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Financing constraints and SME innovation during economic crises
Abstract
Purpose
The purpose of this paper is to provide a better understanding of the determinants of small and medium-sized enterprises (SME) financing constraints and their impacts on investments in innovation. To explicate these factors, the authors use a general definition of innovation, distinguishing between product and process innovations, and highlight the role played by banking relationships.
Design/methodology/approach
On the basis of a literature review covering works specializing in innovation, financing constraints, and SME characteristics, a quantitative study is carried out in Spain, using a sample composed by 267 Spanish SMEs. Information was gathered by applying surveys addressed to the firm managers.
Findings
The findings reveal that financing constraints hinder innovation among Spanish SMEs functioning in hostile environments, though long-term banking relationships can moderate these financing constraints. The longer the duration of a firm’s banking relationship, the fewer financing constraints it faces, because the relationship significantly reduces information asymmetry.
Practical implications
To reduce financing constraints on their innovation, SMEs should establish long relationships and low debt concentration with their main bank. The more banks a firm works with, the greater its financing constraints. The findings have managerial implications, not just for firms but also for government policymakers and providers of consulting services.
Originality/value
This paper provides an in-depth analysis of the factors that affect innovation, along with insights into which financing constraints limit innovation during a severe recession.
... The cost of innovation affects the ability of technological innovation, to the extent that it supports the company's innovation strategy (Wang, 2019). Some studies also found that access to finance is the most Barriers to technological innovations pressing obstacle in SMEs (Madrid-Guijarro et al., 2016) because investments in innovation are regarded as intangible investments. This happens because of its high uncertainty regarding the success achieved through investment in innovation. ...
... Therefore, financial entities may be unwilling to lend for such investments because of the absence of a collateral value (Dinh et al., 2012;Mason, 2013;Mina et al., 2013). This impedes investment in innovation (Madrid-Guijarro et al., 2016). As a consequence, innovation will be low because of a shortage of financial resources (Chundakkadan and Sasidharan, 2019). ...
... The enterprises that have financial limitations tend not to invest in innovation. This is because they are affected by long-term macroeconomic instability and difficulty in getting innovative and supportive equipment (Scozzi et al., 2005;Belitz and Lejpras, 2016;Madrid-Guijarro et al., 2016). However, economic uncertainty tends to encourage enterprises to innovate to remain competitive and survive (Madrid-Guijarro et al., 2009). ...
Purpose
This study aims to analyze the inhibiting factors of small and medium enterprises (SMEs’) technology innovation, supporting institutions for SMEs technology innovation development, SMEs’ technology innovation development model and strategies for developing SMEs in technology innovation.
Design/methodology/approach
This is a mixed-method research project conducted through a survey of SMEs in Riau Province, Sumatera Indonesia (primarily in the districts of Siak, Kampar and Pelalawan) from April to July 2019. SMEs that have been operating for at least five years were chosen purposively as samples. Based on the requirement, there are 277 entities used in this study. A focus group discussion (FGD) was also conducted to formulate SME models and development strategies in technological innovation. In addition, in-depth interviews and observations were also carried out on technological innovations undertaken by respondents.
Findings
It was found that there are five inhibiting factors of SMEs’ technology innovation: government support, quality of human resources, funding of technological innovation, economic conditions and business partners. The biggest inhibiting factor remains to be the funding of technological innovation. Therefore SMEs provide independent technological innovation costs to develop technological innovations for business sustainability. Supporting institutions for developing SME technology innovation consist of government institutions, private institutions, financial institutions (banks) and nonbank financial institutions. To survive and excel amid competition, SMEs need to pay attention to technological innovation. The business strategy that needs to be done is to improve services to consumers and improve their attitude toward innovation in the implementation and development of SMEs’ businesses.
Research limitations/implications
This research is limited to research on the inhibiting factors for SME technology innovation from the aspect of the production sector. This research has not studied various business fields in the trade, service and digital SME sectors. Future studies can reveal factors inhibiting SME technological innovation, except production aspects and various SME business fields. In addition, this study has not analyzed the cost of technological innovation provided by SMEs. Therefore, future studies could also reveal the large costs of technological innovation provided by SMEs.
Originality/value
This research investigates barriers hindering the SMEs’ technological innovations in Southeast Asia, including Indonesia as a maritime country. It also formulates strategies to reduce the barriers to SME’s technological innovation and contributes to the development of knowledge of technological innovations in SMEs. Moreover, this paper involves investigating government support from a nonfinancial aspect. To the best of the authors’ knowledge, this aspect has not been much discussed by studies on innovation at SMEs till now.
... Login options via Gmail, Facebook, etc. should also be available on the customer portal since it can be costly for SMEs to pay for servers to store their customers' data securely. These options speed up and simplify customer access to SMEs' portals, lowering companies' data storage service costs (Adinarayana and Kishore Babu, 2019;Madrid-Guijarro et al., 2016;Pacheco et al., 2019). ...
... It is worth noting that SMEs should have a cloud backup and data recovery system when using these technologies, as they are more affordable. They can maintain the continuity of their operation in case of eventual problems with the use of technologies (Cheung and Bell, 2021;Cobelli and Chiarini, 2020;Madrid-Guijarro et al., 2016). ...
Purpose
Small and medium-sized enterprises (SMEs) are fundamental to the socioeconomic development of a country or region. They directly contribute to increasing employment generation and improving income distribution. Despite the importance of SMEs, there are still opportunities for developing works that support and guide SMEs to use digital technologies, especially to digitalize their customer service. Therefore, this work aims to propose drivers containing recommendations for developing and improving the digitalization of customer service in SMEs.
Design/methodology/approach
This work uses a qualitative approach to systematize the main SMEs' characteristics and identify the boosting elements of the digitalization of customer service in the scientific literature. To this end, the authors conducted a content analysis of the most influential empirical and theoretical articles on the theme published from 2016 to 2021 in the Scopus database.
Findings
This work identified 38 boosting elements of the digitalization of customer service based on the scientific literature. These elements were grouped into six drivers for developing and improving the digitalization of customer service. The drivers contain recommendations that were adapted for SMEs according to their characteristics and based on the experience of the authors of this work.
Originality/value
This work contributes to promoting socioeconomic development, providing important solutions for managers and owners of SMEs to improve their customer service. The proposed drivers support and encourage the use of digital technologies for developing and improving customer service, overcoming the challenges of digitalization in these companies. Thus, SMEs will be able to increase the satisfaction of their customers and improve their competitiveness.
... In particular, the financial status of may make the company unable to implement MAPs. This is supported by Wang (2014), Kim et al. (2016), andMadrid-Guijarro et al. (2016), who pointed out that financial accessibility constraints are a significant factor negatively affecting innovation. According to Otley (1980) and Ittner et al. (2003), environmental and organizational factors influence the use of MAPs. ...
... As demonstrated by the interview findings, the financial status of the companies makes them unable to implement MAPs. This is supported by the findings of Wang (2014), Kim et al. (2016), andMadrid-Guijarro et al. (2016), who indicated that financial accessibility constraints are a significant factor negatively affecting innovation. In this regard, Otley (1980) and Ittner et al. (2003) mentioned that environmental and organizational factors influence the use of management accounting. ...
Fraud Risk Assessment (FRA) is claimed to be an important activity at the audit planning stage in both the private and public sectors. In fact, because of the importance of FRA activities, Auditing Standards (SAS 99, ISA 240, ISSAI 1240) have required auditors to carry out FRAs at the audit planning stage. FRA is considered as the core activity of financial audit planning because of the impact of fraud on the sustainability of an entity, quality of life, and economic growth. This study aimed to determine the practice of FRA in public sector audits and to find out more about the obstacles faced by auditors during the audit process and to find out the causes of these obstacles by considering the approach to the Audit Standards used. This study found that auditors’ performance can be determined based on their complete compliance with audit standards. We have encountered a serious problem that requires firm action from the government or a competent official, namely the auditor’s willingness in preparing the Fraud Risk Assessment Matrix. In addition, we recommend the Audit Standards Board to adopt international public sector auditing standards and disseminate them through training for auditors, students, and professionals. Keywords: fraud risk assessment, public sector audit, auditor competency
... In particular, the financial status of may make the company unable to implement MAPs. This is supported by Wang (2014), Kim et al. (2016), andMadrid-Guijarro et al. (2016), who pointed out that financial accessibility constraints are a significant factor negatively affecting innovation. According to Otley (1980) and Ittner et al. (2003), environmental and organizational factors influence the use of MAPs. ...
... As demonstrated by the interview findings, the financial status of the companies makes them unable to implement MAPs. This is supported by the findings of Wang (2014), Kim et al. (2016), andMadrid-Guijarro et al. (2016), who indicated that financial accessibility constraints are a significant factor negatively affecting innovation. In this regard, Otley (1980) and Ittner et al. (2003) mentioned that environmental and organizational factors influence the use of management accounting. ...
Management Accounting Practices (MAPs) usage among Small and Medium-sized Enterprises (SMEs) and their implications are examined in this paper. 291 sets of questionnaires were dispersed and six interviews were conducted to gather the data. The usage frequency of individual practices and thematic analysis are deliberated, and the results denote the comparatively low MAPs usage rates among Jordanian SMEs as opposed to those in developed countries. Nonetheless, the reported rates in Jordan are comparable to those in developing countries. Among SMEs, MAPs significantly allow product cost information determination, planning and controlling, and detection of problems. Shortcomings of the traditional system, previous experiments of large companies, and external factors, are considered as the main reasons that motivated SMEs to use MAPs. Insufficient experience, lack of financial resources, and the high costs associated with implementing MAPs are the most crucial reasons that forced SMEs to neglect to use a lot of MAPs. The present study enriches the knowledge of MAPs in the context of SMEs. Also, the significance of MAPs among SME managers is highlighted. Equally, this study should stimulate additional scrutiny and analysis of MAPs amongst SMEs. Keywords: management accounting practices (MAPs), small and mediumsized enterprises (SMEs), Jordan, diffusion of innovations theory
... SME are known by their limited access and availability to some speci¯c resources compared to large enterprises [Igbaria and Tan (1997); Nieto and Fern andez (2005); El-Gohary (2012); Madrid-Guijarro et al. (2016)]. Consequently, SME does not adopt IT under the pretext of the lack of resources in the enterprise [Carson and Gilmore (2000);Bhagwat and Sharma (2007); Nguyen and Waring (2013)]. ...
... Financial/Economic resources are known for years among the most decisive and critical resources to companies' performance and success [Rangone (1999); Madrid- Guijarro et al. (2016); Gutmann et al. (2016)], particularly in SME, which su®er from the lack of ¯nancial resources to invest in new projects (most SME owners invest their own personal capital) [Fuller-love (2006); García P erez de Lema and Dur endez (2007); Nguyen and Waring (2013); Laufs et al. (2016)]. Furthermore, Premkumar [2003]; Hamdan and Yahaya [2016] have approved that the high costs of IT is one of issues hindering IT adoption and use within SME. ...
While information technology (IT) has grown rapidly in enterprises, scholars have emphasized the importance of IT factors and aspects, while limited attention has been paid to the barriers and challenges facing the adoption of IT. In light of this, we stress the importance of barriers inhibiting IT adoption within Small and Medium Enterprises (SME). For this purpose, this paper aims to create a systematic literature review in order to provide a better understanding of barriers to IT adoption within SME. On the basis of 132 selected studies, we identify 18 barriers categorized according to internal and external parameters. Finally, we underline a synthesis and avenues for future research, and provide scientific and managerial implications and guidance for the adoption of IT in SME.
... Moreover, having a credit relationship with multiple banks is regarded as a signal of shopping around for a bank that will give credit to a low-quality SME The duration of bank-borrower relationships is also identified as a determinant of bank loan accessibility. Several studies show that a longer relationship with the main bank lowers the likelihood of credit rationing (e.g., Agostino & Trivieri, 2017;Angelini, Di Salvo, & Ferri, 1998;Bharath, Dahiya, Saunders, & Srinivasan, 2011;Cenni et al., 2015;Madrid-Guijarro, Garcia-Perez-de-Lema, & van Auken, 2016). Having a long-run relationship with a bank provides the bank with thorough knowledge about the characteristics of the SME and thus eases access to bank financing. ...
... Moreover, Cole (1998) contends that banks generate soft information about firms when they have long-term credit relationships with them; as a result, the asymmetric information problem is alleviated. Numerous studies find that a longer relationship with the main bank lowers the likelihood of credit rationing (e.g., Agostino & Trivieri, 2017;Angelini et al., 1998;Bharath et al., 2011;Cenni et al., 2015;Madrid-Guijarro et al., 2016). In an emerging-market study, Bakiciol (2017) provides evidence that the duration of the relationship with a bank has a negative effect on the risk-adjusted financing costs of firms. ...
To contribute to the small and medium-sized enterprises (SMEs) financing literature, this paper uses a unique sample of 492 Turkish SMEs to analyse the firm-level determinants of SME perceptions of bank financing accessibility. Logistic regression results reveal that older and relatively more innovative firms are more positive about their ability to secure bank loans, as are SMEs that have longer relationships with their oldest banks. Firms with two owners are more inclined than firms with a single owner and firms with three or more owners to perceive accessing bank loans as easy. This finding signals that although bank loan applications of firms with two owners have higher credibility than those of firms with a single owner, having more than two owners creates more complex agency problems for banks. Compared with firms incurring a loss, firms that make a profit or break even perceive it to be easier to obtain bank financing. SMEs in the service industry are more positive about accessing bank loans than are firms in manufacturing and other industries.
... These numbers include any working owners, fully paid employees, unpaid family members and apprentices. The European Union defines an SME [10] defines an SME on the elements of headcount, annual turnover and the balance sheet amounts as depicted in the Table 1. SME'S play a pivotal role in Kenya's economy they play a key role in economic development. ...
Aims: Small and medium enterprises (SMEs), create jobs and contribute to GDP but SMEs in Kilifi County are facing stagnation and high failure rate. This study set out to test three hypothesis i.e. process innovation has no significant effect on financial performance of SME's, product innovation has no significant effect on financial performance of SME's & Structured innovation has no significant effect on the financial performance of SME's. The study is anchored on Theory of Technology Acceptance Model (TAM), Diffusion of innovation Theory and Kane's Theory of Innovation. 59 Study Design: The study employed explanatory research design with use of both qualitative and quantitative data approaches. Place and Duration of Study: The study was carried out in the year 2021/2022 in Kilifi County in Kenya. Methodology: From a target population of 496 registered SMEs, a Sample size of 216 SMEs was drawn using simple random sampling with use of self-administered questionnaires with both open and closed ended questions collecting data from managers/owners of the SMEs. Results: Correlation results indicated that innovation (product, process and structural) are significantly associated with financial performance. Regression results revealed existence of a significant effect of each innovation on Financial Performance; Business Structural Innovation (B=.106, p= .001), Process innovation (B=.289, p=.003) and Product innovation (B=.143, P<.001). Conclusions: A key finding is that only one in every five SMEs in Kilifi are past their 8th birthday. Business innovation has the highest variability suggesting most of the SMEs configure their businesses to market needs. Despite business innovation being low in SMEs, it is the most yielding when it comes to its effect on financial performance. Compared to business and process innovation, product innovation has least differences among the SME. It is conclusive that innovation among the SMEs is still low but the innovation-pursuing SMEs are also performance leaders.
... Furthermore, Cole (1998) believes that when banks have long-term loan relationships with companies, they create soft information about them, therefore alleviating the asymmetric information problem. Numerous studies have found that having a longer relation with the primary bank reduces the risk of credit rationing (Angelini et al., 1998;Agostino & Trivieri, 2017;Bharath et al., 2011;Cenni et al., 2015;Madrid-Guijarro et al., 2016). As a result, we suggest that the length of the firm's association with its oldest bank is related to a good opinion of bank funding accessibility. ...
This paper investigates the determinants of banks' contribution to financing Lebanese SMEs using data from 2013 and 2019, pooled in a combined panel. The study focuses on factors such as firm size, bank account possession , informal competition, interest rate, location in capital city, external audit, female top manager, years without formal registration, collateral requirements, and the duration of SME-Bank relationships. The empirical analysis reveals that firms' size and the length of relationship duration affect loan approval, with larger firms less likely to have loans. Banks prefer to build long-term credit relationships with customers, but only one SME characteristic, having a checking or savings bank account, has a negative significant effect on loan rejection. Another regression test tested the proportion of investments financed by banks, focusing on the economic sector, location of firms in capital city, interest rate, proportion of working capital financed by banks, SME's size, and duration of the relationship. Results show that firms using banks to finance their working capital (WCF) attract the most funds (BD). High interest rates can make loans expensive and unaffordable, leading to a decline in bank-financed investment. The consistency of the results between panels with grouped data and those with a binary variable to control for the year reflects the rigor of the Lebanese banking sector, but the difference in intensity could be attributed to macroeconomic conjunctures.
... These numbers include any working owners, fully paid employees, unpaid family members and apprentices. The European Union defines an SME [10] defines an SME on the elements of headcount, annual turnover and the balance sheet amounts as depicted in the Table 1. SME'S play a pivotal role in Kenya's economy they play a key role in economic development. ...
Aims: Small and medium enterprises (SMEs), create jobs and contribute to GDP but SMEs in Kilifi County are facing stagnation and high failure rate. This study set out to test three hypothesis i.e. process innovation has no significant effect on financial performance of SME’s, product innovation has no significant effect on financial performance of SME’s & Structured innovation has no significant effect on the financial performance of SME’s. The study is anchored on Theory of Technology Acceptance Model (TAM), Diffusion of innovation Theory and Kane's Theory of Innovation. Study Design: The study employed explanatory research design with use of both qualitative and quantitative data approaches. Place and Duration of Study: The study was carried out in the year 2021/2022 in Kilifi County in Kenya. Methodology: From a target population of 496 registered SMEs, a Sample size of 216 SMEs was drawn using simple random sampling with use of self-administered questionnaires with both open and closed ended questions collecting data from managers/owners of the SMEs. Results: Correlation results indicated that innovation (product, process and structural) are significantly associated with financial performance. Regression results revealed existence of a significant effect of each innovation on Financial Performance; Business Structural Innovation (B=.106, p= .001), Process innovation (B=.289, p=.003) and Product innovation (B=.143, P<.001). Conclusions: A key finding is that only one in every five SMEs in Kilifi are past their 8th birthday. Business innovation has the highest variability suggesting most of the SMEs configure their businesses to market needs. Despite business innovation being low in SMEs, it is the most yielding when it comes to its effect on financial performance. Compared to business and process innovation, product innovation has least differences among the SME. It is conclusive that innovation among the SMEs is still low but the innovation-pursuing SMEs are also performance leaders.
... Financing is a key component of the innovation environment of technology-based micro-enterprises, and effective financing directly affects the development of technological innovation (Madrid-Guijarro et al., 2016). Several studies have shown that money has a significant impact on the real economy and even on technological innovation. ...
Due to the new technological revolution, digital finance and business development have also brought risks and challenges. Financial risk arises when the lack of effective and timely risk management leads to insufficient liquidity. The digital finance of Chinese micro-enterprises is the product of economic innovation. Due to the relatively unhealthy state of China’s financial market, there are certain uncertainties in the financial market, which can cause financial losses to the company and increase the uncertainty of the company’s financial activities and financial risks. On the other hand, the role of digital finance helps companies raise sufficient funds efficiently, cheaply, and quickly, reducing their motivation to obtain highly leveraged financing, reducing corporate debt, improving the stability of national financial risks, and thereby reducing financial risks. This paper studies the impact of the development of digital finance on the financial risks of non-financial companies listed on China’s A-share market from 2011 to 2020 and concludes that developing digital finance can reduce financial risks by reducing financial constraints and improving information asymmetry. Governance has a positive impact on regulating the relationship between the development of digital financial systems and corporate financial risks, especially the financial risks of small private companies that are limited by the development of digital financial systems. Secondly, from the perspective of economic constraints and data asymmetry, this article expounds the impact of the development mechanism of digital financial instruments on corporate financial risk. Thirdly, it analyzes the different impacts of the development of digital finance technology on corporate financial risk from the perspectives of enterprise size and ownership. Therefore, this article conducts an in-depth study of the limitations and information asymmetry of financing for small and medium-sized enterprises — the development of digital finance and corporate financial risks.
... The formation of an innovation ecosystem driven by the entrepreneur at its core is proposed (Groth et al., 2015). Porter (2001) points out the importance of the external environment for the success of innovation activities and expanded to examine other influences on firm innovation including the level of external openness (Huse et al., 2005), human capital (Mariz-Perez et al., 2012;Prajogo & Oke, 2016), the tendency of government intervention (Luo et al., 2021;Zhong & Tang, 2018), stimulated by regulatory policies (Ai et al., 2020;Zhang et al., 2020), the factor market distortion (Yin et al., 2018), urbanization (Ki, 2001), geographical proximity , macro factors (Esmailzadeh et al., 2020), financing constraints (Brown et al., 2012;Madrid-Guijarro et al., 2016), and anti-corruption to optimize the business environment (Xu & Yano, 2017). In general, firms should promote technology and business model innovation in a resource-rich portfolio approach (Halme & Korpela, 2014). ...
The purpose of this study is to explore what are the determinant influencing factors of the dilemma faced by state‐owned enterprises (SOEs) in implementing innovation‐driven development strategy (IDDS), to propose a suitable localized theory. It also suggests specific actions to break the post‐effects dilemma with the support of this theory. Based on the innovation‐driven survey data of provincial SOEs in Gansu Province, this study adopts grounded theory to conduct exploratory research. This paper constructs a behavior process model of “pre‐motivation, innovation path, and post‐effects dilemma” to drive SOE's innovation and expounds on the incidence relation among the three. The results show that the external administrative force and institutional mechanism drive have both indirect and direct impacts on the innovation path choice of SOEs. The endogenous drive is distorted by external administrative force and institutional mechanism drive, leading to the limited innovation path choice and post‐effects dilemma. This paper puts forward the theory of “Attribute Imbalance–Weakened Autonomy–Sluggish Innovation” and explains why it is sometimes difficult to implement the IDDS of SOEs. However, there are some regional limitations in the application scenarios of the theory. Whether it has broader implications need to further explore. Future theoretical testing should be conducted with a sample of SOEs in developed market regions. It is possible to study the differences in the degree of government intervention in SOEs, the ways of intervention, and the impact of these differences on SOEs' balancing dual attribute conflicts.
... Hal tersebut menjadi sebuah tantangan yang harus dihadapi oleh setiap pelaku didalam industri untuk dapat bersaing dengan yang lain. Terutama dalam usaha skala kecil dan menengah yang masih berhadapan dengan berbagai tantangan internal seperti pengelolaan usaha yang masih sederhana, transaksi yang berlum terorganisir dengan baik, keterbatasan teknologi yang digunakan, keterbatasan modal, persoalan rantai pasokan, hingga transfer pengetahuan yang belum terdokumentasi dengan baik (Agostino & Trivieri, 2019;Irjayanti et al., 2016;Irjayanti & Mulyono Azis, 2013;Madrid-Guijarro et al., 2016;Oh et al., 2012;Tejaningrum et al., 2016). Sementara sebuah usaha dapat mencapai tujuan produksinya jika memiliki efektifitas dan efisiensi yang baik. ...
Layout design is important in managing material flow, productivity and human relations within the factory. There are 8 work stations at the Java Preanger Gunung Tilu Coffee Factory, namely warehouse, weighing, washing, pulping machines, huller machines, sorting and roasting machines. This study aims to determine the initial layout of the factory and to compare the initial layout with the proposed layout using descriptive methods with the Activity Relationship Chart (ARC) method, which shows the importance of whether or not a department should be approached in order to create company work efficiency. Then a comparison is made between the mileage of the initial layout and the proposed layout. The results showed that the production process flow was irregular because the distances were not suitable and far apart and the total displacement was 43,808.4 meters. By applying the Activity Relationship Chart (ARC) method, several parts of the factory experienced a change in position which resulted in a proposed layout with reduced mileage during the production process from 61.6 meters to 43.5 meters and the number of displacements reduced to 31,271.5 meters
... According to SMEs, economic risk (49.7%) and market risk (48.6%) are the most significant risks that have a negative effect on the business environment in the Slovak Republic. These conclusions consistently follow the findings and perceptions of Madrid-Guijarro [92] and Lee [93]. In a sample of 193 SMEs in the Slovak Republic, Ivanová [84] found that enterprises have difficult access not only to external sources of financing in the form of bank loans but also to funds and grants from the European Union. ...
This article aims to determine the disparities between SMEs in management and risk management depending on the type of management, age, and size of SMEs in the business environment of Slovakia. The case study was conducted in 2019/2020 on a sample of 362 owners and top managers of SMEs. The hypotheses were verified using statistical methods—the Pearson chi-squared test and the Z-test. The results show that SMEs are more involved in risk management than microenterprises. Process-driven SMEs largely perceive market risk. Medium-sized enterprises perceive personnel risk more intensely than microenterprises and small enterprises. Not even one out of every five owners or top managers can manage risks, and more than 15% of SMEs do not conduct any risk management activities. Financial reserves and insurance are the most used risk reduction measures in SMEs. The purpose of the survey is to strengthen the resilience of SMEs and to find out the causes of the weakening of resilience concerning the investigated risk factors. The creation of integrated management systems presupposes the inclusion of the risk management system among other management systems. By implementing risk management, it is possible to increase the efficiency of management systems.
... For SMEs, resources are often limited and these constraints can interfere with their ability to survive (Andrade-Valbuena et al., 2017;Mishina et al., 2004). 2 The literature on SMEs suggests that resource constraints negatively affect different processes from the detection of demand and supply opportunities (van Burg et al., 2012) to deferment of innovation activities (Andrade-Valbuena et al., 2021;Laforet & Tann, 2006;Madrid-Guijarro et al., 2016). As existing resources are depleted, managers are compelled to disband or search for new resources (Sapienza & Gupta, 1994). ...
This study analyzes how the resources and capabilities of the owner-manager influence the firm’s capacity to survive during crises. We conceptualize that only the deliberate use of available resources (bricolage) can enhance this capacity, and that “making-do” behaviors mediate the influence of the owner’s social and human resources on the firm's capacity to survive crises. Based on a sample of 462 Chilean owner-managed small and medium enterprises (SME), we test our hypotheses using a complementary partial least squares-structural equation modeling (PLS-SEM) and fuzzy set-qualitative comparative analysis (fsQCA) approach. The results indicate that when founders deliberatively use their social and cognitive resources, they enhance the firm’s capacity to survive in crisis environments. The fsQCA results complement these outcomes by showing that low levels of survival capacity are related to low levels of bricolage and founders’ ties.
... Financial support is an effective means to reduce poverty and increase income, and a lack of finance may lead to a widening income gap owing to financial constraints (Yu & Lu, 2021). Finance can optimise resource allocation (Tian et al., 2021), reduce financing constraints (Madrid-Guijarro et al., 2016), promote household consumption , and increase economic growth (Ye et al., 2021). ...
This study examined the effect of digital financial inclusion in reducing the urban–rural income inequality in China. Based on city-level panel data, the results showed that digital financial inclusion narrowed the urban–rural income gap significantly by boosting economic growth. The results were robust when the core explained variables were replaced. Heterogeneity analysis showed that digital financial inclusion indicates regional differences in narrowing the urban–rural income gap. This study puts forward corresponding countermeasures for the development of digital financial inclusion and adds to the research on this very topical subject.
... SMEs face the challenge of finding financing to support their growth; and, the lack of access to bank credit promotes others forms of financing (Madrid-Guijarro et al., 2016;Rupeika-Apoga & Solovjova, 2016;Boadi & Mertens, 2018), government policy design (Kusmuljono, 2009;Hahn et al., 2017) and new forms of financing (Albuquerque et al., 2016;Fanta, 2015;Kaya & Masetti, 2019;Aysan et al., 2016;Wang & Yang, 2016;Berger & Schaeck, 2011) provide insights on the subject. ...
... Based on their finding, they concluded that many small firms have lesser access to funds. Madrid-Guijarro, Lema & Auken (2016) surveyed the managers of 267 small firms based in Spain to analyze the role of financial constraints on innovation. They concluded that small enterprises face financing constraint which hinders their innovation. ...
The importance of Micro, Small, and Medium Enterprises (MSMEs) in economic development and their access to finance post-COVID-19 has been highlighted in this study. The availability of finance is a critical factor for MSMEs to flourish, and they are mostly severely affected by the economic recession. The purpose of this study was to ascertain how the firm-specific factors such as Location, Industry, Size, Age, Ownership, Collaterals, and Business information affect their access to finance in India. This study used a survey to collect primary data from 200 MSMEs in India. Descriptive and logistic regression analysis was used to analyze the data. Results show that firms with collateral, larger and older firms, and private limited firms are less likely to face problems in raising finance, while service firms are more likely to face problems in raising finance. The results from this study will add to the understanding of the financing problems faced by MSMEs in India. The study recommends that firm attributes are important for accessing finance and help policymakers and researchers develop new strategies and policies to support the financing of MSMEs in India. Received: 23 September 2021 / Accepted: 7 March 2022 / Published: 5 May 2022
... It has been argued that for SMEs, in addition to equity financing as the external source of innovation funding, debt financing can also promote innovation (Cornaggia et al., 2015;Madrid-Guijarro et al., 2016;Xin et al., 2017). And the mechanism of debt financing affecting innovation efficiency can be divided into the "financing constraint view" hypothesis and the "financing efficiency view" hypothesis. ...
Tech-based SMEs are important subjects for achieving national innovation-driven development, and it is crucial to study whether and how changes in the macro-institutional environment affect their innovation efficiency. New Asset Management Regulation (NAMR) is a policy promulgated by the Chinese government to address the chaotic expansion of shadow banking in China, and this study treats it as a quasi-natural experiment, selecting a sample of Chinese GEM-listed firms from 2015 to 2019, adopting the event study method and the generalized double difference method, and empirically testing the impact of shadow banking contraction on the innovation efficiency of Chinese tech-based SMEs and its mechanism. This study finds that shadow banking contraction under the NAMR significantly improves innovation efficiency of tech-based SMEs. The mechanism test finds that the NAMR can optimize the debt financing structure of tech-based SMEs, reduce their financing costs and financing risks, and ultimately accelerate their innovation efficiency by improving their financing efficiency, which supports the hypothesis of “financing efficiency view”; it is further found that, to tech-based SMEs, the more they rely on shadow banking and the severer financing constraints they endure, the more obvious NAMR’s effect is on improving innovation efficiency. The findings not only provide some empirical evidence to clarify the controversy of shadow banking in China from the perspective of firm innovation, but also have some implications for the subsequent financial regulatory reform.
... Their results corroborate those of Madrid-365 Guijarro et al. (2009;2016) who found that a key barrier to SME innovation is lack of financial resources. Furthermore, in a context such as the GFC, SMEs will be unwilling to borrow from banks to invest in the intangible assets involved in exploration (Indrawati et al., 2020;Madrid-Guijarro et al., 2016). Consequently, an event like the GFC could be the type of condition where 370 SMEs must decrease SC in ambidexterity to some extent in order to survive. ...
This article examines the relationship between strategic consistency in ambidexterity and the resilience outcomes of Small and Medium-Sized Enterprises (SMEs) after stressful and disruptive events. The underlying approaches taken by the majority of previous studies have focused on the role of strategic consistency as an advantage or disadvantage for firms when it comes to achieving resilience. We propose a model that contributes to the strategic management literature by considering that the relationship between strategic consistency and performance is not a straightforward one. Several constraints play a decisive role in how ambidexterity consistency affects SMEs’ resilience when these organizations, which may have different internal weaknesses, face extreme external events. Through a sample of 2,766 firms, we provide evidence of an inverted U-shape relationship between ambidexterity consistency and SME resilience outcomes under a context of scarce slack resources as the last global financial crisis.
... The benefits of increasing SMEs involvement in procurement are numerous, not only for the wider economy in terms of wealth creation and poverty reduction but also for public sector organisations. SMEs are catalysts of innovation and capable of providing bespoke solutions to meet public sector's multiple and complex needs (Madrid-Guijarro et al., 2016). ...
Purpose
This study aims to examine the causes of small and medium-sized enterprises (SMEs) disinclination towards subcontracting in public sector markets. Previous studies have revealed that UK SMEs are reluctant to do business with the public sector through the subcontracting route, but the reasons for this lack of enthusiasm have not been widely researched.
Design/methodology/approach
Drawing on semi-structured interviews with SMEs competing for public contracts in North West England, a qualitative study was performed, from which several themes emerged.
Findings
The findings were synthesised into a framework underpinned by attribution theory, to portray situationally and dispositionally caused factors that were used to interpret SMEs’ behaviour.
Social implications
The findings can guide policy development and government interventions in developed and developing countries, aimed at using public procurement as a policy tool to develop the small business sector.
Originality/value
This paper contributes in a unique way to an emerging discourse on how subcontracting can facilitate the access of SMEs to government procurement spending. It adds to knowledge regarding the explanatory power of attribution theory – from its base in social psychology.
... Access to resources such as specialised technical knowledge, new technology or new markets is also strongly affected by environmental dynamism (Bianchi et al., 2016). Madrid-Guijarro et al. (2016) also refer to SMEs' financing difficulties and their impact on investment in innovation and development processes, technology and product diversification, as factors preventing SMEs from competing in hostile environments. However, even with less resources comparing to large companies, particularly financial resources and skilled human resources, SMEs play an important role in economies, because they have a great capacity to exploit business opportunities locally, through the bonds they establish with other firms (Oinas & Malecki, 2002;Koschatzky & Zenker, 1999). ...
The analysis of organisational ambidexterity in the small and medium-sized enterprise context should consider their unique characteristics, including size, internal structure, the low level of use of management practices and great capacity to introduce innovative products. Aiming to understand how the characteristics of SMEs influence, or do not influence, organisational ambidexterity, this article presents an explanatory theoretical model of that relationship. This article contributes to innovative systematization of this type of firm from a multi-level perspective. This unique approach also advances theory by contributing to clarifying the debate on organisational ambidexterity and identifies important opportunities and directions for future research.
... SMEs are known to face several constraints in human, financial, and technical resources [93]. Due to financial limitations, a South Korean study comes to the conclusion that financial government incentives will help to defeat the lack of finances, as this hinders SMEs in their innovation and development of forces [94], and SMEs seem unable to generate the required financial funds themselves and struggle in acquiring funds from banks [95]. Besides the mentioned constraints, the Organisation for Economic Co-operation and Development (OECD) identified missing managerial capabilities and low productivity as reasons for lacking competitive ability [96]. ...
This study investigates the application of a smart manufacturing execution system (SMES) based on the current controlling structure in a medium-sized company in the Czech Republic. Based on existing approaches on the architecture of SMESs, this paper develops a sample architecture grounded in the current controlling structure of small and medium-sized enterprises (SMEs). While only a few papers on approaches to the given topic exist, this approach makes use of operative production controlling data and uses a standardisation module to provide standardised data. The sample architecture was validated with a case study on a Czech SME. This case study was conducted on two different entities of one production company suggesting differences in the entities due to the nature of production. The research showed that simple tasks with intelligent welding equipment allow for a working SMES architecture, while complex assembly works with a high extent of human labour, and a high number of components still remain an obstacle. This research contributes to gathering more understanding of SMES architectures in SMEs by making use of a standardisation module.
... About the same ones, it can be said that they are representative samples that the own sampling process itself has allowed us to find them. Similarly, noted that they are not considered in Rasch´s measurement unanswered questions; in consequence, 257 exporting SMEs have been used for this measurement and from them, 84 belong to the social economy (Madrid-Guijarro, García-Pérez-de-Lema and Van Auken, 2016). Finally, to indicate that, for confidentiality reasons, enterprises are not treated in a nominative form considering that this is not substantial. ...
Purpose – This study aims to determine the export competitiveness of the Social Economy
in Andalusia, this is carried out by quantifying the export competitiveness of the
internationalized enterprises of the Social Economy in the export sector of the region.
Design/methodology/approach – The strengths and weaknesses of this business sector are
quantified and the Rasch´s Probability. It is a model used to measure the latent variable
called export competitiveness, which is defined by items (factors): size, cooperation,
number of target markets, competitive advantages, years abroad and percentage of sales
abroad. The article provides empirical evidence of 362 Andalusian export enterprises.
Findings – The results show that the export competitiveness of social enterprises reflected
their strengths as compared with other SMEs.
Originality/value – This concept paper empirically combines two different fields of
knowledge (design and behavior of companies) in the construction of the foreign trade.
This work standardizes the treatment of two descriptors scarcely discussed in the
literature: Social Enterprises and Export.
... About the importance of using the proactive and efficient cash-flow mechanism to maintain business stability during severe disruptions (and thus COVID-19), Bangladeshi SMEs and managers have little to no advice about how to handle cash-flows for such disruptions in organizations. Past academic contributions of Butler and Gray (2006), Niemimaa (2015), Pal et al., (2014), Madrid-Guijarro et al.,(2016), Serrasqueiro et al., (2018), and Tangsucheeva et al., (2014) have analyzed the mechanism of cash flow in restoring small and medium enterprises from various crisis scenarios. Also, the latest studies of Syriopoulos (2020), Cowling et al., (2020), andLu et al., (2020) tried to assist SME's survival process during the COVID-19 emergency by analyzing about internal financial management or the importance of precautionary saving leading to business success. ...
Purpose: In a very short period, the worldwide pandemic sparked by the COVID-19 has not only taken multiple lives but has also imposed extreme restrictions on both the private and business activities. The purpose of the study at this point is to provide a broader interpretation of how a flexible cash-flow structure of various strategic interventions will enable Bangladeshi SMEs to endure through the emergency. Design/Methodology/Approach: The study has embraced a qualitative approach on basis of online focus group discussion with the support of a professional facilitator. The data collection process includes 09 participants from various fields, such as Academia, SMEs, Media, and NGOs. Findings: Because SMEs are operating in uncertain conditions, the analysis from the discussions suggests that an adjustable integration of various ranges of cash-flow management initiatives, such as cash flow targets, clear payment terms, use of technology, revisit variable cost, extend payables, and government schemes can help SMEs to endure throughout this turbulent time. Research limitation: Prior empirical attempts are subsequently required to inquiry about the proposed model for SMEs from different perspectives. Also, besides, a smaller sample size creates an issue with generalizability. The moderator, intentionally or inadvertently, may inject his personal biases into the participants' exchange of ideas. Practical implications: The formulated model provides recommendations for SMEs and on how to remain competitive through resilience and renewal strategies. Originality/Value: This article is the first to configure a strategic cash-flow management model for Bangladeshi SMEs to harness the entrepreneurial potential of the pandemic.
... Third, this paper examines the moderating effects of corporate financing constraints and bargaining power on the relationship between SO 2 ETP and TFP, respectively. On the one hand, enterprises tend to have motivation and ability to carry out technological innovation-related activities when their financing constraints are in good condition [41,42]. Then further, technological innovation improves quality and efficiency through knowledge spillover effect. ...
Taking China's SO 2 emissions trading pilot (ETP) in 2007, a large-scale market-based environmental regulation as its target, this paper reexamines the strong Porter hypothesis by adopting the method of propensity score matching-differences-indifferences. Research shows the following results: first, SO 2 ETP which provides high flexibility for enterprises in the process of emission reduction, improves total factor productivity (TFP) significantly on the whole. Second, the productivity effect of market-based environmental regulation varies from the productivity level of enterprise. For example, the SO 2 ETP has a significant effect on TFP only at 40-80 percent quantile of TFP, and the effect increases at first and then decreases. Third, the financing constraints and bargaining power of enterprises have significant negative moderating effects on the impact of SO 2 ETP on TFP, and the moderating effects between state-owned and non-state-owned enterprises exist heterogeneity. In conclusion, it provides reference for the formulation of market-type environmental regulations and the realization of high-quality development for developing countries.
... About the importance of using the proactive and efficient cash-flow mechanism to maintain business stability during severe disruptions (and thus COVID-19), Bangladeshi SMEs and managers have little to no advice about how to handle cash-flows for such disruptions in organizations. Past academic contributions of Butler and Gray (2006), Niemimaa (2015), Pal et al., (2014), Madrid-Guijarro et al.,(2016), Serrasqueiro et al., (2018), and Tangsucheeva et al., (2014) have analyzed the mechanism of cash flow in restoring small and medium enterprises from various crisis scenarios. Also, the latest studies of Syriopoulos (2020), Cowling et al., (2020), andLu et al., (2020) tried to assist SME's survival process during the COVID-19 emergency by analyzing about internal financial management or the importance of precautionary saving leading to business success. ...
Purpose: In a very short period, the worldwide pandemic sparked by the COVID-19 has not only taken multiple lives but has also imposed extreme restrictions on both the private and business activities. The purpose of the study at this point is to provide a broader interpretation of how a flexible cash-flow structure of various strategic interventions will enable Bangladeshi SMEs to endure through the emergency.
Design/Methodology/Approach: The study has embraced a qualitative approach on basis of online focus group discussion with the support of a professional facilitator. The data collection process includes 09 participants from various fields, such as Academia, SMEs, Media, and NGOs.
Findings: Because SMEs are operating in uncertain conditions, the analysis from the discussions suggests that an adjustable integration of various ranges of cash-flow management initiatives, such as cash flow targets, clear payment terms, use of technology, revisit variable cost, extend payables, and government schemes can help SMEs to endure throughout this turbulent time.
Research limitation: Prior empirical attempts are subsequently required to inquiry about the proposed model for SMEs from different perspectives. Also beside a smaller sample size creates an issue with generalisability.
Practical implications: The formulated model provides recommendations for SMEs and on how to remain competitive through resilience and renewal strategies.
Originality/Value: This article is the first to configure a strategic cash-flow management model for Bangladeshi SMEs to harness the entrepreneurial potential of the pandemic.
Keywords- COVID-19, Digitalization, Innovation, Sustainable growth.
... In the traditional financial system, it is difficult to acquire quality financial resources and services for lower income group and small enterprise having poor credit qualities [4]. Moreover, the access thresholds of traditional finance make lower income groups and small enterprises difficult to obtain funds through the financial service platform [5]. Therefore, the income gap between urban and rural residents is further widen. ...
On the basis of China’s dual structure of urban and rural economy, this paper constructs the inclusive financial index, which contains eight sub-indexes coming from the demand and supply of financial service. And then we analyse the influence of inclusive finance on the income gap between urban and rural residents using the panel data model. The results show that (1) a negative correlation is found between the developmental level of inclusive finance and the urban-rural income gap; (2) under the influence of inclusive finance, the acceleration of economic growth narrows the income gap between urban and rural areas; and (3) the increase of government expenditure causes the income gap between urban and rural areas owing to the characteristic of financial expenditure structure.
... Determinants of Regulation and Networks were followed by firm's commitment to learning, embedded networks, and internal capabilities, found in eight papers. Commitment to learning exposed SMEs to broader potential in product and network development (Gordon et , embedded networks -perpetually renewing external relationships -served as a catalyst to new capabilities and resources (Bager, Jensen, Nielsen, & Larsen, 2015;Davenport, 2005;Feakins, 2004;Gordon et al., 2012;Madrid-Guijarro et al., 2016;Noke & Hughes, 2010;Radas & Bozic, 2009;Uhlaner, van Stel, Duplat, & Zhou, 2013;), and internal capabilities represented the ability to exploit external determinants (Noke & Hughes, 2010;Parrilli et al., 2010) and implement innovation strategies (Cowling, 2016;Harms et al., 2010;Neirotti, Paolucci, & Raguseo, 2013;Nowacki & Staniewski, 2012). ...
Recent debates have seen increased interest in the growth of SMEs. Most research however follows a limited remit, focusing on specific subsets and employing narrow, resource-based perspectives. A consequence is our knowledge is limited on how SME growth occurs more broadly and the critical determinants in this process. This paper addresses this gap, examining SME growth as a multidimensional process rather than an output. The paper operationalises a Four Dimensions Conceptual Model through a Systematic Literature Review of 36 studies on the growth process. It identifies a broader set of determinants supporting a multidimensional approach, the pluralistic nature of SME growth embedded in distinctive contexts. Evidence suggests a greater reliance on firm-based Characteristics and Environmental factors in supporting growth, providing critical inputs into forming and reinforcing networks through which firm-based resources are activated. We emphasise the need to test these propositions through more SME research using qualitative and longitudinal methods.
... Este trabajo se centra en las pymes de base tecnológica, es decir, empresas que desarrollan y explotan comercialmente una innovación tecnológica que implica una elevada incertidumbre (Storey & Tether, 1998). Varios autores encuentran que las pymes de base tecnológica presentan mayores restricciones para acceder al financiamiento (Bank of England, 2001;Oakey, 2003;Rajan & Zingales, 1995;Bozkaya & Van Pottelsberghe, 2008;Revest & Sapio, 2012;Madrid-Guijarro, García-Pérez de Lema, & Van Auken, 2016). Esto se debe a que las actividades de innovación que realizan estas empresas profundizan las asimetrías de información, producto de la incertidumbre que genera la innovación y la dificultad comprender los proyectos que suelen ser complejos para los intermediarios financieros. ...
El objetivo de este trabajo es evaluar las decisiones de financiamiento de dos subsectores específicos del segmento de tecnologías de la información y la comunicación (TIC): el de desarrollo de videojuegos (VG) y el de software y servicios informáticos (SSI). Los datos utilizados incluyen 80 empresas argentinas relevadas durante el 2017. Los resultados muestran que la fuente principal de financiamiento en las diferentes etapas del ciclo de negocio son los fondos propios para todas las empresas de la muestra. Sin embargo, la participación de dichos fondos se reduce a medida que las empresas transitan las etapas de start up y de crecimiento. Además, se encuentra que la tipología de las fuentes externas con las que sustituyen el financiamiento propio difiere de acuerdo con el subsector analizado. En la etapa de start up, las empresas de SSI sustituyen fondos propios por subsidios públicos, a diferencia de las empresas de VG que utilizan el financiamiento de prestamistas privados. En la etapa de crecimiento, las empresas de SSI utilizan en mayor proporción financiamiento bancario, y las empresas de VG, subsidios públicos.
... Este trabajo se centra en las pymes de base tecnológica, es decir, empresas que desarrollan y explotan comercialmente una innovación tecnológica que implica una elevada incertidumbre (Storey & Tether, 1998). Varios autores encuentran que las pymes de base tecnológica presentan mayores restricciones para acceder al financiamiento (Bank of England, 2001;Oakey, 2003;Rajan & Zingales, 1995;Bozkaya & Van Pottelsberghe, 2008;Revest & Sapio, 2012;Madrid-Guijarro, García-Pérez de Lema, & Van Auken, 2016). Esto se debe a que las actividades de innovación que realizan estas empresas profundizan las asimetrías de información, producto de la incertidumbre que genera la innovación y la dificultad comprender los proyectos que suelen ser complejos para los intermediarios financieros. ...
This work seeks to evaluate the financing decisions of two specific subsectors of the information and communication technologies (ict) segment: video games development (vg) and software and computer services (scs). The data used includes 80 Argentinian companies surveyed during 2017. Results show that the main financing source at the different stages of the business cycle is the company's own funds for all the businesses in the sample. However, the participation of these funds is reduced as companies go through the start-up and growth stages. In addition, it is found that the typology of external sources with which they replace their own financing differs according to the subsector. In the start-up stage, scs companies substitute their own funds for public subsidies, unlike vg companies, which use financing from private lenders. In the growth stage, scs companies use bank financing to a greater extent, while vg companies request public subsidies. ANÁLISE DAS EMPRESAS tic SOB UMA PERSPECTIVA FINANCEIRA. EVIDÊNCIA PARA AS pmes DE SOFTWARE E VIDEOGAMES RESUMO: o objetivo deste trabalho é avaliar as decisões de financiamento de dois subsetores específicos do setor de tecnologias da informação e da comunicação (tic): o desenvolvimento de videogames e o de software e ser-viços informáticos (ssi). Os dados utilizados incluem 80 empresas argen-tinas e foram levantados durante 2017. Os resultados mostram que a fonte principal de financiamento nas diferentes etapas do ciclo de negócio são os fundos próprios para todas as empresas da amostra. Contudo, a parti-cipação desses fundos é reduzida à medida que as empresas passam pelas etapas de start up e de crescimento. Além disso, verifica-se que a tipologia das fontes externas com as quais substituem o financiamento próprio di-fere de acordo com o subsetor analisado. Na etapa de start up, as empresas de ssi substituem fundos próprios por incentivos públicos, à diferença das empresas de videogames que utilizam o financiamento de organismos de crédito privados. Na etapa de crescimento, as empresas de ssi utilizam, em maior proporção, financiamento bancário, e as empresas de videogames, in-centivos públicos. PALAVRAS-CHAVE: empresas de base tecnológica, estruturas de capital, inovação, pmes. UNE ANALYSE DES ENTREPRISES TIC DU POINT DE VUE FINANCIER. PREUVE POUR LES PME DES LOGICIELS ET DES JEUX VIDÉO RÉSUMÉ: Le but de ce travail est d'évaluer les décisions de financement de deux sous-secteurs spécifiques du secteur des technologies de l'information et de la communication (tic): celui du développement de jeux vidéo (vg) et de logiciels et celui des services informatiques (ssi). Les données utilisées in-cluent 80 entreprises argentines interrogées en 2017. Les résultats montrent que la principale source de financement aux différentes étapes du cycle éco-nomique est constituée par les fonds propres de toutes les entreprises de l'échantillon. Toutefois, la participation de ces fonds se réduit au fur et à mesure que les entreprises franchissent les étapes de démarrage et de crois-sance. En outre, on a constaté que la typologie des sources externes avec lesquelles elles remplacent leur propre financement diffère selon le sous-secteur analysé. Au stade du démarrage, les sociétés ssi substituent leurs fonds propres à des subventions publiques, contrairement aux sociétés vg qui utilisent des financements de prêteurs privés. Au stade de la croissance, les entreprises SSI ont davantage recours au financement bancaire et les entreprises vg aux subventions publiques.
... The consequences of economic crises include drops in demand, increased costs and reduced or inefficient government support; in turn, these consequences may affect firms' performance, as budgets may be cut and resource allocation prioritised. Consequently, reductions in innovation can occur and layoffs can become necessary (Becker et al., 2016;Chzhen, 2016;Madrid-Guijarro et al., 2016). Moreover, the consequences of economic crises may also impact social and environmental initiatives. ...
This article analyses the effects of economic crises on the relationship between environmental practices, environmental performance and business performance. Six hypotheses are tested via survey responses from firms located in Brazil – a country that has recently faced a serious economic crisis. The data were analysed using PLS path-modelling (PLS-PM). The findings are discussed through the theoretical lenses of contingency theory and dynamic capabilities theory. We provide evidence that the aftermath of the recent economic crisis has significantly weakened the relationship between environmental practices, environmental performance and business performance among Brazilian firms. However, environmental practices that are linked to firms' strategy and have dynamic capability characteristics can still improve business performance, even under economic contingencies, as the win-win characteristics of these practices remain even in times of economic crisis. Firms may benefit from the awareness that even in difficult times, environmental practices continue to support business performance. The article extends the understanding of the ‘win-win situation’ regarding a market environment facing an economic crisis. The originality of this study, to the best of our knowledge, is that it is the first study to employ this theoretical and methodological approach to deal with this key societal and economic subject.
... The results are in line with these authors (Ruziev, Midmore, 2015;Abe et al., 2015;Brancati, 2015;Mancusi, Vezzulli, 2014). Madrid-Guijarro et al. (2016) present instructions, how to increase the success of SMEs external funding. The longer the duration of a firm's banking relationship, the fewer financing constraints it faces. ...
Innovations are an important part of business activities, because of their impact on the market position and financial performance of enterprises. Furthermore, they help keep existing companies in a growing competitive environment. The aim of the article is to define and quantify significant factors which determine inclination to innovations in the segment of SMEs. In this context, empirical research in the Slovak economic environment was realized. The total number of respondents in this research was the 529. Pearson’s statistic and regression analysis were used to confirm hypotheses. The research showed that 56% of SMEs regularly undertake innovative activities while larger and older firms invest more intensively. Financial motivation and awareness of SMEs on governments’ innovation policy in Slovakia is relatively low. The biggest impact on companies’ innovation activities has sufficient awareness about government innovation policy; less impact has other independent variables: external funding sources and government´s financial incentives. © Vilnius University, 2002-2018 and Brno University of Technology, 2002-2018 and University of Latvia, 2002-2018.
... Once a company be able to survive, they can make profit, expand and growth. Given this, economic crisis could damage the innovative capacity of its companies (Madrid-Guijarro et al., 2016) and subsequently may influence the level of expansion and growth. ...
ABSTRACT: Financing has been viewed as the main barrier to a companys growth.
Small Medium Enterprises (SMEs) in Asia seek for financial institutions as the
main source of external financing as the capital markets in this system are often
bank-dominated. Despite of this, some of SMEs in Malaysia may not prefer to opt
for external financing though they have the capacity to do so. This study is conducted
to recognize factors affecting capital structures of SMEs especially in the District of
Kuala Selangor, Malaysia. This study covers three important elements which include
challenges, risk and sustainability of SMEs that might influence their decisions in
obtaining external financing from financial institution. SMEs are selected on the
basis that SMEs strive to contribute significant percentage of Growth Domestic
Product (GDP), employment and export contribution to the country together with
SMEs development and capacity building area. It was found that, challenges which
include accounting knowledge, fluctuate demand of the product/services and
sensitivity of cash flows may expose SMEs on the various types of risks such as
liquidity, interest rate, e-business and technological as well as supply chain risks
and subsequently shed the light of sustainability issues in this dynamic economy.
Keywords: Loan application, SMEs, challenges, risk, sustainability
High-tech small and medium-sized enterprises (high-tech SMEs) play a driving role in the economic transformation of the China Yangtze River Delta. However, comparatively little research and attention has been paid to evaluating the financing efficiency and investigating both external and internal influencing factors on financing efficiency based on the information of these enterprises. This study evaluates the financing efficiencies in a homogeneous environment of high-tech SMEs of information technology industry in the China Yangtze River Delta for the period 2014 to 2020 employing the panel three-stage Data Envelopment Analysis model. We have concluded that the financing technical efficiency presents a U-shaped trend from 2014 to 2020, at a moderate level due to the low pure technical efficiency; financing efficiency shows different spatial distribution patterns; most decision-making units are in the quasi-relatively inefficient range, while only a minority are at the efficiency frontier. Furthermore, the external and internal environmental factors are investigated based on Panel Stochastic Frontier Analysis and Tobit model. According to the empirical results, the optimization of the financial and technical environment contributes to financing efficiency; by contrast, a good economic and policy environment appears to restrict it; internal environmental factors such as growth ability, debt solvency, and the average age of managers have significant impacts on financing efficiency.
The study examines the effect of information technology on market share of small and medium scale enterprises (SMEs) in Lagos state. The survey research method was utilized in selecting three hundred and eighty-one respondents comprising of owners and managers of selected SMEs within Lagos state. Questionnaires were used as a data collection tool administered on a sample of 381 out of which 366 were returned from samples. Data was analyzed using multiple regression. Two hypotheses were formulated and tested at 0.05% level of significance to check for the truthfulness and falsity of the dependent and independent variables using descriptive and inferential analysis through Statistical Package for Social Science (SPSS). Findings from the data analyzed shows that the use of information technology by management of SMEs helps to improve market share thereby increasing the effectiveness of management. The study therefore recommends that Small and medium scale enterprises should focus on variables used such as IT knowledge which has been identified as a major factor that could influence the performance of small and medium scale enterprises.
Abstract
The study examines the effect of information technology on market share of small and medium scale enterprises (SMEs) in Lagos state. The survey research method was utilised in selecting three hundred and eighty-one respondents comprising of owners and managers of selected SMEs within Lagos state. Questionnaires were used as a data collection tool administered on a sample of 381 out of which 366 were returned from samples. Data was analysed using multiple regression. Two hypotheses were formulated and tested at 0.05% level of significance to check for the truthfulness and falsity of the dependent and independent variables using descriptive and inferential analysis through Statistical Package for Social Science (SPSS). Findings from the data analysed shows that the use of information technology by management of SMEs helps to improve market share thereby increasing the effectiveness of management. The study therefore recommends that Small and medium scale enterprises should focus on variables used such as IT knowledge which has been identified as a major factor that could influence the performance of small and medium scale enterprises.
The Covid-19 pandemic has caused a significant decline in stock markets worldwide, and organizations are experiencing serious financial problems. Protecting and preserving firm value are critical ways to help organizations survive the crisis. This study analyzes a sample of 45 firms listed on the Polish Stock Market in two periods to determine the relationship among green initiatives, the triple bottom line (TBL) perspective , and firm value in the periods before and during the crisis caused by the Covid-19 pandemic. The results show that firms with higher green initiatives are more likely to obtain better TBL performance during the normal period. Economic and social dimensions of TBL positively influence firm value regardless of the period, but the same is not true of the ecological dimension. The Covid-19 pandemic's negative impact on investors' perception does not translate to firm value. This study provides the first empirical evidence on the value of organizations affected by the Covid-19 pandemic in the context of environmental management. By considering the TBL approach, this study provides a new boundary condition that explains the impact mechanism of green initiatives during a crisis.
High-tech SMEs are the new drivers of economic growth and innovation development. The complex and turbulent operating environment of the volatility, uncertainty, complexity, and ambiguity (VUCA) era poses a serious threat to high-tech SME sustainability. Although studies have explored the factors influencing high-tech SME resilience, the equivalent effects of different combinations of factors on organizational resilience have yet to be considered. Based on the resources–capabilities–environment perspective, this study uses fuzzy-set qualitative comparative analysis (fsQCA) to analyze the driving paths of high-tech SME resilience. The configuration effects of financial and relationship resources, managerial abilities, innovation capabilities, the market environment, and government interventions on the organizational resilience of high-tech SMEs are examined, and a robustness test is passed. The results show the following: (1) high-tech SME resilience is affected by multiple factors; (2) high-tech SMEs have three high-resilience driving paths—resource–capability, resource–capability–environment, and resource–environment—and two non-high-resilience driving paths—resource–capability inhibition and resource–environment inhibition; and (3) the high and non-high resilience paths are asymmetric. Theoretically, the formation of organizational resilience is a complex nonlinear process with limited single condition effects on outcomes. This study explores the impact of the interaction of multiple factors on organizational resilience, reveals the multiple driving paths of high-tech SME resilience, and enriches the theoretical study of organizational resilience. Practically, this study helps managers identify the combined effects of “resource–capability–environment” perspectives on high-tech SMEs’ resilience and provides intellectual support for them to achieve sustainable development and enhance resilience.
Mit Blick auf die aktuelle Literatur ist die Digitalisierung von Unternehmen ein breites Thema und wird in vielerlei Hinsicht diskutiert. Um Forscher*innen und Praktikern*innen diesbezüglich einen Überblick zu geben, werden in diesem Artikel zahlreiche Beiträge aus akademischen Datenbanken analysiert und überblicksartig nach Themenclustern zusammengefasst. Besonderer Fokus wird bei dieser Literaturanalyse vor allem auf kleine und mittlere Unternehmen (KMU) gelegt, da diese sich aufgrund geringerer Budgets, kürzerer Entscheidungswege und oft stärkerer Nischenexpertise grundlegend von Großunternehmen unterscheiden. Ziel dabei ist es, Digitalisierungsaspekte im speziellen Kontext von KMU zu diskutieren. Wissenschaftlern*innen sollen auf diese Weise spezifische Fragestellungen geboten sowie für Praktiker*innen Handlungsempfehlungen für eine mögliche Strategieentwicklung und Entscheidungsfindung herausgearbeitet werden. Weiterhin sollen Implikationen für die IT-Organisation abgeleitet werden, die sich vor allem in Betriebsmodellen widerspiegeln.
The purpose of the startup approach is to find an appropriate course of action that adds value to the economy’s development. This study is aimed to determine the effect of the lean startup approach with mediating effect of business coaching to foster innovative work behavior in women entrepreneurs. Additionally, the study also examines the moderating effect of age on the lean startup approach and innovative work behavior. A quantitative approach was employed. The findings show that the relationship between the lean startup approach and innovative work behavior is significant. Moreover, the findings also revealed a significant mediating effect of business coaching and moderating effect of age. This research encourages practitioners and scholars to deal with women entrepreneurship incubation initiatives in the lean startup methodology. Furthermore, this study also leads to a deeper understanding of women’s ideas for business exploration, growth, and implementation. The study contends that guidelines and directives are critical for creative entrepreneurial behavior.
The main objective of a startup is to discover a suitable plan of action that can create value for growth in the economy. This research provides evidence and allied vision engrossed on three perspectives: business coaching, lean start-up approach, and innovative work behavior of women's context in solar energy entrepreneurial action. Moreover, the study is based on a quantitative method, and results indicated that it has a significant impact on the lean start-up approach on innovative work behavior and has a significant mediating effect on business coaching. This study helps researchers and practitioners cope with the entrepreneurial incubation programs for women entrepreneurs in the lean start-up approach. Moreover, this also contributes to the deep understanding of women's exploring, building, and implementing business ideas. Additionally, the study argues that guidance and directions are important for innovative entrepreneurial actions.
This paper examines the impact of an environmental tax on SME innovation and how SME financing constraint moderates this relationship. Given the paucity of research on the implications of financing constraint on SMEs’ green innovative activities, the study adopts cross-country panel data to investigate the impact of environmental tax on SME’s innovative activities across 24 OECD countries for the period 2000-2019. Results from our study indicate that an increase in environmental tax leads to a decrease in SME innovation. Further, we also find that financing constraint positively moderates the relationship between environmental tax and SME innovation. Our findings shed new light on the theoretical and practical implications of financing constraint on SMEs’ green innovative activities.
Las políticas públicas tienen una especial relevancia en el ámbito de la innovación, dado que buscan minimizar los obstáculos que tienen las organizaciones (principalmente relacionados con las limitaciones de acceso a la financiación) que dificultan el diseño e implementación de actividades innovadoras. Sobre la base de una muestra de empresas españolas, este capítulo muestra los efectos de las subvenciones a la innovación recibidas por parte de las empresas españolas (como uno de los instrumentos más destacados de financiación pública), dada su contribución a la mejora de la posición económico-financiera de dichas organizaciones, lo que, a su vez, repercute favorablemente sobre la economía de un país al promover el crecimiento económico.
Küresel planda ortaya çıkan rekabet ve ticaret savaşları, ülkeleri mal ve hizmet üretimlerinde verimliliklerini ve çıktılarını arttıracak Ar-Ge ve inovasyon faaliyetlerini gerçekleştirmeye itmiştir. Fakat bu durum, söz konusu faaliyetlerin finansmanının nasıl sağlanacağı konusunda birtakım sorunları da beraberinde getirmiştir. Bu süreçte krediler; ülkelerin, kurumların ve firmaların inovasyon sürecinde karşılaşabilecekleri finansman sorunlarının giderilmesinde anahtar bir rol oynamıştır. Bu öneme binaen bu çalışmada, özel sektöre yönelik olarak verilen kredilerin inovasyon üzerindeki etkileri 24 Avrupa Birliği üyesi ülke ve Türkiye bağlamında incelenmektedir. 2001 ve 2017 dönemi yıllık verilerini kapsayan çalışmada; Pedroni Eşbütünleşme Analizi, Granger Nedensellik Analizi, FMOLS ve DOLS tahmincileri kullanılarak değişkenler arasındaki ilişki analiz edilmektedir. Çalışmadan elde edilen bulgular, özel sektöre verilen kredilerdeki artışların inovasyonu arttırdığını göstermektedir. FMOLS tahmin sonuçlarına göre; özel sektöre verilen kredi hacmindeki, eğitim endeksindeki ve Ar-Ge harcamalarındaki %1’lik artış, patent başvurularını sırasıyla yaklaşık olarak; %0.17, %0.44 ve %1.24 oranında arttırmaktadır. DOLS modeli için bu oranlar aynı sırayla yaklaşık olarak; %0.32, %0.54 ve %0.85’dir.
This study investigates the impact of Global Economic Policy Uncertainty (GEPU) on firms’ key marketing strategies namely, innovation as characterised by R&D spending and new product introductions. Additional analyses investigate whether labour productivity is also impacted. Based on a sample of African SMEs in both the services and manufacturing sectors, the findings from this study indicate GEPU negatively impacts the firm’s propensity to undertake key marketing strategies (i.e. innovation and new product introductions). The implications from this research discuss how African SMEs could pursue less risky marketing strategies in order to survive during times of high economic uncertainty.
Intrigued by literature findings that credit constrained firms are less likely to be innovative and bearing in mind that the evidence has so far largely been from developed economies, this study ventures to explore the relationship in the case of a developing economy. Focussing on Vietnam, using a biennial survey-based dataset spanning the 2005–2013 period, with around 2,500 SMEs per round, and a mix of econometric strategies, the findings of the study shed a new light in the literature on credit constraints vis-à-vis innovation relationships: credit constraints may not always impede innovation. Implications are discussed.
This research aims to empirically test the relationship between the financial structure and innovation in family businesses. The notion of innovation is, indeed, a sustainability factor for family businesses which favors the conceptual incorporation into the capital structure of family businesses. This paves us the way to analyze the relationship by mobilizing the theory of resources. This research also enables us to verify the moderating role of the generational stage in this relationship. The model estimates are based on a sample of panel data collected over the period 2003-2012 for 100 unlisted French Family firms. The main results indicate that all the traditional determinants of the financial structure, except ROA, play an important role in the financing policy of these firms. We can perceive that innovation can affect the choice of financing and can, also, play a significant role in the choice of debt maturity. Moreover, the financial structure of these family businesses slowly but surely converges towards its target level
Despite differences in definitions, researchers understand that radical innovation within an organization is very different from incremental innovation and that it is critical to the long-term success of firms. Unfortunately, research has also shown that it is often difficult to get support for radical projects in large firms, where internal cultures and pressures often push efforts toward more low risk, immediate reward, incremental projects. Interestingly, we know considerably less about the effective management of the product development process in the radical than in an incremental context. The purpose of this study is to explore the process of radical new product development from a strategic perspective, and to outline key observations and challenges that managers face as they move these projects to market. The findings presented here represent the results of a longitudinal (since 1995), multidisciplinary study of radical innovation projects. A multiple case study design was used to explore the similarities and differences in management practices applied to twelve radical innovation projects in ten large, established North American firms. The findings are grouped into three high-level strategic themes. The first theme, market scope, discusses the challenges associated with the pursuit of familiar versus unfamiliar markets for radical innovation. The second theme of competency management identifies and discusses strategic challenges that emerge as firms stretch themselves into new and unfamiliar territory. The final theme relates to the people issues that emerge as both individuals and the project teams themselves try to move radical projects forward in organizations that are not necessarily designed to support such uncertainty. A breadth of subtopics emerge within and across this framework relating to such ideas as risk management, product cannibalization, team composition, and the search for a divisional home. Taken together, our observations reinforce the emerging literature that shows that project teams engaging in radical innovation encounter a much different set of challenges than those typically faced by NPD teams engaged in incremental innovation.
Access to finance has figured prominently in the debate on barriers to firm growth, even though existing empirical research
has not found conclusive evidence of a “finance gap.” Moreover, it is not clear to what extent innovation aggravates financial
constraints and what role innovation inputs, processes and outputs play in the market for external capital. In this article,
we analyze how firm-level innovation affects (i) the likelihood of seeking external finance and (ii) the likelihood of obtaining
it. We analyze an original data set of 3095 UK and US firms (small and medium size enterprises and middle-market) containing
information on firms’ innovation behaviors, performance, and finances for the period 2002–2004. Controlling for firm-specific
characteristics, we provide novel and extensive evidence on the links between innovation, in its input, process and output
dimensions, and the demand for external capital and its supply.
This study investigates product, process, and management innovation among a sample of Spanish manufacturing small and medium-sized enterprises (SMEs) during the current economic downturn and a period of economic growth. Tobit analyses examined whether the level of process, product, and management innovation changed during the recessionary period relative to the expansionary period; and MCO estimations were used to show whether the recession affected the relationship between SME innovation and performance. Three main findings are: (1) innovation among Spanish manufacturing SMEs declined during the recent economic crisis; (2) the type of innovation at Spanish manufacturing SMEs changed during different economic conditions; and (3) innovation was positively associated with firm performance during the economic expansion and recession years. The results demonstrate the importance of adopting innovation into SME strategy over the business cycle. The findings have relevance to SMEs, government policymakers, and providers of consulting services.
Concurrent development activities and strategic supply chain management have become staples of the new product development (NPD) process over the last 15 years. Although this is beneficial, often the advice given comes in a “generic” form, based on the assumption that the similarities among NPD efforts are more important than the differences between them. However, variation in the radicalness of projects can make a significant difference in the way that they should be managed. This paper explores the processes associated with the development of radical new products. Based on interviews with project managers and engineers in the United States and Japan, this paper puts forth three propositions, which we summarize in a model aimed to help managers decide whether the “degree of radicalness” of the product may require changes in the organization's NPD process.
The OECD is developing a strategic response to the crisis focusing on two priority areas: finance, competition and governance; and restoring long-term growth. As part of this strategic response, the OECD Directorate for Science, Technology and Industry (DSTI) has analysed the likely impact of the downturn on the drivers of long term economic growth and the innovation-related items in policy responses of major countries. Special workshops and sessions on the economic crisis were held by the Committee for Innovation, Industry and Entrepreneurship, the Committee for Scientific and Technological Policy, and the Committee for Information, Computer and Communications Policy. In January 2009, the OECD Directorate for Science, Technology and Industry circulated a questionnaire to member countries to collect information on specific innovation-related items of their stimulus packages. By May 2009, 27 member countries, all five OECD accession countries (Chile, Estonia, Israel, Russia and Slovenia) and South Africa had answered the questionnaire. In May 2009, the three OECD Committees recommended to make public, under their responsibility, this updated version. This report presents the results of this exercise: the first chapter reports the general analysis of the impact of the crisis and the appropriate policy responses, and the second chapter reviews current national responses.
The contingent perspective on the corporate entrepreneurship–performance relationship has focused mainly on the influence of factors either environmental or internal to the organization. Only recently have researchers turned their attention to the relational context and specifically to inter-organizational alliances’ potential to influence this relationship. Our paper analyzes how knowledge acquisition from alliances affects the corporate entrepreneurship–performance relationship in a sample of Spanish SMEs from the Information and Communication Technology sector (ICT). The results obtained show that both corporate entrepreneurship and knowledge acquisition have a positive influence on performance but that the moderating effect of knowledge acquisition on the relationship between corporate entrepreneurship and performance is negative and it varies depending on the level of knowledge-based resources of the firm.
We study the effect of financing constraints on the decision to do R&D and on the level of R&D investment using survey data and complete financial accounting data on a large number of Italian manufacturing SMEs from 2001 to 2003. We use a direct indicator of credit constraints and employ an econometric approach allowing for the existence of binding financing constraints to be endogenously determined. We find that there is a significantly negative effect on the probability to set up R&D activities due to the presence of financing constraints, ceteris paribus. We also find that ignoring the endogeneity of the financing constraints indicator and the sample selection originating from firms not interested in doing R&D induces a bias in the estimated effect, which turns out to be positive and significant. We find the same result when studying the effect of liquidity constraints on R&D spending and are able to show that its reduction of liquidity constraints is largely to be associated with the reduction in the likelihood to do R&D (the R&D participation decision), rather than with a reduced level of investment. Finally, but importantly, firms that are both young and small appear to have additional difficulties in obtaining financing - even after controlling for both size and age - and disply a higher probability of being subject to credit constraints, ceteris paribus.
Innovation facilitates how SMEs respond to market changes and maintain their competitive advantage. This paper analyses the relationship between the degree of innovation (measured as innovation in products, processes and administration systems) and performance among 1,091 Spanish manufacturing SMEs. The results show that innovation positively impacts SMEs performance in low and high technology industries. Innovation was more important to achieving a competitive advantage to high technology firms than low technology firms. These results support innovation as being important to a firm's sustainable competitive advantage.
This paper broadly addresses the financing problems of the innovation process, by analysing the extent to which financial constraints hinder firms’ investment in R&D and innovation, as well as investigating the role of public financial support in alleviating such constraints. In order to overcome the problems associated with measuring financial constraints, we make use of both indirect and direct measures of constraints. Our findings suggest that while financial constraints have a perverse effect upon R&D investment and innovation, there is no evidence that subsidies mitigate such constraints. Accordingly, we raise a number of questions regarding the efficiency and effectiveness of subsidies in alleviating firms’ financial constraints.
In this paper we examine the importance of financial and other obstacles to innovation in the Netherlands using statistical information from the CIS 3.5 innovation survey. We report results on the effect of these obstacles on the firms' decision to abandon, prematurely stop, seriously slow down, or not to start an innovative project. These results are compared with those from other studies in the Netherlands and other countries. We end with a discussion of policy measures that have been taken to overcome, or at least attenuate these obstacles, such as R&D tax incentives, venture capital financing and policy mix packages.
Research on market orientation and organizational learning addresses how organizations adapt to their environments and develop competitive advantage. A significant void exists in current models of market orientation because none of the frameworks incorporates constructs related to innovation. The authors present a conceptual framework for incorporating constructs that pertain to innovation in market orientation research. Some of the critical relationships in this conceptual framework are tested among a sample of 9648 employees from 56 organizations in a large agency of the U.S. federal government. The results indicate that higher levels of innovativeness in the firms’ culture are associated with a greater capacity for adaptation and innovation (number of innovations successfully implemented). In addition, higher levels of innovativeness are associated with cultures that emphasize learning, development, and participative decision making. The authors make recommendations for incorporating constructs related to innovation into research on market orientation and organizational learning.
Th is study explores the question of how firms innovate with limited resources in turbulent markets utilizing the comparative case studies of 10 start-up companies. The evidence discovered while studying resource-limited innovation at these 10 companies suggests that the effect resource utilization has on innovation performance is moderated by four attitudinal factors that act as catalysts for successful innovation when resources are limited. The four factors are: Intention, Inspiration, Integration, and Indefatigability. These factors are the foundation of ‘lean innovation capability’ such that companies, in the presence of these attitudinal factors, use limited resources in creative ways. The study’s results suggesta need to reconsider the conventional wisdom regarding the need for the abundance of resources in order to successfully innovate. In fact, utilizing the case data, we argue that limited resources managed with these four-attitudinal factors lead to superior innovation performance, which is underutilized and ineffi ciently deployed in more munifi cent environments.
Exploring the scope, breadth and depth of innovation in small firms, the authors of this book employ a rich array of survey data to analyze the operating characteristics of dynamic small-firm populations. They investigate the strategies and activities that small firms pursue at different stages in their lifecycles and in different competitive environments, as well as which business skills are associated with survival, innovation, growth and high performance. John Baldwin and Guy Gellatly find that the strategic decisions young firms make play a critical role in determining their odds for survival and growth. New small firms survive by developing a core set of business skills skills related inter alia to management, human resources, marketing and financing. Advanced innovation capabilities related to R&D and technology set high-performance firms apart from other businesses. Industry-level differences in product lifecycle, production activity, competitive intensity and the science base all influence the nature of small-firm innovation.
Purpose
This study aims to examine the influence of managerial perceptions on the strategic responses adopted by four Colombian organizations when facing a political crisis.
Design/methodology/approach
To address this research, face‐to‐face interviews were conducted with Colombian managers, consultants, journalists, government officials, and industry experts, and triangulated with documents and archival data.
Findings
The findings show that the response adopted by each organization was significantly influenced by their manager's perception of the crisis and, consequently, was prone to producing a particular performance outcome.
Practical implications
The authors’ findings constitute a strong warning call to managers and management teams about the possibility of falling into the “mirror trap”, through which their organizations will adopt strategic responses influenced by their own perceptions of crises.
Originality/value
These findings suggest that managers can affect performance through their individual assessment of a crisis as a threat, an opportunity, or neither one nor the other.
For several decades, research about large companies' internal corporate venturing has shown that such activities frequently exhibit substantial cyclicality. Companies may enthusiastically launch ICV initiatives, later shut them down, and still later launch new ICV programs again. In this article, the authors describe four common situations that occur in cycles of corporate venturing. They argue that, unless properly managed, corporate commitment to ICV is apt to fluctuate according to the availability of uncommitted financial resources and the growth prospects of the organization's primary businesses. For example, if the corporation has uncommitted financial resources but the growth prospects of the main business are perceived to be insufficient, then the company may launch a topdown "all-out ICV drive" that is vulnerable to costly mistakes. If, however, the growth prospects of the primary business are perceived to be adequate and there are few uncommitted financial resources, top management is likely to perceive ICV as largely irrelevant. The authors examine factors contributing to ICV cyclicality; they then suggest that companies can achieve better outcomes if executives recognize the strategic importance of internal corporate venturing activities and view them as a way of gaining insights into emerging opportunities.
An increasing number of new venture firms are internationalizing their business operations early in their life cycles. Previous explanations of this trend have focused on the importance of technological knowledge, skills, and resources for new ventures' international expansion. However, little is known about how these firms use the technological learning gained through internationalization. This study examined the effects of international expansion, as measured by international diversity and mode of market entry, on a firm's technological learning and the effects of this learning on the firm's financial performance.
This paper analyses the spatial effects influence on the convergence process in Spanish industrial SME's productivity. In order to do this: 1. We use an absolute convergence model considering the technological intensity of each sector; 2. From a statistical point of view, we determine the existence and composition of convergence clubs in productivity levels; 3. Finally, we test if the convergence clubs are affecting to the convergence process. To do this, we use accounting information with a microdata source composed by 35.042 firms over the period 1996–2004. The results show that there is a regional convergence process in firms belonging to high and low technological intensity. Moreover, in high technology sector there is not a spatial structure while this structure is evident in low technology sector. In this last case the spatial structure is influencing on the convergence process.
Using empirical data drawn from two studies of manufacturing SMEs in ‘remote’ rural areas in northern England, the paper examines some of the ways in which firms have adapted to the characteristics of their local external environment over a 16-year period. The evidence presented suggests that in both the 1980s and 1990s successful adaptation to local conditions in peripheral rural regions included: proactive product and market development to overcome the limited size and scope of local markets; a labour-intensive development path to exploit the potential advantages of remote rural labour markets; and a relatively low level of subcontracting-out of production activities. The study also shows that whilst the recession of the early 1990s had an impact on the annual profitability and sales growth performance of rural manufacturing SMEs, its impact on their survivability was less than might be expected.
The global financial crisis hit nearly every country in the world, devastating their economies, decimating the financial resources of their companies and citizens, and nearly collapsing the banking systems in their countries. While risky financial instruments and bad home lending practices receive much of the blame for this downturn, too few innovations introduced in the years leading up to the crisis also contribute to this collapse or, at a minimum, deepening the resulting recession. This paper draws on theoretical literature and contemporary media accounts, building the argument for a significant impact of innovations on the economy and its potential role in pulling the US economy out of the financial crisis. The paper develops propositions based on this review and discusses implications for staving off future economic difficulties.
This study examines the antecedents of firm innovation capability in high technology firms in China and its effect on long-term corporate growth. It explores the growth-driven core competence of a firm by employing a knowledge-based view. The analysis of firm innovation capability indicates that firm innovation capability is related to long-term corporate growth. The results of this study support this link and the findings stress the importance of innovation intent and infrastructure to a firm's innovation capability.
The emergence of the Internet has pushed many established companies to explore this radically new distribution channel. Like all market discontinuities, the Internet creates opportunities as well as threats-it can be performance-enhancing as readily as it can be performance-destroying. Making use of event-study methodology, the authors assess the net impact of adding an Internet channel on a firm's stock market return, a measure of the change in expected future cash flows. The authors find that, on average, Internet channel investments are positive net-present-value investments. The authors then identify firm, introduction strategy, and marketplace characteristics that influence the direction and magnitude of the stock market reaction. The results indicate that powerful firms with a few direct channels are expected to achieve greater gains in financial performance than are less powerful firms with a broader direct channel offering. In terms of order of entry, early followers have a competitive advantage over both innovators and later followers, even when time of entry is controlled for. The authors also find that Internet channel additions that are supported by more publicity are perceived as having a higher performance potential.
Small Enterprises (SEs), which make a significant contribution to the Indian economy, have been exposed to an intensifying competitive environment since the early 1990s due to economic liberalisation, globalisation and Information and Communication Technology revolution. In the competitive environment, a significant number of SEs in Karnataka State has undertaken innovations, predominantly informally with self-efforts. External factors have primarily prompted these SEs to undertake innovations to achieve the objective of improving competitiveness. Innovation activities of SEs are primarily product-related, particularly improving product performance and quality. These ''incremental innovations'' have enabled the majority of the SEs to achieve quality improvement, reduced output rejections and higher productivity which all imply greater competitiveness. Technological innovations make a positive contribution to output. Therefore policy makers should reorient India's Small Enterprise Policy emphasis from support through ''technology transfer'' to support to ''in-house technological innovations'' that lend greater stability to SE development.
Purpose
This paper aims to construct a financial health indicator to define the degree of financial health in order to decontaminate the estimation sample and to make predictions that are not biased by unhealthy firms.
Design/methodology/approach
The binomial logit model is used to examine the likelihood that a firm will go bankrupt. In order to evaluate the accuracy of the estimated models, measures proposed by the Basel Committee on Banking Supervision are applied: cumulative accuracy profile (CAP) and the receiver operating characteristics (ROC).
Findings
The proposed financial health indicator permits the heterogeneity of the firms to be reduced as well as identifying a strong firm sample to estimate the bankruptcy probability accurately.
Originality/value
A drawback of all bankruptcy prediction models comes from the fact that bankruptcy is an example of a homogeneous observable qualitative response while non‐bankruptcy would be expected to be represented by a healthy firm. However, the non‐bankruptcy firms are heterogeneous and their actual probabilities of bankruptcy are non‐observable. The article adds to the previous literature on SMEs' bankruptcy prediction by using a financial health indicator to construct the estimation sample and to make accurate bankruptcy predictions.
This paper contributes to the study of innovative SMEs in two ways. First, the entirety of recent work focuses upon success cases of local innovation systems at the expense of less successful areas, which are thus in greater need of policy intervention. This paper aspires to address this gap in the literature by focusing on the experience of an area (Bedfordshire) characterized by low levels of innovative activity. Second, the search for the factors that accommodate or hinder innovation concentrated heavily at the macro-level. Consequently, any policy recommendations failed to distinguish between SMEs according to the extent and nature of their previous involvement in innovation. In response the authors develop a typology of SMEs based upon the extent and timing of innovation; the underlined aim is to undertake a comparative analysis of the causes, processes and obstacles to innovative activity. It is argued that: (1) there appears to be some relationship between the size of an enterprise and the extent of its involvement in innovation within the SME sector; (2) there are fundamental differences in the characteristics, processes and obstacles to innovation between the four elements of the typology; and (3) at the micro-level innovative activity does not appear to be positively related to job creation. Thus, increasing the innovative propensity of SMEs will not necessarily reduce unemployment rates.
Although a large body of research theoretically asserts a positive relationship between market orientation and organizational
performance, fewer empirical studies demonstrate it using multiple and varied organizational performance measures. Additionally,
a series of recent studies have theoretically proposed, but not empirically demonstrated, that a firm’s learning orientation
is likely to indirectly affect organizational performance by improving the quality of its market-oriented behaviors and directly
influence organizational performance by facilitating the type of generative learning that leads to innovations in products,
procedures, and systems. This empirical study supports all of these specific contentions and the more global notion that higher
order learning processes may be critical in creating a sustainable competitive advantage in the firm.
The complexity of innovation processes led to a tremendous growth in the use of external networks by small- and medium-sized enterprises (SMEs). Based on a survey to 137 Chinese manufacturing SMEs, this paper empirically explores the relationships between different cooperation networks and innovation performance of SME using the technique of structural equation modeling (SEM). The study finds that there are significant positive relationships between inter-firm cooperation, cooperation with intermediary institutions, cooperation with research organizations and innovation performance of SMEs, of which inter-firm cooperation has the most significant positive impact on the innovation performance of SMEs. Surprisingly, the result reveals that the linkage and cooperation with government agencies do not demonstrate any significant impact on the innovation performance of SMEs. In addition, these findings confirm that the vertical and horizontal cooperation with customers, suppliers and other firms plays a more distinct role in the innovation process of SMEs than horizontal cooperation with research institutions, universities or colleges, and government agencies.
Investment in R&D spawns innovations, which in turn, foster economic growth. In recent years, researchers have become increasingly aware of the role of industrial innovation in the rate of regional development and economic growth. In order to innovate, firms must invest in R&D (in-house or out-sourcing), and engage highly skilled labor that is able to cope with complex technological problems.The plethora of empirical studies on the determinants influencing R&D expenditure, and thus the rate of innovation, suggests that this investment is related, in different degrees, to firm size, organizational structure, ownership type, industrial branch and location.Large firms tend to invest more in R&D than do small ones. Numerous studies have found that R&D tends to be concentrated in large urban areas, and it plays a more vital role in creating innovation in central than in peripheral areas.This paper presents a model whose assumption is that expenditure on R&D is influenced by a firm’s characteristics—primarily its size, type of industrial branch, ownership type and location. The results obtained in the empirical analysis are based on data collected through personal interviews involving 209 industrial firms in the northern part of Israel.
This study explores the use of existing categorizations in classifying high and low technology firms such as the standard industrial classification (SIC). Such classifications tend to be applied to firms in a blanket fashion rather than on a systematic basis. This study uses both input and output approaches to identify high technology firms. The results indicate that electronics and IT/software firms meet the criteria for classification as high technology firms using both input and output criteria. The findings also indicate that distribution firms can also be categorized as high technology firms using the output approach only. Based on the analysis, we derived objective criteria for the classification of high technology firms.
The resource-based view of the firm contributes to the management of product development by highlighting how different functional and integrative capabilities affect process efficiency and product effectiveness. Here, I first review this evidence and then add it to past findings on this topic to form an agent-resource model, which provides a more analytical understanding of product development performance drivers. I also discuss the model in order to direct future research on such relevant issues as the creation, the utilization, and the capitalization of capabilities.
The authors propose a competing values approach to organizational effectiveness. Seven researchers in organizational behavior were impaneled to make judgments about the similarity of effectiveness criteria derived from a comprehensive list. A spatial model was developed from the judgment data. It indicated that three value dimensions, focus (task--people), structure (control--flexibility), and time (short-term--long-term) underlie conceptualizations of organizational effectiveness. Furthermore, the model suggested some fundamental criteria of organizational effectiveness that differentially reflect these three value dimensions. The present research uses this competing values approach to resolve a number of existing problems in the organizational effectiveness literature.
The disappointing performance of U.S. firms during the 1980s in technology-intensive, global markets (such as consumer electronics, office and factory automation, and semiconductor memories) has been widely attributed to a failure to continuously and incrementally improve products and processes. In "The Breakthrough Illusion", Florida and Kenney wrote that "The United States makes the breakthroughs, while other countries, especially Japan, provide the follow-through" on which competitive advantage is built. Gomory made a similar point. contrasting "revolutionary" innovations with "another, wholly different, less dramatic, and rather grueling process of innovation, which is far more critical to commercializing technology profitably...Its hallmark is incremental improvement, not breakthrough. It requires turning products over again and again, getting the new model out, starting work on an even newer one. This may all sound dull, but the achievements are exhilarating." In "The Machine that Changed the World", the most influential work on the subject of the 1980s, Womack, Jones, and Roos measured the competitive effects of this lack of attention to continuous incremental improvement throiugh a benchmarking study of the global automobile industry. Other studies reinforce this message: compared to their Japanese competitors, U.S. firms lagged in cost, quality, and speed; and in large measure, the problem stemmed from a relative........
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The 5th Edition of Strategic Management of Technology and Innovation by Burgelman, Christensen, and Wheelwright continues its unmatched tradition of market leadership, by using a combination of text, readings, and cases to bring to life the latest business research on these critical business challenges. Strategic Management of Technology and Innovation takes the perspective of the general manager at the product line, business unit, and corporate levels. The book not only examines each of these levels in some detail, but also addresses the interaction between the different levels of general management - for example, the fit between product strategy and business unit strategy, and the link between business and corporate level technology strategy. Each part of the book starts with an introductory chapter laying out an overall framework and offering a brief discussion of key tools and findings from existing literature. The remainder of each part offers a selected handful of seminar readings and case studies. Almost all of the cases deal with recent events and situations, including several that are concerned with the impact of the Internet. A few "classics" have been retained, however, because they capture a timeless issue or problem in such a definitive way that the historical date of their writing is irrelevant.