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Control aversion and the search for external financing in Swedish SMEs
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2000 (English)In: Small Business Economics, ISSN 0921-898X, E-ISSN 1573-0913, Vol. 15, no 3, 233-242 p.Article in journal (Refereed) Published
Abstract [en]

The discussion on growth (see Storey, 1997) and control aversion (Cressy, 1995; Chittenden et al., 1996; Cressy and Olofsson, 1996) in small and medium sized firms has been attracting an increasing amount of attention. Our purpose in this article is to identify under what circumstances small and medium sized firms are prepared to accept outside control in the business firm in order to grow. In the article it is argued that technology development, financial strength, size and perceived need to grow, change firms attitudes towards external financiers. The change in attitude towards more openness eventually leads to an actual behaviour where the principals choose to apply for external finance in the form of bank loans. A linear structural equation modelling program, LISREL, is used to analyse a sample of 281 Swedish firms. The firms all have less than 200 employees, and the sample includes both manufacturing and service firms.

Place, publisher, year, edition, pages
2000. Vol. 15, no 3, 233-242 p.
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:uu:diva-89921DOI: 10.1023/A:1008153428618OAI: oai:DiVA.org:uu-89921DiVA: diva2:161791
Available from: 2002-05-15 Created: 2002-05-15 Last updated: 2017-12-14Bibliographically approved
In thesis
1. Vigilant Associates - Financiers' Contribution to the Growth of SMEs
Open this publication in new window or tab >>Vigilant Associates - Financiers' Contribution to the Growth of SMEs
2002 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

With the recession of the early 1990s, small and medium sized enterprises (SMEs) attracted increased attention from policy-makers and in public debate as it was realized that SMEs play an important role in employment, innovation and regional dynamics. At the same time researchers claimed that SMEs are at a disadvantage in raising investment funds. This thesis adopts the perspective of the SMEs, analysing the mechanisms whereby control aversion can be reduced in SMEs, and examining the related financial search activity in SMEs as well as the contributions that financiers make to SMEs.

The empirical basis of the thesis comprises two surveys with 281 and 459 respondents and a qualitative study consisting of 10 interviews. The results of the analysis indicate that control aversion is reduced by mechanisms related to learning and coercion, and that Swedish SMEs generally tend to follow the pecking order theory of finance. The contributions that financiers make to the SMEs differ, depending mainly on whether they are equity or loan financiers. Lack of legitimacy and information asymmetries are two generic problems that impede the development of SMEs, and a well-established financier could mitigate these problems. Besides these contributions a financier could target his efforts to specific areas such as production and product development, connecting the firm to customers and the market, connecting the firm to a financial network, boosting profitability and creating more rapid growth.

Place, publisher, year, edition, pages
Uppsala: Företagsekonomiska institutionen, 2002. 204 p.
Keyword
Business studies, Företagsekonomi
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:uu:diva-2147 (URN)
Public defence
2002-06-05, Ekonomikum hörsal 2, Uppsala, 10:15
Opponent
Available from: 2002-05-15 Created: 2002-05-15Bibliographically approved

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