Open AccessExpansion And International Expansion Of Small-To Medium Sized Firms: The Role Of Finance
Author(s) -
Jan Smolarski,
Can Kut,
Neil Wilner
Publication year - 2011
Publication title -
the international business and economic research journal/the international business and economics research journal
Language(s) - English
Resource type - Journals
eISSN - 2157-9393
pISSN - 1535-0754
DOI - 10.19030/iber.v4i2.3569
Subject(s) - venture capital , internationalization , finance , equity (law) , business , equity capital , capital structure , external financing , capital (architecture) , internal financing , equity financing , initial public offering , international trade , information asymmetry , debt , archaeology , political science , law , history
Small- to medium-sized firms are expected to show international growth at an early stage. Several factors may affect the outcome of initial efforts to expand and internationalize. Our research examines how equity based venture funding affects SME expansion and internationalization. We divide venture capital financing into two categories: incremental financing where firms receive their venture capital funding in portions and lump-sum venture funding where firms receive their funding in one lump-sum. The results show that type of equity based venture capital financing affect expansion and internationalization. Incremental funding appears more appropriate for firms with high growth rates whereas lump-sum financing appears more appropriate for firms that are internationalizing their operations.