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The growth-profitability nexus among Swedish SMEs
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law. (CRER)
Mid Sweden University, Faculty of Human Sciences, Department of Business, Economics and Law. (CRER)
2015 (English)In: International Journal of Managerial Finance, ISSN 1743-9132, E-ISSN 1758-6569, Vol. 11, no 4, 531-547 p.Article in journal (Refereed) Published
Abstract [en]

Purpose – The purpose of this paper is to examine the growth-profitability nexus among small- and medium-sized enterprises (SMEs). Design/methodology/approach – The data comprise 106,884 observations covering 26,721 Swedish SMEs in six industry sectors over the 2008-2011 period. The data were analysed using several statistical techniques, including two-stage least squares regression, fixed-effects and random regressions, and bootstrapped quantile regression. Findings – Consistent with the hypotheses derived from the resource-based approach, the results indicate that current profitability significantly and positively affects firm growth. The firm-level control variable size significantly and positively affects firm growth, though firm age significantly and negatively affects growth. Firm industry affiliation also affects firm growth. Research limitations/implications – Since SME performance is commonly equated with access to knowledge, consultancy services or business training programmes sponsored by governmental organizations can help SMEs improve their management skills and thereby their performance. Moreover, adopting advanced financial management practices can improve the use of financial resources, leading to higher profitability and thereby sustainable growth. This implies that managers should change their strategy from “growth now, profitability later” to “profitable growth now”. Originality/value – Unlike most previous studies, this study employs several multivariate methods to analyse a comprehensive, cross-sectoral sample comprising non-financial, independent, and active SMEs in several industries. This study focuses explicitly on SMEs, which play a fundamental role in the Swedish economy. © 2015, Emerald Group Publishing Limited.

Place, publisher, year, edition, pages
2015. Vol. 11, no 4, 531-547 p.
Keyword [en]
Cross-sectoral analysis, Profitability, Resource-based approach, SMEs, Sustainable growth
National Category
Business Administration
Identifiers
URN: urn:nbn:se:miun:diva-25925DOI: 10.1108/IJMF-01-2015-0005Scopus ID: 2-s2.0-84940934503OAI: oai:DiVA.org:miun-25925DiVA: diva2:856222
Note

Export Date: 23 September 2015

Available from: 2015-09-23 Created: 2015-09-23 Last updated: 2015-09-23Bibliographically approved

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CiteExportLink to record
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Cite
Citation style
  • apa
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Language
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