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The growth–profitability nexus among Swedish SMEs
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.
2014 (English)Conference paper, Abstract (Refereed)
Abstract [en]

This study empirically examines the growth–profitability nexus among small and medium-sized enterprises (SMEs). The data comprise 11,572 observations covering 26,721 Swedish SMEs in six industry sectors over the 2008–2011 period. The data were analysed using the three-stage least square model (3SLS model). Consistent with the hypotheses derived from the resource-based approach, the results indicate that current profitability significantly and positively affect firm growth. The firm-level control variable size significantly and positively affects firm growth, though firm age significantly and negatively affects growth. Furthermore, also the firms’ industry affiliation affects firm growth. Unlike the most of previous studies, the current study contributes to the literature by employing the 3SLS model to analyse a comprehensive, cross-sectoral sample including of non-financial, independent, and unlisted active SMEs in six industry. Since this study focuses explicitly on SMEs which play a fundamental role in Swedish economy, the findings of this study added to literature. The findings could help policy makers and SME owners and managers to gain a better understanding of the relation between profitability and growth. Governments can support SMEs by reducing taxation pressure, thereby providing better motivation for reinvestment and growth. Firm owners and managers can accomplish sustainable growth by unique combination of resource, adapting competitive and invocative development projects focusing on continuous upgrading of human capital that improve firm profitability.

Place, publisher, year, edition, pages
2014.
Keyword [en]
SMEs growth, Profitability, 3SLS model, Cross-sectoral analysis, Resource-based approach
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:miun:diva-22738OAI: oai:DiVA.org:miun-22738DiVA: diva2:743421
Conference
ISBE Conference, Manchester, 5-6 November 2014
Available from: 2014-09-04 Created: 2014-09-04 Last updated: 2014-10-23Bibliographically approved

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Yazdanfar, DarushÖhman, Peter
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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf