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The effect of finance, knowledge and empathy gaps on the use of private equity amongst family-owned SMEs

Author

Listed:
  • Pi-Shen Seet
  • Chris Graves
  • Magdalena Hadji
  • Andy Schnackenberg
  • Petter Gustafson

Abstract

This paper presents the findings of exploratory research into the challenges that small-to-medium-sized family-owned enterprises (SMFEs) face when engaging with the private equity (PE) sector. This study, conducted through interviews of SMFE owners, PE firms and family business professional advisors in South Australia, indicates that there are three large gaps between SMFE owners vis-a-vis the PE community: 1) a finance gap; 2) a knowledge gap; 3) an empathy gap. The results of this study also suggest that these gaps interact with each other to exacerbate the overall gap, and that some professional advisors were found to contribute to (rather than bridge) these gaps. This paper concludes with a revised conceptual framework model for the better understanding of the barriers to and opportunities for SMFEs to gain access to PE and some suggestions as to how professional bodies and trade associations can facilitate the process.

Suggested Citation

  • Pi-Shen Seet & Chris Graves & Magdalena Hadji & Andy Schnackenberg & Petter Gustafson, 2010. "The effect of finance, knowledge and empathy gaps on the use of private equity amongst family-owned SMEs," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 11(1), pages 85-104.
    • Handle: RePEc:ids:ijesbu:v:11:y:2010:i:1:p:85-104
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    Citations

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    Cited by:

    1. Graves, Chris & Shi, Henry X. & Barbera, Francesco, 2022. "Family-centred non-economic goals and the internationalisation of family firms: Evidence from Australia," International Business Review, Elsevier, vol. 31(4).
    2. Felix K. Thiele, 2017. "Family businesses and non-family equity: literature review and avenues for future research," Management Review Quarterly, Springer, vol. 67(1), pages 31-63, February.
    3. Schickinger, Antonia & Leitterstorf, Max P. & Kammerlander, Nadine, 2018. "Private equity and family firms: A systematic review and categorization of the field," Journal of Family Business Strategy, Elsevier, vol. 9(4), pages 268-292.
    4. Olaf M. Rottke & Felix K. Thiele, 2018. "Do family investors differ from other investors? Similarity, experience, and professionalism in the light of family investee firm challenges," Journal of Business Economics, Springer, vol. 88(2), pages 139-166, February.
    5. Kijkasiwat, Ploypailin, 2021. "The influence of behavioral factors on SMES’ owners intention to adopt private finance," Journal of Behavioral and Experimental Finance, Elsevier, vol. 30(C).

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