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Control Aversion and The Search for External Financing in Swedish SMEs

  • Björn Berggren

    ()

  • Christer Olofsson
  • Lars Silver
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    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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    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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    1. De Meza, D. & Southey, C., 1995. "The Borrower's Curse: Optimism, Finance and Enterpreneurship," Discussion Papers 9502, Exeter University, Department of Economics.
    2. JS Armstrong & Terry Overton, 2005. "Estimating Nonresponse Bias in Mail Surveys," General Economics and Teaching 0502044, EconWPA.
    3. Oakey, RP, 1984. "Finance and innovation in British small independent firms," Omega, Elsevier, vol. 12(2), pages 113-124.
    4. Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
    5. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
    6. Hall, John & Hofer, Charles W., 1993. "Venture capitalists' decision criteria in new venture evaluation," Journal of Business Venturing, Elsevier, vol. 8(1), pages 25-42, January.
    7. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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