Abstract
According to several researchers finance is scarce, scarcer for small businesses than for big enterprises. Small and medium-sized enterprises, SMEs, that want to start exporting and sales or manufacturing abroad need capital to get ready. Which capital structure and financial costs do they have, and which forms of finance do they actually use for that purpose. New american research by Mansi, Reeb (2002) has suggested, that there is a positive connection between leverage and a negative one between financial costs and internationalization, and that a non-linear model better describes this connection.
This study has gathered data in two ways: Through a questionnaire from 37 SMEs and balance sheet figures from totally 166 manufacturing SMEs. In order to examine, whether the company was active on the international market, 200 SMEs in south Sweden were asked, if they exported to, produced or sold on any other market than their home market. From the balance sheet I collected data about leverage, financial costs and other important figures.
Some of the results were interesting. Firstly there is a financial gap for external financing especially for venture capital but also for bank loans. Though average leverage tends to a negative development from export to foreign establishment, multiple regression models show a slightly negative connection with internationalization, which is against the modern theory of internationalization. The non-linear model performs some percent better than the linear one. Financial costs rise through the different steps of internationalization, but the multiple regression models cannot confirm any statistical connection.
The pecking order for financing is as follows: Internally generated funds, IGF, bank loans and owners capital. This order was constant for financing all company activities, export or activities abroad. The percentage of choices for all activities tends to similarity with other studies of financing behavior like Cressy, Gandemo, Olofsson (1996): IGF 75,7 %, bank loans 64,9 % and owners capital 54,1 %. Important factors to determine the choice of finance in this study are: Control aversion, preferences towards internal and external finance and capital structure.
My conclusions are several but most importantly, that this study deals with small businesses, which have financial problems regarding bank loans and above all venture capital. The problems tend to aggravate along the internationalizat...
