Vigilant Associates - Financiers' Contribution to the Growth of SMEs

Sammanfattning: With the recession of the early 1990s, small and medium sized enterprises (SMEs) attracted increased attention from policy-makers and in public debate as it was realized that SMEs play an important role in employment, innovation and regional dynamics. At the same time researchers claimed that SMEs are at a disadvantage in raising investment funds. This thesis adopts the perspective of the SMEs, analysing the mechanisms whereby control aversion can be reduced in SMEs, and examining the related financial search activity in SMEs as well as the contributions that financiers make to SMEs.The empirical basis of the thesis comprises two surveys with 281 and 459 respondents and a qualitative study consisting of 10 interviews. The results of the analysis indicate that control aversion is reduced by mechanisms related to learning and coercion, and that Swedish SMEs generally tend to follow the pecking order theory of finance. The contributions that financiers make to the SMEs differ, depending mainly on whether they are equity or loan financiers. Lack of legitimacy and information asymmetries are two generic problems that impede the development of SMEs, and a well-established financier could mitigate these problems. Besides these contributions a financier could target his efforts to specific areas such as production and product development, connecting the firm to customers and the market, connecting the firm to a financial network, boosting profitability and creating more rapid growth.