources in a simulation-based experiment. Copyright © 2012 John Wiley & Sons, Ltd.