Open AccessINVESTMENT DETERMINANTS OF FITNESS SMES IN PORTUGAL
Author(s) -
Paulo Maçãs Nunes,
Zélia Serrasqueiro,
Pedro Guedes de Carvalho
Publication year - 2014
Publication title -
technological and economic development of economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.634
H-Index - 47
eISSN - 2029-4921
pISSN - 2029-4913
DOI - 10.3846/20294913.2013.879750
Subject(s) - investment (military) , subsidy , cash flow , open ended investment company , economics , return on investment , debt , free cash flow , portuguese , investment function , government (linguistics) , finance , monetary economics , microeconomics , market economy , production (economics) , linguistics , philosophy , politics , political science , law
Based on a sample of 182 Portuguese fitness SMEs we study the investment determinants of fitness SMEs in Portugal. The multiple empirical evidence obtained in this study lets us conclude that the main explanatory theories of firm investment cannot be considered mutually exclusive in explaining the investment of Portuguese fitness SMEs, since: 1) they adjust investment as a function of sales, corroborating the assumptions of Neoclassical theory; 2) cash flow is an important financial resource for investment, corroborating the assumptions of Free Cash Flow theory; and 3) external finance, namely debt, is a restrictive determinant of investment, which corroborates the assumptions of Agency theory. Besides these results, we find that growth opportunities and government subsidies are positive determinants of investment in Portuguese fitness SMEs, and the financial crisis of 2008 has a negative influence on investment in Portuguese fitness SMEs. The financial crisis of 2008 also means greater relative importance of cash flow and government subsidies for increased investment, and debt for diminished investment, in fitness SMEs.