After microfinance, the missing middle is the new buzzword for SME development experts. And again finance is supposed to be the number one solution to support enterpreneurs. Klaas Molenaar recommends to take a look into the history of microfinance to question the hype.
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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 shift towards a more sustainable circular economy will require innovations. While SMEs can contribute to this development, financing innovations within SMEs is difficult. Various authors have not ed moreover that the concept of the circular economy has further increased the complexity of investment decisions concerning sustainable innovations, due to the multiple value creation and new business models involved . On the other hand
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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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This relationship between external knowledge providers, e.g. consultants and academic institutions, and small and medium enterprises (SMEs) is a difficult one. SME entrepreneurs think external advice is expensive, not required and/or not useful. In this paper these arguments are explored against the specific characteristics of SMEs. The argument of price probably tells more about the consultants inability to quantify the returns on their advice than about the cost of their services. Support policies enable free consults for SMEs on numerous topics, but the use of these facilities is relatively low. The suggestion that SME entrepreneurs do not need external knowledge is contradicted by their own assessment of their qualities. Typically the entrepreneurs lack expertise in supporting business functions like HR, IT, Finance and Legal. In SMEs these blank spots are not compensated by specialist staff members because the of the scale of the organization. The argument that the advice of an external consultant is generally not useful raises the question whether the insights gained in several business sciences only apply to large companies. This seems unlikely. Given the characteristics of SMEs the difference is probably more the context in which the insights are applied than the content of the insights itself. From the analysis of the characteristics of SMEs the dominant influence of the person of the owner/director, together with the absence of specialist staff, appeared as two of the most significant differences between SMEs and large companies. Given the personal profiles of these owners/directors as studied by Blom (Blom, 2001), the external knowledge providers should realize the three ways in consulting. The first way is the way of thinking. For this way it was stated already that the content of business sciences is not likely to differ for SMEs. The second way, the way of working, represents for the way information is gathered and the entrepreneur and his staff is involved in the process of developing the advice. In this way the consultant should allow for interaction and should make it fun for the participants. In this aspect, the process approach of consulting shows promising. The third way, the way of communicating, represents the way the knowledge is transferred from the advisor to the entrepreneur. In this way it is crucial to acknowledge the different personal profiles of SME entrepreneurs and consultants and to adjust the communication accordingly. Taking the three ways into account, the conclusion could be that the transfer of knowledge should be more the sharing of experiences. The Chair of Management Consulting will adjust her activities to explore this insight further.
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This study focuses on SME networks of design and high-tech companies in Southeast Netherland. By highlighting the personal networks of members across design and high-tech industries, the study attempts to identify the main brokers in this dynamic environment. In addition, we investigate whether specific characteristics are associated with these brokers. The main contribution of the paper lies in the fact that, in contrast to most other work, it is quantitative and that it focuses on brokers identified in an actual network (based on both suppliers and users of the knowledge infrastructure). Studying the phenomenon of brokerage provides us with clear insights into the concept of brokerage regarding SME networks in different fields. In particular we highlight how third parties contribute to the transfer and development of knowledge. Empirical results show, among others that the most influential brokers are found in the nonprofit and science sector and have a long track record in their branch.
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In December of 2004 the Directorate General for Research and Technological Development (DG RTD) of the European Commission (EC) set up a High-Level Expert Group to propose a series of measures to stimulate the reporting of Intellectual Capital in research intensive Small and Medium-Sized Enterprises (SMEs). The Expert Group has focused on enterprises that either perform Research and Development (R&D), or use the results of R&D to innovate and has also considered the implications for the specialist R&D units of larger enterprises, dedicated Research & Technology Organizations and Universities. In this report the Expert Group presents its findings, leading to six recommendations to stimulate the reporting of Intellectual Capital in SMEs by raising awareness, improving reporting competencies, promoting the use of IC Reporting and facilitating standardization.
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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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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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Bedrijfsoverdrachten leiden tot innovatie en groei in het mkb. In 2011 is voor het eerst onderzoek gedaan naar de economische gevolgen van bedrijfsoverdrachten (Van Teeffelen, 2012). Wat is de situatie eind 2014, begin 2015? Steekproef vergelijkbaar met 2011 Er is een random steekproef van 4350 ondernemers getrokken in drie rondes. 2428 ondernemers hebben deelgenomen aan het onderzoek. De dataset is goed vergelijkbaar met de trekking in 2011. Kwaliteit en aantal bedrijven in overdracht is toegenomen Het aantal bedrijven in de verkoop is sterk gestegen: van 23.500 in 2011 naar 55.700 bedrijven nu. 10% van alle bedrijven met personeel staat nu te koop, een verdrievoudiging in vergelijking tot 2011. De kwaliteit van de bedrijven is toegenomen. Bedrijven zijn gegroeid in personeelsleden van 5,8 naar 7,3 fte. Het zijn vooral familiebedrijven die nu in de verkoop staan. Verkopende ondernemers beschikken over meer aan- of verkoopervaring, de bedrijven zijn minder afhankelijk van de ondernemer, de vraagprijs bij verkopende ondernemers lijkt realistischer. Verkopende ondernemers exporteren meer. Het percentage bedrijven dat kansrijk is bij verkoop is gestegen van 44% naar 53%. Punt van zorg is de toename van de ondernemersleeftijd bij verkoop: van begin vijftig in 2011 naar zestig jaar in 2014/15. Kwaliteit en aantal bedrijven in opheffingen afgenomen Het aantal bedrijven in opheffing is afgenomen van bijna 59.000 in 2011 naar 53.000 in 2014/2015. De kwaliteit van de bedrijven in opheffing is sinds 2011 achteruit gegaan. Zij zijn in personeelsomvang gekrompen en lopen achter qua innovaties. Ook zijn bedrijven in opheffing minder kansrijk geworden bij een eventuele verkoop. Bij opheffingen gaan jaarlijks 2,0% van alle banen in Nederland verloren. Economische effecten van bedrijfsoverdrachten fors gestegen. Bij overdrachten staan nu 7,1% van alle voltijdsbanen op het spel. Het afbreukrisico voor de Nederlandse economie is sterk toegenomen. Het werkgelegenheidsverlies als gevolg van mislukte overdracht is in vergelijking tot 2011 verdubbeld, de omzetderving en kapitaalvernietiging zijn verviervoudigd.
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