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This paper aims to empirically examine the financing of small and medium sized enterprises (SMEs) through a financial growth lifecycle model.

Data in publicly available databases are generally unsuitable to examine the financial lifecycle model, thus a questionnaire survey was employed to collect data. Because of the well‐documented reticence of SME owners to reveal detailed financial information, data were requested in percentage form. This innovative methodology was successful, as 92 per cent of respondents disclosed detailed financing data. A response rate of 42.6 per cent across six industry sectors provided data to employ parametric techniques. Reporting and analysing the large primary data set across six age categories, a number of statistical tests were conducted to test the financial growth lifecycle model.

Analysis of respondents' capital structures across age groups indicates distinct changes in sources of finance employed by firms over time. Financing choices are consistent with Myers's pecking‐order hypothesis, and the importance of profitability in financing SMEs is emphasised. Contrary to conventional wisdom, respondents in the youngest age category report a relatively high use of debt financing. This is explained by the provision of firm owners' personal assets to secure firm debt.

The key contribution of this paper is to provide an empirical examination of the financial growth lifecycle model by combining a number of statistical tests. This approach is significantly different to that traditionally adopted in empirical investigations of SME financing, which is to examine the applicability of theories developed in corporate finance on panel data. Additionally, the paper presents data on personal sources of finance employed by firm owners, which is typically not available, even in comprehensive secondary databases.

Literature on entrepreneurial finance has long overcome the view of an investor as a sole provider of financial capital. Entrepreneurs need to consider more aspects when deciding on an investor. Especially the depiction of corporate venture capital (CVC) investors has long highlighted advantages and disadvantages compared to independent VC (IVC) investors. The authors investigate what drives entrepreneurs' preferences for CVC relative to IVC and thereby focus on two key issues in the entrepreneur's consideration – the role of resource requirements and exit strategies.

The data were collected in an online survey that gathered information on several characteristics of entrepreneurs and their ventures. The resulting data set of 105 German entrepreneurs was analyzed using logistic regression and revealed important drivers for entrepreneurs' investor preferences.

The study’s findings confirm that the venture's resource needs, specifically the need for marketing resources and access to the corporate network, which play a significant role in the decision on whether a CVC or IVC investor is preferred. Moreover, the analysis debunks the hypothesis that entrepreneurs view a CVC investment as the first step toward acquisition. However, those entrepreneurs striving for an IPO are less likely to prefer CVC.

The study expands the literature on CVC attractiveness and specifically considers the entrepreneurs' intentions and needs. The results confirm but also debunk some widespread perceptions about why entrepreneurs choose to pursue financing from a CVC investor.

The purpose of this study is to conduct a comparative analysis of the short- and long-term financial strategies to augment SMEs’ performance in emerging markets. Using a resource-based theoretic perspective; the analysis has investigated the mediating role of distinctive management competencies (DMCs) between efficient financial strategies and SMEs’ business growth.

The empirical data were drawn from a cross-industrial panel of 273 SMEs from Spain and 224 SMEs from Pakistan across all manufacturing sectors over the period of 2006-2013. Multivariate tests are conducted to estimate the impact of efficient financial strategies on SMEs’ performance. The advanced mediation version of Kenny and Judd (2013) is used to test mediation confirmation of DMCs; while Sobel test is applied to examine robustness of mediation results.

The robustness check of 497 privately held SMEs confirmed that practicing efficient financial strategies has significant influence on SMEs’ performance. Stimulatingly, mediating effect of DMCs, that are used for executives’ prudent financial decisions have been traced in both respondent countries. Based on the findings, it is argued that efficient financial strategies realistically translate into DMCs, which taken together are likely to lead more effective and significant to improve SMEs’ performance.

The results suggest that power of distinctive managerial decisions is a crucial factor in the employment process besides efficient financial strategies identified in previous studies. The results of this study are of great importance to managers and major stakeholders, such as investors, creditors, financial analysts and policymakers, to inflate their efforts to reduce the incidence of business failure and for survival and growth of SMEs.

The paper raises a new theoretic explanation by determining the intervening role of DMCs in translating EFS into improved SMEs’ performance, thereby supplementing the extant theories.

The paper aims to investigate the role of corporate governance in the relationship between small businesses financing choice decisions on the business performance.

The paper was situated within the financial growth cycle theory and stewardship theory and survey approach was adopted for data collection. The statistical analysis was conducted by using partial least square structural equation modelling.

The results indicate that the interaction of corporate governance and financing choice decisions strengthens the performance relationship. Further, corporate governance mediates the positive relationship between financing choice decisions and performance. Thus, suggesting that corporate governance can carry the effect of the financing choice decisions to business performance.

The findings of our research reveal that, small businesses who follow solid corporate governance procedures should expect higher business performance. This is because financing decisions alone will not assure positive business performance unless they are tied to a broader perspective of effective corporate governance practices.

To the best of the authors’ knowledge, this is the first study that contributes to the small business financing choice and performance literature by combining the strengths of financial growth cycle theory and stewardship theory to explain the financing choice decisions and, in particular, the role of corporate governance in the relationship. Further, the study is unique in its nature because it presents a successful model for small businesses in emerging economies to concentrate more on the role of corporate governance in enhancing business performance.

This paper aims to investigate how ethnic diversity and finance options impact the survival of small- and medium-sized enterprises (SMEs) in New Zealand.

This study incorporates survey data and secondary data from the public domain. The surveys were conducted across six sectors of the economy categorised into four main ethnic groups involving six nationalities. This study adopts regression analysis using Probit, Logit and linear probability.

The financing choices of the entrepreneurs were consistent with pecking-order theory. The evidence suggests that information asymmetries are prevalent in New Zealand, as SMEs’ owners perceive significant risk from expanding businesses internationally. There is no relationship between ethnicity bias and the survival of firms.

This study provides a contribution to the literature on factors relating to business survival and guides the policymakers to use the benefits of potential factors to increase the survival rate of SMEs.

The purpose of this paper is to analyze the relationship between housing markets and new firm formation in six different industries in all 284 municipalities in Sweden.

The authors have used data from Statistics Sweden and The Swedish Agency for Economic and Regional Growth to develop a model to analyze the relationship between house prices and industry-specific new firm formation, with the interaction effect of financial infrastructure.

In the data, stable high house prices have no effect on entrepreneurship. However, a market with rising house prices has a positive effect on new firm formation, in retail, construction, business-to-business services and miscellaneous sectors, but produced no effect in either mining, agriculture and fishing or in manufacturing. The interaction between rising house prices and financial infrastructure does not change the positive effect on retail, business-to-business services and miscellaneous sectors, but within the construction industry, the positive effect on new firm formation disappears. In manufacturing, the authors observe the opposite – a positive effect, instead of no effect previously.

The contribution of this study is to provide evidence of how house prices are associated with entrepreneurship in different industries, as well as analyzing how the interaction between house prices and financial infrastructure is associated with entrepreneurship. By separating observations in time, endogeneity is controlled and a causal relationship where higher house prices is postulated, which leads to an increase in entrepreneurial activity in different industries. By using a spatial Durbin model, the authors control for spatial dependency.

The purpose of this paper is to investigate the effects of small business entrepreneurs’ relinquishment of control aversion and the impact of their interaction with external financiers on market connection.

Questionnaires were sent to the chief executive officers of small businesses in the manufacturing and professional services sectors. A total of 459 valid responses were analyzed in a structural equation model.

The attitude of small business entrepreneurs in relying on financiers’ advice is marked by control aversion. This fear of losing control creates information asymmetry, which in itself leads to decreased financing opportunities for small business entrepreneurs. The results of the study suggest that small firms seeking the aid of financiers will be provided with substantial additional information about the market. Issues pertaining to supply seem to be less relevant than those relating to demand, thus indicating that greater focus should be placed on the investment readiness of small businesses.

This study emphasizes the importance of the role of attitudes among SMEs in understanding capital market failure and credit rationing.

The purpose of this paper is to ascertain the factors determining the choice of sources of finance for a tech startup over its lifecycle.

This study adopts simple random sampling technique to choose 93 sample tech startups in Bangalore. Further, this study employs the primary data collection from the sampled startups under study through a semi-structured questionnaire and in-depth interviews with the founders/CEOs of these startups. Furthermore, it carries out binary logistic regression analysis to primarily examine the likelihood of a tech startup to approach and access a particular source of finance over its lifecycle.

Our results indicate that a tech startup's choice for a financial source varies with its lifecycle stage and financial requirements. We find that while in its early stage, a tech startup's choice of a financial source is limited to business angels (BA), in the growth stage, it approaches the institutional sources, viz. Venture Capital (VC), Corporate Venture Capital (CVC), Banks and Private Equity (PE) firms alternatively. Out of the three major categories of financial requirements: Human Capital (HC), Research Capital (RC) and Social Capital (SC), the requirement for HC and SC is predominantly funded by VCs, while the acquisition of RC is facilitated by early stage investors (BAs) as well as growth stage investors (CVC and PEs).

The research implication of the study lies in bringing out the need to understand both the nature and the quantum of financial requirements of tech startups would influence the sources of finance it would approach and obtain finance for its operations and growth.

The major policy implication of the study refers to the need to promote the diverse sources of finance to meet the diverse needs of finance in different stages of a tech startup's lifecycle. Particularly in an emerging economy, where we do not see the emergence and growth of highly innovative tech startups, the need to promote adequate availability of RC is especially important.

This study makes a key contribution to the entrepreneurial finance literature by empirically investigating the factors determining a tech startup's propensity to approach and access a particular source of finance over its lifecycle.

Limited access to capital is a classic issue in and a burden to micro, small and medium enterprises (MSMEs) in Indonesia. The existence of the problem with information asymmetry and agency conflicts that are predominant at the level of small businesses, increasingly hampers the opportunity to obtain funds from various external sources. Especially for businesses that are at the pioneering stage, entrepreneurs are required to think creatively, have the courage to take risks, and be independent in fulfilling resources to realize business opportunities. The availability of funds certainly has an impact on business performance, either directly or indirectly. Based on a literature review, business performance is categorized into financial and non-financial dimensions with various measurement proxies. However, some of the models and measurements proposed are not always suitable in assessing the performance of MSMEs, especially in the startup phase. Therefore, this chapter concurrently describes the funding patterns and the funding alternatives to measure the performance of new businesses based on the existing literature. Theoretically, this research adds a perspective in the field of entrepreneurial finance regarding funding patterns that can be implemented by startup businesses in Indonesia and provides a proposal for measuring the concept of performance that is more adaptive and comprehensive for businesses in the startup stage. The implication of this research for entrepreneurs leads to the need to adjust funding decisions according to the changing stages of the business lifecycle and to expand the funding window to support the sustainability of small businesses.