Expansion strategies of sole practitioners in Japan: how resource and client scope affect the business growth rate

Strategic management research predominantly focuses on large organizations, leaving a critical gap in understanding how resource-constrained sole professionals achieve growth. Unlike larger firms that leverage organizational division of labor, sole practitioners face severe limitations in time and cognitive resources that fundamentally constrain their strategic options. This study examines 306 Japanese patent attorneys operating as sole practitioners (2002–2010), using panel data (1,865 observations) and fixed-effects models with lagged predictors to examine how resource and client scope affect growth. Resource concentration shows a positive association with business growth (β = 0.466, p < 0.01), though causality tests reveal this relationship may reflect post-growth adaptation rather than a growth driver. Client expansion demonstrates a robust negative causal effect on performance (β = −0.013, p < 0.01). These findings directly challenge conventional diversification advice for small businesses: sole professionals achieve superior business growth by deepening existing client relationships and expertise rather than pursuing new opportunities. These results also apply to knowledge-intensive sole professions globally, such as consultants, accountants, and lawyers. In these professions, individual cognitive constraints strongly influence strategic decisions. This study contributes to entrepreneurship theory by demonstrating that strategies effective for large firms prove counterproductive for individual professionals, who must prioritize focus over diversification to achieve growth.