The role of finance in the development of technology-based SMEs: evidence from New Zealand

Purpose- In this paper we discuss an exploratory study that involved face to face, qualitative inter-views with 20 technology-based small firms (TBSFs) and seven qualitative interviews with key in-formants and funders. The TBSFs were all located in New Zealand (NZ), a small open economy with a limited domestic market, a population of 4.3 million, current GDP per capita of US$32,260 (2010) and arguably an immature and limited financial infrastructure. The central research question for this study was whether TBSFs can raise appropriate finance that allows them to start, develop and remain in NZ? Design/methodology/approach- An exploratory study has involved a programme of 20 in-depth, face to face qualitative interviews with the founders and chief executives of TBSFs drawn from three contrasting locations in New Zealand and from across different technology-based sectors. A further seven interviews have been conducted with key informants drawn from the three locations. Findings- As might be expected from theory, there was a heavy reliance on internal funding and bootstrapping methods, although a number of TBSFs had in addition managed to raise additional private capital through their own contacts and networks. All the sample had relied upon internal fund-ing to some extent. However, a total of 13 (65 per cent) either relied totally on internal funding (from the initial start-up) or relied upon a combination of internal funding, bootstrapping and private inves-tors. Context was important with New Zealand being a small open and relatively remote economy when compared to the UK; where the EU provides a significant market for TBSF development. In contrast, NZ TBSFs, of necessity were heavily involved in distant overseas markets. Research Implications- There was evidence of a distinct finance gap in the external equity market in New Zealand. For amounts below NZ$1m, these could be sought from networks of business angels, even though such sources were limited and restricted. If the funding sought was in the range NZ$1m -$5m; this was likely to fall between the informal and formal venture markets. Associated with this was a distinct preference for relying on internal funding by NZ TBSFs. Originality/value- This paper provides a contribution by being the first serious study of TBSF devel-opment in New Zealand, specifically focusing on the role of finance. The example of TBSF develop-ment in New Zealand’s small, open economy is significant and comparisons are drawn with the extent of funding gaps and similar issues in TBSF development from a UK based study. These comparisons enable the findings to be set in context and implications developed

Paradise lost? The case of technology-based small firms in New Zealand in the post global financial crisis economic environment

In this paper we draw on two studies that used face to face, qualitative interviews with technology-based small firms (TBSFs) and informal interviews with key informants. The interviews took place with two data sets of TBSFs, the first with 20 firms in 2011 and the second with 34 agri-business TBSFs in 2013. This allows some temporal comparisons of the funding environment for TBSFs in New Zealand, but this was not a longitudinal study as the two data sets were composed from the recruitment of different firms. However, all the TBSFs were located in New Zealand, a small open economy with a limited domestic market, a population of 4.4 million, GDP per capita of US$32,260 (2010) and arguably an immature and limited financial infrastructure. This environment is compounded for founding technology-based entrepreneurs, since to develop and stay in New Zealand means accepting being a long distance from major overseas markets, when in theory at least TBSFs have potential to be in global markets. Such TBSFs, therefore, face pressure to move overseas for markets and for finance and other resources; if successful they may make attractive takeover targets for overseas investors and MNCs. Despite these challenges, TBSFs have been promoted as key contributors to GDP and a way of closing New Zealand’s productivity gap (compared with Australia and other developed nations). Although we find evidence of the development of embryonic regional and specialised business angel networks (BANs) on the supply-side of finance, there is still a marked reluctance to undertake a search for external equity and evidence of discouraged borrowing and discouraged grant-based applications on the demand-side. New Zealand is sometimes described as “paradise ” due to its natural and outstanding beauty, but in our conclusions we suggest that the comparatively stable economic environment has not operated in favour of TBSFs

Sentimental Arcs From Grief to Mourning in An Unnecessary Woman and Koolaids: The Art of War by Rabih Alameddine

in the first chapter this thesis will explore how each text tentatively adheres to sentimental arcs that move characters in a linear arc of bereavement from grief to mourning. The second chapter this thesis will address how each text’s narrators explicitly reject the sentimental arc from grief to mourning. Finally, the third chapter will explore how the equivalency between trauma and grief imbedded in sentimental arcs misreads complexities of An Unnecessary Woman and only provisionally applies to Koolaids

Finance pathways for young innovative small‐ and medium‐size enterprises: a demand‐side examination of finance gaps and policy implications for the post‐global financial crisis finance escalator

The paper addresses the persistent finance gaps facing young, innovative SMEs, by examining the financing pathways of 40 UK businesses in a post global financial crisis (GFC) environment. Using a unique combination of finance escalator and resource-based view theories four propositions are tested by examining: (i) early and growth stage development; (ii) innovation R&D investment horizons; (iii) the management resource base; (iv) finance gaps and their implications. The paper finds that successful financing strategies are emerging, using a mix of bootstrapping, collaboration and new emerging post-GFC finance escalator funding, which is heavily reliant on government interventions. It also pinpoints remaining finance gaps and the need for more cohesive financing and support policy to address these

Access to bank finance for Scottish SMEs.

There is evidence that some SMEs may still face difficulties in accessing bank finance from lenders (CEEDR, 2007). This paper reports an in-depth study into demand and supply side issues relating to access to bank finance by Scottish SMEs and whether there is still market failure associated with good, bankable business cases from SMEs that do not receive finance. We argue that our study utilises innovative methodology and is relatively rare as a robust study in this area. We combine demand side in depth survey analysis of SMEs with supply side analysis by bank managers of real business propositions through verbal protocol analysis. This paper discusses the ability of SMEs to access debt finance from the commercial banks in Scotland, it reports findings from a survey of 51 SMEs that had reported having difficulty raising finance and from interviews with bank managers utilising verbal protocol analysis with validated real SME business proposals to give insights into the decision-making of bank managers in the processing of proposals from SMEs. Theoretically, there are categories of SMEs that may face greater difficulties or contain circumstances in which it is more difficult for bank managers to apply standard decision-making models and these categories are explored to provide a theoretical framework for the investigation. The theoretical framework provides themes for discussion of the findings. These include for example; younger SMEs and owners, rural-based SMEs and manufacturing SMEs. Bank officers were found to follow standard financial models, although considerable discretion could be exercised by senior bank managers often leading to a heavy reliance on personal relationships. Smaller and newer SMEs where discretion was more limited were more likely to face difficulties. The study revealed a number of categories of SMEs that face difficulties, including strong growth SMEs in rural environments, new and young SMES,young entrepreneurs seeking start-up finance and manufacturing SMEs seeking to diversify and finance new product development. Focusing on these categories of SMEs,we analyse survey evidence, in depth case studies and verbal protocol analysis with bank managers to discuss research questions on whether informational effects can lead to market failure in the provision of debt finance, the circumstances in which sound propositions are turned down and whether such circumstances can be prevented. This forms the basis for development of conclusions on the continued existence of a debt gap for certain categories of SMEs and some policy implications

The importance of mutual understanding between external accountants and owner-managers of SMEs

This study investigates the perspective of the owner–manager of a small or medium‐sized enterprise (SME) on the importance of mutual understanding with an external accountant. Mutual understanding means that the owner–manager understands what the accountant is saying and feels understood by the accountant. The results, based on 310 completed surveys of Belgian owner–managers, show that owner–managers who have a high level of mutual understanding use the advice of their external accountant more extensively. This is in turn positively linked to the financial health of an SME. Furthermore, several drivers that enable the establishment of a high level of mutual understanding are explored. Owner–managers with a high level of mutual understanding consider their accountant as a strategic partner, experience a high level of proactive behaviour with them, have a higher frequency of formal contact, and perceive informal contact as important. External accountants should consider these opportunities in their client management and training of internal staff. Education of clients and openness also seem very important, as the level of a client's accounting knowledge, the number of accounting topics owner–managers deal with, and transparency towards the accountant are significantly positively related to mutual understanding

Assessing the effectiveness of business support services in England: evidence from a theory based evaluation

In England, publicly supported advisory services for small firms are organised primarily through the Business Link (BL) network. Based on the programme theory underlying this business support services we develop four propositions and test these empirically using data from a new survey of over 3,000 English small firms. Our empirical results provide a broad validation of the programme theory underlying BL assistance for small firms in England during 2003, and more limited support for its effectiveness. More specifically, we find strong support for the value of BL operators maintaining a high profile as a way of boosting take-up. We also find some support for the approach to market segmentation adopted by BL allowing more intensive assistance to be targeted on younger firms and those with limited liability status. In terms of the outcomes of BL support, and allowing for issues of sample selection, we find no significant effects on growth from ‘other’ assistance but do find positive and significant employment growth effects from intensive assistance. This provides partial support for the programme theory assertion that BL support will lead to improvements in business growth performance and stronger support for the proposition that there would be differential outcomes from intensive and other assistance. The positive employment growth outcomes identified here from intensive assistance, even allowing for sample selection, suggest something of an improvement in the effectiveness of the BL network since the late 1990s

Financing SME growth in the UK: meeting the challenges after the global financial crisis

In the aftermath of the Global Financial Crisis new forms of SME finance are emerging in the place of traditional banking and equity finance sources. This Special Issue has its origins in a conference organised in June 2014 by the Centre for Enterprise and Economic Development Research (CEEDR) at Middlesex University Business School, where all but the final two papers were presented. The Conference was designed to provide a timely forum for leading academics, practitioners and policy makers to disseminate current research and practitioner knowledge exploring finance gaps and how best to address the financing needs of small high growth potential businesses

The role of behavioural competences in predicting entrepreneurial funding resource orchestration

This study examines how a psychometric testing tool can be used to explain, predict and measure behavioural competences and how entrepreneurs fund the firm. Reference is made to studies of personality traits (McClelland, 1961; Sandberg & Hoffer, 1987; Brockhaus, 1980; Baum & Locke, 2004; Ciaveralla, 2004; Rauch & Frese, 2007). More recent studies have called for research into behaviour and competences (Zhao, 2010; Bird at al, 2012; Mueller, 2012) and specifically in the finance context of orchestration of resources (Wright and Sigliani 2013). The authors take a pragmatic realism perspective using a mixed method study to explore the “reality” of the entrepreneur (Watson, 2013). Cluster analysis is used to identify the relationship between behavioural competences and funding outcomes. Applying Big 5 Theory of Personality and the Great 8 Competences indicates how behaviour impacts outcomes as entrepreneurs seek to access finance. The identification of three distinct groups in this longitudinal study means belonging to one of these groups predicts likely behaviour when searching for finance. A strong behavioural characteristic which emerged, validated through interviews and psychometric testing, was an orientation towards engagement and working with other organisations. In a funding context, this manifested itself in using networks, seeking advice and sharing equity. These co-operative, collaborative characteristics are different to the classic image of the entrepreneur as a risk-taker or extrovert. The study identifies entrepreneurs who are both successful and unsuccessful in finance applications and compares behavioural competency profiles, thus overcoming the limitations of many studies (Rauch 2007) that are biased towards successful enterprises