Adapting to the Financial Landscape: Evidence from Small Firms in Nairobi

Bootstrapping in small firms: An empirical analysis of change over time

“…Aaronson et al (2004) found evidence in small firms to support this, with trade credit more likely to be offered as supplier relationships are further developed. Vandenberg (2003) also found some support for this theory, reporting evidence of a positive relationship between access to trade credit and firm size. Therefore, small firms should be able to lean on suppliers for more financing as relationships and credit history develop over time.…”

“…Early on, when firms have little credit history with payables, the threat of payment default is higher and it is likely to be more difficult to obtain supplier credit (Aaronson et al, 2004;Vandenberg, 2003;Ng et al, 1999). These firms are often faced with either paying early or facing an interest penalty, with little room to negotiate terms (Ng et al, 1999).…”

“…Resource dependence theory would also predict that joint-utilization bootstrapping techniques should decrease over time, as these are thought to be both a response to resource constraints and a way to obtain legitimacy (Vandenberg, 2003;Winborg and Landstrom, 2001). For instance, joint utilization of equipment is a way to obtain access to an asset without realizing the asset's full cost, as well as a way to establish credibility via having access to the asset and having a relationship with a partner firm.…”

Trade credit in China in the early 1990s

“…Short-term and long-term subdivisions of bank loans are not available for 1993 and 1994. We therefore use the total sum of bank loans as the 4 McMillan and Woodruff (1999) have treated trade credit in developing economies; others include Fisman and Love (2003), Vandenberg (2003), Fafchamps (2004), Fisman and Raturi (2004), and Hyndman and Serio (2010). 5 Schwartz (1974) developed a model which suggests that firms with easier access to finance have a motive to pass on their available credit to customers.…”

Comparative Research of Financial Model in Supply Chain

“…Lack of funds is the first unfavorable factor in the development of small and medium-sized firms in China [1]. More than 80 % of the small and medium-sized firms rely on self-financing, while more than 90 % of the small and medium-sized firms are depended on the internal financing channel in the initial growth period, and the financing difficulty of small and medium-sized firms widespread [2]. 3PL enterprise undertakes procurement, logistics, payment to supplier, and delay payment service to retailer.…”