Financing technology-based small firms in Europe: what do we know?

Revest, Valérie; Sapio, Alessandro

doi:10.1007/s11187-010-9291-6

Cited by 160 publications

(116 citation statements)

References 166 publications

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“…Alongside this, a wider literature focusing on new technology based firms also suggest that financing can be a problem for this sub-set of innovative firms (Revest and Sapio, 2010).…”

Section: Structural Problems In the Supply Of Finance For Innovative mentioning

confidence: 99%

Access to finance for innovative SMEs since the financial crisis

2015

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In the wake of the 2008 financial crisis, there has been increased focus on access to finance for small and medium sized firms. Some evidence from before the crisis suggested that it was harder for innovative firms to access finance. Yet no research has considered the differential effect of the crisis on innovative firms. This paper addresses this gap using a dataset of over 10,000 UK SME employers. We find that innovative firms are more likely to be turned down for finance than other firms, and this worsened significantly in the crisis. However, regressions controlling for a host of firm characteristics show that the worsening in general credit conditions has been more pronounced for non-innovative firms with the exception of absolute credit rationing which still remains more severe for innovative firms. The results suggest that there are two issues in the financial system. First, we find evidence of a structural problem which restricts access to finance for innovative firms. Second, we show a cyclical problem has been caused by the financial crisis and impacted relatively more severely on noninnovative firms.

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“…Alongside this, a wider literature focusing on new technology based firms also suggest that financing can be a problem for this sub-set of innovative firms (Revest and Sapio, 2010).…”

Section: Structural Problems In the Supply Of Finance For Innovative mentioning

confidence: 99%

Access to finance for innovative SMEs since the financial crisis

2015

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“…Firms operating in technologically intensive sectors face higher risks since they usually have to invest in innovations which are less likely to have been undertaken elsewhere. As a consequence, they are going to suffer from higher information asymmetries (Canepa and Stoneman, 2008;Revest and Sapio, 2012) 4 . According to Guiso (1998, p. 40), higher financial barriers are due to the more severe informational frictions which affect high-tech firms 5 .…”

Section: Empirical Evidencementioning

confidence: 99%

Financial constraints and the failure of innovation projects

García‐Quevedo

Segarra‐Blasco

Teruel

2018

Technological Forecasting and Social Change

167

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Abstract:Theoretical and empirical approaches have stressed the existence of financial constraints in firms' innovative activities. Although a large number of innovation projects are abandoned before their completion, the empirical evidence has focused on the determinants of innovation while failed projects have received little attention. This paper analyses the role of financial obstacles on the likelihood of abandoning an innovation project by using panel data of potential innovative Spanish firms for the period 2005-2013. Our analysis differentiates between internal and external barriers on the probability of abandoning a project and we examine whether the effects are different depending on the stage of the innovation process. Controlling for potential endogeneity, we use a bivariate probit model to take into account the simultaneity of financial constraints and the decision to abandon an innovation project. Our results show that financial constraints most affect the probability of abandoning an innovation project during the concept stage.

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“…In fact small organisations differ in nature from large organisations (Liff and Turner, 1999), given the distinctive factors that characterise enterprises of different size. Specifically, as a result of their relative resource poverty, weak external environment control, limited options of financing (Smallbone et al, 2012;Westhead and Storey, 1996) and access to financial resources derived from imperfections in capital market allocation (Revest and Sapio, 2010;Cressy, 2002;Auerswald and Branscomb, 2003), a priori, smaller firms are expected to be less resilient to a recessionary environment than larger firms (Field and Franklin, 2013;Sheehan, 2013). McCann (2008) reports that 62% of UK small firms experienced negative effects of the 'credit crunch'; half of these have been affected directly by more expensive finance and the rest indirectly by poor sales performance.…”

Section: Introductionmentioning

confidence: 99%