Purpose: Small and medium-sized entities (SMEs) operating in the alternative financing sector are typically heterogenous in nature making them differ greatly from traditional banks. Where traditional banks must comply with strict banking regulations, developing uniform regulations for the alternative financing sector remains a challenge. This paper examines the current challenges and solutions from a sociological and institutional perspective in developing standards for SMEs operating in the alternative financing sector in the Netherlands. Adopting minimum quality standards should lead to increased transparency and public trust in the non-banking sector.
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According to various authors access to financing is one of the main limitations constraining further growth for small- and medium sized enterprises (SMEs). Hence, academics and policymakers showed great interest in the topic of access to financing for SMEs. Various researchers argued the competitive advantage of large traditional banks in SME lending over smaller institutions. These institutions with more market power may charge higher financing costs and apply stricter credit policies for SME clients further affecting credit availability. In the past decade, SME financiers have entered the market as a response to the market domination of these large institutions. These new parties must gain trust as they operate in a market that is not regulated. Where traditional banks must comply with strict banking regulations, developing uniform regulations for the alternative financing sector remains a challenge. This paper examines the current challenges and solutions from a sociological and institutional perspective in developing standards for SMEs in the alternative financing sector. Our study contributes to the SME finance literature as it is the first empirical study that explicitly examines the regulatory gap in SME financing through interaction with policymakers, SME entrepreneurs, traditional banks as well as SME financiers themselves. Note: this is a confidential paper, part of a Phd-program and awaiting publication (as per August 2024)
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PurposeIn order to better understand how heuristics are used in practice, the authors explore what type of heuristics is used in the managerial domain of financial advisors to small and medium-sized enterprises (SMEs) and what influences the shaping of these heuristics. In doing so, the authors detect possible fast-and-frugal heuristics in day-to-day decision-making of independent financial advisers who help owners of SMEs to acquire capital (e.g. loans, factoring, leasing and equity).Design/methodology/approachThe authors inductively assessed the work of financial advisers of SMEs. Based on group discussions, the authors drew up a semi-structured interview-protocol with descriptive questions about how financial advisers come to a deal for their clients. The interviews of 19 professionals were analysed by relating them to the theory of fast-and-frugal heuristics.FindingsWithin their decision-making, advisers estimate the likelihood of acceptance by a few financial providers they know well in their personal network with a strong bias towards traditional banking products, although there are a large number of alternatives on the Dutch market. “Less is more” seems to be a relevant principle when defined as satisficing. Heuristics help advisers to deal with behavioural and economic limitations. Also, the authors have found that client interaction, previous working experience and the company the adviser is working for influences the shaping of the simple rules the adviser is using.Research limitations/implicationsThe study shows how difficult it is to understand the ecological rationality of a certain group of professionals and to understand the “less is more” principle. Financial advisers to SMEs use cognitive shortcuts and simple rules to advise SME-owners, based on previous experiences, but it is difficult to determine whether that leads to the same or even better solutions for them and their clients than using probability theory and financial optimisation models. Within heuristics, satisficing seems to be a dominant mechanism. Here, heuristics help advisers in recognising possibilities by searching for similarities between a current financing case and previous experiences. The data suggests that if “less is more” is defined as satisficing for one or more stakeholders involved, the principle dominates the decision making of financial advisers of SME's.Practical implicationsThe authors suggest the relevance of a behavioural approach to finance by assessing the day-to-day decisions of financial advisers of SMEs. Also, the authors suggest that financial advisers are guided by previous experiences, and they do not fully assess a wide range of options in their work but need shortcuts to fulfil the needs of their clients.Originality/valueThe study comes close to day-to-day decision-making in finance by assessing how professionals make decisions. The authors try to understand types of heuristics in relation with “ecological rationality” and the less is more principle. The authors assess financial advisers of SME-companies, a group that has gotten little research attention until now. The influence of client interaction and of the company the adviser is working for is remarkable in the shaping of the advisers' simple rules.
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The objective of this study is to shed light on the added value of the services of five disciplines in M&A advisory in the SME domain: accountants, bankers, business brokers, fiscalists and lawyers. Theory is inconclusive in the added value of advisory services and research on the subject is hardly available. RBV predicts direct benefits in using advisory services in M&A, leading to less obstacles in and directly after M&A or lagged effects on more renewal of the firm. The theory of structural holes, agency theory and management entrenchment theory on the other hand predict neutral or negative effect of advisory services in M&A. The dataset includes 899 mergers and acquisitions (1) completed before 2003; (2) with an acquirer having bought 100% of target shares or assets; (3) of German, Belgian or Dutch origin; (4) of non-listed firms; (5) where acquirer and target firm are not member of the same family. Using (M)ANOVA’s and controlling for the effects of more than one advisor involved, the outcomes show consistently that the M&A advisory services do not reduce obstacles like financing, misinformation and culture and staff problems during or immediately after M&A. Looking at lagged effects of advisory services in the period of two years after M&A strategic more renewal by innovation occurs if bankers, fiscalists and lawyers are involved. Involvement of accountants and business brokers on the other hand decrease renewal.
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Creative SMEs are heavily focusing on the creating process designing new products and services. Consequently, their managers tend to loose contact with crucial management issues. Especially their knowledge of the financial aspects of their business can be so limited that they fail to connect with the financial viability of their business, which can lead to serious business problems. This paper draws on a number of studies that examine the role of outsiders -contracted professional service providers- in relation to business success of SMEs. In the light of the potential growth of Flemish creative SMEs on international markets the question can be raised as to what extent outsiders, and more specifically financial service providers like accountants and banks, contribute to the export success of these firms. In this paper therefore the role played by accountants and banks was explored to solve export-related questions by small furniture designers in Flanders, Belgium. Export can be considered as the most successful growth and therefore raises interesting management issues for creative SMEs. Little is known about the content and intensity of services of accountants and bank employees in relation to export-related questions of owner-managers of small creative firms. In order to examine the fit between supply and demand the focus is on outsider contribution during six phases of export.
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Every year I talk to many entrepreneurs about business transfers and acquisitions. Only rarely do they tell me that it was a cinch. Buying or selling a business is complex. For a start, a business should be shipshape from an organizational and administrative perspective, while several legal and fiscal matters also affect the transaction. Moreover, many parties are involved in a business transfer: the buyer and the seller, of course, but also the employees, the spouse and/or family of the entrepreneur, the customers and suppliers. Emotions and trust also play a central role in selling a firm. Many owner/managers find it hard to abandon their business. The fact that a transaction of fixed assets may also be involved is another complicating factor. Is it a good thing to include fixed assets in the sale, or in fact the reverse? Considering that most people find it quite hard to sell their own house, engaging an estate agent to do it for them, it is understandable that buying and selling a business is a transaction fraught with difficulties.
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Een circulair bedrijfsmodel vraagt veelal om een andere financieringsconstructie. Zo hebben producten die worden hergebruikt of op hoogwaardige wijze worden gerecycled altijd een financiële restwaarde. Deze dient inzichtelijk te zijn en afgestemd te worden met de verschillende ketenpartners en met financiers. De financieringsbehoefte van een onderneming verandert ook als een bedrijf ervoor kiest om producten niet te verkopen, maar via een overeenkomst beschikbaar te stellen aan gebruikers. Dit onderzoek richt zich op de volgende praktijkvragen: 1. Hoe kunnen we de financiële (rest)waardes van onze producten bepalen en verbinden aan zakelijke afspraken over hergebruik en recycling? 2. Hoe kunnen we financiële contracten opstellen met ketenpartners waardoor gebruikers worden gefaciliteerd en gestimuleerd om producten opnieuw te gebruiken en te recyclen? 3. Hoe kunnen we financiering aantrekken en wat betekent dit voor onze onderneming en samenwerking binnen de logistieke keten? In september 2017 is een groep van onderzoekers van de hogescholen Windesheim en NHL Stenden in samenwerking met de Universiteit van Aruba en Circle Economy begonnen aan dit grootschalige onderzoeksproject. Het onderzoeksproject is een vorm van co-creatie waarbij er geleerd wordt van en met bedrijven. Dit onderzoeksrapport doet verslag van de dataverzameling, interpretatie en aanbevelingen. We beginnen met een inleiding vanuit de theoretische rationale, leidende tot de onderzoeksvragen. Hoofdstuk twee beschrijft de bestaande kennis binnen het domein vanuit de literatuur. Aansluitend is hoofdstuk drie gewijd aan de methodologie. De bevindingen zijn te lezen in hoofdstuk vier en worden besproken in hoofdstuk vijf. Het afsluitende hoofdstuk trekt conclusies en stelt aanbevelingen.
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This paper investigates whether students change their entrepreneurial entry preference if they are presented with different options. We propose that students’ entry preferences are mediated by concepts proposed by threshold theory: choice options, opportunity costs and psychic income. This study is exploratory in nature, analyzing a small sample of 31 student essays both quantitatively and qualitatively to test our propositions. Though lacking a control group, enrolment in a six-week module on entry mode options by a group of third year Bachelor students at a Dutch university resulted in some interesting changes—in particular, toward greater clarity in the entrepreneurial entry mode preference as well as a shift toward takeover options (including firm acquisition and family succession). However, thematic analysis of students essays reveals that the perceived ability to act on such preferences may still be limited by opportunity costs (i.e., the higher need for financial capital) and a self-perceived lack of human capital (entrepreneurial or management experience).
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People want to participate and not remain on the side-lines. Most people have good ideas for how to participate, but making those ideas a reality requires money, as well as knowledge, information and an enabling environment. There are, in fact, people amongst the lesser fortunate in society who want to be able to borrow money, take out insurance, transfer money and set aside money as savings at affordable prices and ideally as close as possible. An increasing number of people seized such opportunities empowered by microfinance. Today, a network of microfinance institutions is providing all kinds of services in many countries, ranging from micro loans (microcredit), micro insurance, micro savings to micro pensions. All of those services are offered in a way different to that which banks were used to. A new way of handling money and bringing people and finance together has developed. A network of new organisations has emerged that has gained attention. The success of microcredit has been given the attention it deserved, yet microfinance is now facing criticism. Does the money reach the right people? Why are the interest rates so high? Who actually benefits from it? Why are private investors interested to join? And why are microfinance organisations once set up with clear, social goals sold to private parties on the market? The question is rightly tabled whether financial inclusion is still being pursued. In order to contribute to that discussion, one needs to know what microcredit or microfinance actually is all about. What do we understand by these terms?
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This paper analyzes connectivity and efficiency of a SME network across two industries. These characteristics are likely to be different for networks of various industries. The concept of 'small worlds' is used to judge overall network efficiency. The actual network can be classified as one in which a small world is present. Visualization of the results shows a single core group in the network. It was found that non-profit as well as science actors were overrepresented in the core of the field.
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