Resourcing Small and Medium Sized Enterprises (eBook)

Preface 6
Contents 9
Abbreviations 12
List of Figures 14
Chapter 1: The Role of SMEs in Western Economies 19
Introduction 19
Definitions in SME Financing Research 26
Emergence of the Research Subject 29
Previous Research on Financing Irish SMEs 32
Sources of External Finance Available to Irish SMEs 34
Conclusion 38
Chapter 2: SME Financing: A Life Cycle Approach 40
Introduction 40
Life Cycle Theory of the Firm 41
Application of the Life Cycle Approach to the SME Sector 43
Empirical Examination of the Financial Growth Life Cyclefinancial growth life cycle Modelfinancial growth life cycle model 45
Distribution of Debt and Equity Across Age Groups 48
One-Way Anova Post-Hoc Analysis 52
Comparison of Sources of Finance Employed at Start-Up and at Present 53
Data on the Provision of Collateral by Respondentsprovision of collateral by respondents 56
Comparison of Collateral Provision Across Age Groups 56
Comparison of Collateral Provision at Start-Up and at Present 58
Conclusions 59
Chapter 3: SME Financing: Investigation of Firm and Industry Effectsfirm and industry effects 61
Introduction 61
Description of Variables Employed in Multivariate Models 62
Summary Descriptive Data of Dependent Variablesdependent variables 62
Summary Descriptive Data of Independent Variablesindependent variables 64
Tests for Multicollinearitymulticollinearity 66
Multivariate Regression ResultsMultivariate regression results 69
Examining Statistical Significancestatistical significance 76
HeteroskedasticityHeteroskedasticity 77
Investigation of Sectoral Effectssectoral effects 78
Results of Seemingly Unrelated Regression ModelsResults of seemingly unrelated regression models 82
Conclusions 85
Chapter 4: SME Owners´ Financing Preferencesfinancing preferences 93
Introduction 93
Respondents´ Financing Preferencesfinancing preferences 94
External Financing Requirement 97
Perceived Availability of Finance 98
Perceived Internal Growth Constraintsinternal growth constraints 100
Explanations for Respondents´ Financing Preferencesfinancing preferences 101
Control and Managerial IndependenceControl and managerial independence 102
Perception of Funders and Their Requirements 104
Financial ObjectivesFinancial objectives 107
Respondents´ Considerations When Raising External Finance 109
Considerations When Raising Debt 109
Considerations When Raising External Equity 111
Exploration of Signallingsignalling, Trade-Off, And Timing Theories 113
Respondents´ Views on Signallingsignalling Effects 114
Respondents´ Views on Debt-Tax Shielddebt-tax shield Benefits of Debt 115
Respondents´ Views on Timing Considerations 116
Conclusion 117
Chapter 5: Discussion and Conclusions 120
Introduction 120
Discussion of Results 121
Asymmetric Information and Signallingsignalling Theories 121
Agency TheoryAgency theory 123
Trade-Off Theory 125
Implications for Future Researchfuture research 125
Policy ImplicationsPolicy implications 126
Implications for SME Firm Owners 128
Implications for Funders 128
Findings in Relation to Initial Research Objectivesresearch objectives 129
Firm Characteristics 129
Owner Preferences 130
The Financial Growth Life Cyclefinancial growth life cycle Modelfinancial growth life cycle model 130
A: Research Methodologymethodology and Profile of Respondents 132
Introduction 132
Data CollectionData collection 132
Selection of the Sample Framesample frame 133
Development of the Questionnaire Instrumentquestionnaire instrument 136
Elements Incorporated to Improve Response Rateresponse rate 138
Piloting and Testing the Questionnaire Instrumentquestionnaire instrument 140
Profile of RespondentsProfile of respondents 142
Age Profile of Respondents 142
Sectoral ProfileSectoral profile of Respondents 144
Size ProfileSize profile of Respondents 144
Respondents´ Expenditure on Research and Developmentexpenditure on research and development 145
Export ActivityExport activity of Respondents 146
B: Previous Related Literature 151
Introduction 151
The Modigliani and MillerModigliani and Miller Propositions 152
Static Trade-Off Theorytrade-off theory 153
Application of Trade-Off Theorytrade-off theory to the SME Sector 155
Asymmetric Information and Signallingsignalling Theories 158
Application of Asymmetric Information and Signallingsignalling Theories to the Sme Sector 160
Agency TheoryAgency theory 163
Application of Agency Theoryagency theory to the SME Sector 164
Empirical Evidence of Determinants of SME Capital Structure 169
``Firm Characteristic´´ Studies 170
``Owner Characteristic´´ Studies 177
Conclusion 179
C: Sectoral Classification of Sample Framesample frame by NACE CodesNACE codes 193
D: Supplementary Tables Referenced in Chapter 4 195
References 201
Index 218