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The Search for Competent Capital: Financing of High Technology Small Firms in Sweden and USA

Published on Jan 1, 2005in Venture Capital: An International Journal of Entrepreneurial Finance
· DOI :10.1080/1369106042000335629
Hans Sjögren9
Estimated H-index: 9
(Linköping University),
Marcus Zackrisson1
Estimated H-index: 1
(Office of Science and Technology)
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Abstract
The pecking order theory states that firms choose financing in the following order: internal finance-debt-equity. However, most of the research has been conducted on larger (publicly-listed) firms. This article presents a unique empirical material on the financing of high technology small firms (HTSFs) in Linkoping, Sweden and Santa Clara County, USA. The data reveals how firms are financed and their preferences for different financial sources. Whilst traditional financial theory and pecking order studies assume only three different financial sources (internal financing-debt-equity), this study also considers who the money comes from: venture capitalists, business angels, banks, corporate venture capital, governments, employees or the firms' founders. The paper shows that the pecking order is different for HTSFs than for larger firms. The HTSFs in the study have a preference for equity financing. The paper also shows that there are differences in financing between HTSFs in Linkoping and Silicon Valley and that these differences are not explained by differences in pecking order but rather by differences in availability of finance--in other words, the functioning of the financial systems and the competence provided by the various financiers. HTSFs are primarily searching for appropriate financing.
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Published on Nov 12, 2018in Journal of Economic Studies
Peter Öhman11
Estimated H-index: 11
(Mid Sweden University),
Darush Yazdanfar6
Estimated H-index: 6
(Mid Sweden University)
Purpose The purpose of this paper is to examine organizational-level determinants of commercial bank profitability. Design/methodology/approach Using bank-level longitudinal panel data for the 2005–2014 period, this study conducts univariate and multivariate statistical analyses, i.e. ordinary least squares (OLS), fixed-effects and feasible generalized least-squares (FGLS) regressions, to analyze profitability variables in Swedish commercial banks. Findings The findings indicate that the organiz...
Published on Jul 1, 2018in Annals of Regional Science1.07
Mikaela Backman6
Estimated H-index: 6
(Jönköping University),
Tina Wallin2
Estimated H-index: 2
(Jönköping University)
We examine whether low access to banks is perceived as problematic when obtaining financial capital for innovation activities. Data on innovation obstacles from the Swedish Community Innovation Survey are combined with geo-coded data at the firm level, which allows us to proxy access to external capital by the Euclidian distance from each firm to its nearest bank and the supply within a radius of 5 km. The results indicate that both a longer distance to the nearest bank and fewer banks in the vi...
Published on Jan 1, 2018
Nicolas Pary (ULB: Université libre de Bruxelles), Olivier Witmeur (ULB: Université libre de Bruxelles)
While they boost the economy and innovation, New Technology-Based Firms (NTBF) frequently experience difficulties to finance themselves. In Europe, policy makers react by providing them with grants. However, three elements cast doubt on these grants. First, it has been argued that most NTBF financing constraints would be due to the immaturity of projects rather than the lack of investors. Second, Pecking Order Theory suggests that grants, being free and non-dilutive, may be solicited without act...
Published on Feb 13, 2017in Review of Accounting and Finance
Peter Öhman11
Estimated H-index: 11
,
Darush Yazdanfar6
Estimated H-index: 6
Purpose - This paper aims to empirically investigate the capital structure determinants of small and medium-sized enterprises (SMEs) with a particular focus on short- and long-term debt. Design/methodology/approach - Several methods were used to analyse a sample of 15,897 Swedish SMEs for which complete financial information was available for a four-year period following the 2008 financial crisis, i.e. the 2009-2012 period. Findings - The results indicate that eight explanatory variables – i.e. ...
This contribution outlines the rising and promising research topic related to investment readiness level (IRL) of Small and Medium Sized Companies (SMEs). To advance this field of investigation and to bring potential future research directions to light, this paper reviews and explores the current state of research by means of a literature review contemplating quantitative facets in the methodology. While facilitating comparisons in applied methods of earlier development and progress, it uncovers...
Ayşegül Ertuğrul Ayrancı1
Estimated H-index: 1
(Istanbul Arel University),
Evren Ayranci2
Estimated H-index: 2
Today’s business realm involves a vast variety of businesses and business groups; small and medium-sized enterprises (SMEs) being one of the most prominent. Despite countless investigations from many different business-related perspectives, their innovation perspective is rarely subjected. This current study chooses this perspective and moves a step beyond by considering financing of these businesses. In other words, this study covets to uncover how innovative SMEs are financed, how much these b...
Published on Jan 2, 2016in European Journal of Finance1.12
Zélia Serrasqueiro11
Estimated H-index: 11
(UBI: University of Beira Interior),
Paulo Maçãs Nunes11
Estimated H-index: 11
(UBI: University of Beira Interior),
Manuel José da Rocha Armada13
Estimated H-index: 13
Using panel data models and this study analyses the capital structure decisions of high-tech small- and medium-sized enterprises (SMEs) and non-high-tech SMEs. The results suggest that the capital structure decisions of high-tech SMEs are closer to what is predicted by the Pecking Order Theory. However, the results also suggest a modified version of the Pecking Order Theory for high-tech SMEs that have relied on venture capital. These firms prefer equity issues to debt, when internal finance is ...
Mikaela Backman6
Estimated H-index: 6
It is natural to assume that the characteristics of the bank sector are important factors for new firm formation when external capital is needed for establishing new firms. The local bank sector acts as the main provider of financial funds in Sweden since other sources of external capital are limited. In addition, the banking services needed in the start-up process tend to be sensitive to distance and are mainly supplied locally. Thus, the structure of the local bank sector is an important facto...
Published on Jun 30, 2014in Journal of Business & Industrial Marketing1.96
Mark Freel4
Estimated H-index: 4
(U of O: University of Ottawa),
Paul Robson25
Estimated H-index: 25
(RHUL: Royal Holloway, University of London),
Sarah Jack25
Estimated H-index: 25
(Lancaster University)
Purpose – This paper aims to understand the factors associated with perceptions of venture capital as a barrier to innovation in an important subset of knowledge-intensive service firms – technology-based business services. A general and longstanding neglect of services in studies of innovation and a common focus of innovation studies on the availability of, and demand for, risk capital has been noted. Design/methodology/approach – In exploring these issues, the authors draw on survey data colle...
Published on Jan 1, 2014
Celem niniejszego opracowania jest ocena stopnia wykorzystania dotacji z funduszy unijnych jako instrumentu finansowania dzialalno ś ci innowacyjnej malych i ś rednich przedsi e biorstw sektora wysokiej technologii w Polsce oraz identyfikacja barier ograniczaj ą cych mo z liwo ś ci tych przedsi e biorstw w ubieganiu si e o ś rodki unijne. W artykule postawiono hipotez e , i z pozyskiwane przez male i ś rednie przedsi e biorstwa wysokiej technologii w Polsce ś rodki z funduszy unijnych slu zą fin...
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