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The paper contrasts two	theoretical perspectives that account for	business group formation in the smal business sector: the financial perspective	 and the organizational/entrepreneurial perspective. Two main hypotheses are derived from these perspectives: the first hypothesis concerns capital and knowledge intensityrequired by the business; the second one refers to the	 entrepreneur’s ownership of firms in business groups. The empirical results show that the financial and the organizational perspectives are both relevant in explaining business groups in the small business	 sector, but the entrepreneurial perspective is more appropriate when explaining	the ownership	structure	of firms within business groups

What Explains Small and Medium-Sized Business Groups? Comparing the Financial and the Entrepreneurial Perspective