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Control Aversion and The Search for External Financing in Swedish SMEs

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  • Björn Berggren

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  • Christer Olofsson
  • Lars Silver
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    Abstract

    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. Copyright Kluwer Academic Publishers 2000

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    Bibliographic Info

    Article provided by Springer in its journal Small Business Economics.

    Volume (Year): 15 (2000)
    Issue (Month): 3 (November)
    Pages: 233-242

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    Handle: RePEc:kap:sbusec:v:15:y:2000:i:3:p:233-242

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    Web page: http://www.springerlink.com/link.asp?id=100338

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    Cited by:
    1. Cécile Carpentier & Jean-François L'Her & Jean-Marc Suret, 2010. "Seasoned Equity Offerings by Small and Medium-Sized Enterprises," CIRANO Working Papers 2010s-07, CIRANO.
    2. Jun Du & Alessandra Guariglia & Alexander Newman, . "Does social capital affect the financing decisions of Chinese small and medium-sized enterprises?," Discussion Papers 10/13, University of Nottingham, GEP.
    3. Ciarán mac an Bhaird & Brian Lucey, 2010. "Determinants of capital structure in Irish SMEs," Small Business Economics, Springer, Springer, vol. 35(3), pages 357-375, October.
    4. Cécile Carpentier & Jean-Marc Suret, 2005. "The Indirect Costs of Venture Capital in Canada," CIRANO Working Papers 2005s-25, CIRANO.
    5. Van Campenhout, Geert & Van Caneghem, Tom, 2009. "Information Availability, Information Quality and the Financial Structure of Belgian SME's," Working Papers, Hogeschool-Universiteit Brussel, Faculteit Economie en Management 2009/27, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    6. K. Baeyens & S. Manigart, 2006. "Who gets private equity? The role of debt capacity, growth and intangible assets," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium, Ghent University, Faculty of Economics and Business Administration 06/368, Ghent University, Faculty of Economics and Business Administration.
    7. Tom Caneghem & Geert Campenhout, 2012. "Quantity and quality of information and SME financial structure," Small Business Economics, Springer, Springer, vol. 39(2), pages 341-358, September.
    8. Brian Lucey & Colm KEarney & Ciaran MacAnBhaird, 2012. "Culture and capital structure in small and medium sized firms," The Institute for International Integration Studies Discussion Paper Series iiisdp419, IIIS.
    9. Hogan, Teresa & Hutson, Elaine, 2005. "Capital structure in new technology-based firms: Evidence from the Irish software sector," Global Finance Journal, Elsevier, vol. 15(3), pages 369-387, February.
    10. Cécile Carpentier & Jean-François L’Her & Jean-Marc Suret, 2012. "Seasoned equity offerings by small and medium-sized enterprises," Small Business Economics, Springer, Springer, vol. 38(4), pages 449-465, May.
    11. Cécile Carpentier & Jean-Marc Suret, 2005. "On the Usefulness of Tax Incentives for Business Angels and SME Owners: An Empirical Analysis," CIRANO Working Papers 2005s-13, CIRANO.
    12. Milen Baltov, 2008. "Challenges in Front of the Financing of the Innovation Active Small and Medium-sized Enterprises – Regional Prospects," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 109-131.
    13. Péter Hernádi & Mihály Ormos, 2012. "What managers think of capital structure and how they act: Evidence from Central and Eastern Europe," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 12(2), pages 47-71, December.

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