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Determinants of SME growth: The influence of financing pattern.: An empirical study based on Swedish data
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law.
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law.
2016 (English)In: Management Research Review, ISSN 2040-8269, E-ISSN 2040-8277, Vol. 39, no 9, 966-986 p.Article in journal (Refereed) Published
Abstract [en]

Purpose: The purpose of this paper is to study the firm-level financial variables affecting the growth of small and medium-sized enterprises (SMEs). Design/methodology/approach: The study applies a resource-based view to analyze the firm-level as well as industry-level determinants of SME growth. Empirical evidence has also been provided from a data set of SMEs in Sweden to support the hypotheses. For a robust statistical analysis, three models – ordinary least squares (OLS) regression, random-effects regression and fixed-effects regression – are used to examine the influence of explanatory variables on growth. Findings: The findings of this study show a positive and significant influence of profitability, short-term debt and size on a firm’s growth across all three models. Results regarding the influence of long-term debt on growth, however, are mixed. While the results of a fixed-effect model show the negative and significant influence of long-term debt on growth, the results according to OLS and random effects show long-term debt positively related to growth. Research limitations/implications: This study has been conducted over a period of four years and in the context of Sweden which may limit the generalizability of its results for longer periods and for different contexts. Moreover, the low explanatory power of the models implies the need to also consider other types of variables, such as managerial or socio-economic variables, to better explain the determinants of SME growth. Practical implications: Understanding the determinants of growth can be important for policy makers, SME managers and financial institutions. The findings of this study can be used for designing policies which stimulate SME growth. Realizing the financial resources that influence growth can also help SME managers and financial institutions to understand each other’s need for better cooperation. Originality/value: This paper applies different models for analyzing large and cross-sectoral data regarding SME growth in the context of Sweden.

Place, publisher, year, edition, pages
2016. Vol. 39, no 9, 966-986 p.
Keyword [en]
Fixed-effects regression, Growth, OLS regression, Random-effects regression, SME, Sweden
National Category
Economics
Identifiers
URN: urn:nbn:se:miun:diva-29000DOI: 10.1108/MRR-04-2015-0093ISI: 000391150700001Scopus ID: 2-s2.0-84987989541OAI: oai:DiVA.org:miun-29000DiVA: diva2:1006167
Available from: 2016-09-30 Created: 2016-09-30 Last updated: 2017-02-06Bibliographically approved

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