National culture and small firms' use of trade credit: Evidence from Europe

2021 ◽  
pp. 100655
Author(s):  
Andrea Moro ◽  
Yacine Belghitar ◽  
Cesario Matheus
Keyword(s):  
National Culture ◽  
Small Firms ◽  
Trade Credit

scholarly journals Religion, national culture and cross-country differences in the use of trade credit

2019 ◽  
Vol 15 (3) ◽  
pp. 350-370
Author(s):  
Markus Mättö ◽  
Mervi Niskanen
Keyword(s):  
Cultural Values ◽  
National Culture ◽  
Trade Credit ◽  
Cultural Dimensions ◽  
Firm Level ◽  
Content Type ◽  
Cross Country ◽  
New Evidence ◽  
The Relationship ◽  
Practical Implications

Purpose The purpose of this paper is to investigate whether religion or national culture can explain previously observed cross-country variation in trade credit. Design/methodology/approach Using the firm-level SME data from 35 European countries, religion and cultural factors of Hofstede and Schwartz, the authors provide new evidence on the determinants of the cross-country variation in trade credit. Findings The results indicate that religion and national culture are associated with trade credit. The authors find that the levels of trade credit are higher in Catholic countries than in Protestant ones and that peoples’ religiousness has an impact on trade credit only in Catholic countries. The authors also find that Hofstede’s cultural dimensions, such as power distance and uncertainty avoidance, are positively associated with trade credit. Practical implications Overall, authors’ findings indicate that religion and national culture are important determinants of trade credit management, and that the association between commonly used cultural values and trade credit depends on the religious, legal, and financial environment. Originality/value To the best of authors’ knowledge, this is the first study to research the relationship between national culture and trade credit.

Trade credit: a real option for bootstrapping small firms

2010 ◽  
Vol 12 (1) ◽  
pp. 49-63 ◽  
Author(s):  
Douglas A. Bosse ◽  
Tom Arnold
Keyword(s):  
Small Firms ◽  
Real Option ◽  
Trade Credit

Mature SMEs and Technological Innovation: Entrepreneurial Networks in the United Kingdom and Portugal

1997 ◽  
Vol 01 (03) ◽  
pp. 201-227 ◽  
Author(s):  
Oswald Jones ◽  
Carlos Cabral Cardoso ◽  
Martin Beckinsale
Keyword(s):  
United Kingdom ◽  
National Culture ◽  
Technological Innovation ◽  
Small Firms ◽  
Management Education ◽  
Cultural Environment ◽  
Entrepreneurial Networks ◽  
The United Kingdom ◽  
The Uk ◽  
Innovative Capacity

This research examines the links between national culture, entrepreneurship, networks and innovation. Both networking and entrepreneurship are seen as central to the innovative capacity of smaller firms. At the same time, the cultural environment in which such firms operate will influence the ability of entrepreneurs to develop new products and processes. We consider these problems by examining five SMEs in the United Kingdom (UK) and five in Portugal. All 10 companies are manufacturing-based and operate in "traditional" (low-technology) sectors. The case studies are utilised as a means of identifying the problems confronting owner/managers in such companies as they try to access newer technologies. We conclude that Portuguese managers are less likely to have been exposed to management education and tend to place greater reliance on family members for creating networks. Hence the options for innovation tend to be much narrower than small firms in the UK.

Bank Lending and Trade Credit: Evidence from Chinese Firms

2011 ◽  
Vol 52-54 ◽  
pp. 1470-1475
Author(s):  
Zhong Hua Ma
Keyword(s):  
Supply Chain ◽  
Small Firms ◽  
Trade Credit ◽  
Bank Lending ◽  
Chinese Firms ◽  
Listed Firms ◽  
Complementary Role ◽  
Financing Channel

The determinants and roles of bank lending, which is formal financing channel and outsides the supply chain, and trade credit, which is informal financing channel and insides the supply chain, are analyzed here through listed firms in China over 2006-2009. In our model we consider the trade credit as a complementary role and more important for small firms. Also with the firms different industry classified, we give the performance of bank lending and trade credit respectively. The estimation results and analysis are given detailed in our paper.

Trade credit dynamics during the phases of the business cycle – a value chain perspective

2016 ◽  
Vol 21 (3) ◽  
pp. 363-380 ◽  
Author(s):  
Harri Lorentz ◽  
Tomi Solakivi ◽  
Juuso Töyli ◽  
Lauri Ojala
Keyword(s):  
Business Cycle ◽  
Value Chain ◽  
Small Firms ◽  
Trade Credit ◽  
Task Interdependence ◽  
Working Capital ◽  
Content Type ◽  
A Value ◽  
The Business Cycle

Purpose The purpose of this paper is to provide evidence of how the business cycle affects net-trade-credit and its components in firms on different tiers of the value chain, including retail, wholesale and two consecutive manufacturing tiers. Design/methodology/approach Data were collected by the means of four surveys in the years 2006, 2009, 2012 and 2014, representing different phases of the business cycle, that is, from strong economic growth to a deep recession and on to slow recovery and finally into decline. Descriptive statistics and three ANOVA models were used in the analysis of the data. Findings The distinctive profile of each value chain tier appears to have an effect on tier-specific trade credit dynamics. Overall, upstream positioned firms and small firms are likely to experience a decline in the net-trade-credit during uncertain economic times. The type of task interdependence between tiers also appears to affect trade credit dynamics in some tiers of the value chain. Furthermore, initiated by recession, certain trade credit dynamics in the value chain suggest a mechanism that transmits an increased working capital burden from customers to suppliers along the value chain. Research limitations/implications Results are based on survey research with a limited amount of respondents and geographical coverage, implying limited generalisability. The use of implicit measures limits the conclusiveness of the research. Originality/value The conventional perception of the power-based determination of trade credit policies is complemented with a value chain-related task interdependence perspective. The results of this paper also highlight that a more holistic value chain perceptive on working capital management would be more sustainable in comparison to firm-centric approaches.

scholarly journals Management of trade credit by small and medium-sized enterprises

2018 ◽  
Vol 11 (1) ◽  
Author(s):  
Werner H. Otto
Keyword(s):  
South African ◽  
Small Firms ◽  
Management Practices ◽  
Trade Credit ◽  
Descriptive Statistics ◽  
Statistical Techniques ◽  
The South ◽  
Credit Management ◽  
African Development

This study identifies the trade credit management situation within the small and medium-sized enterprise (SME) environment. The purpose of this study is to determine the trade credit management practices of SMEs, focussing on debtors alone, in order to establish whether South African SMEs mismanage trade credit. Focussing on SMEs, this study created a unique opportunity to determine the trade credit management practices of SMEs specifically. This article provides vital evidence containing SMEs’ trade credit management practices and insight to entrepreneurs (SME owners) and government regarding possible reasons why SMEs find it difficult to manage trade credit effectively. Data were analysed using statistical techniques such as descriptive statistics, frequencies, cross-tabulations and mean scores. The intention is that SMEs and small firms can use the results of this study in assessing the appropriateness and effectiveness of their own practices and, in doing so, contribute towards the sustainability and viability of SMEs in order to empower SMEs to operate successfully in addressing the South African development challenges.

M&A Activity, Financial Distress, and Trade Credit

2016 ◽  
pp. 51-72
Author(s):  
Mine Uğurlu
Keyword(s):  
Financial Distress ◽  
Small Firms ◽  
Trade Credit ◽  
Emerging Market ◽  
Financing Constraints ◽  
Capital Investments ◽  
High Likelihood ◽  
Positive Relation ◽  
Pecking Order ◽  
Distressed Firms

This paper investigates the effects of firm constraints on the likelihood of M&A involvement and explores if mergers mitigate financing constraints. The results display that young and small firms facing financial constraints, corporations that have low R&D expenditures and capital investments have higher likelihood of M&A activity. Firms that compete in technology-driven industries are more likely to merge. Equity- constrained firms have high likelihood of M&A involvement while cash insolvency and leverage are not significantly related with mergers. The results support the positive relation between the use of trade credit and financial distress displayed in previous studies, but reveal that distressed firms involved in mergers reduce trade credit significantly. Results indicate that mergers mitigate the positive relation between distress and trade credit. Distressed firms involved in mergers avoid payables which rank lower in pecking order finance. M&As seem to alleviate financing constraints for cash-constrained corporations in an emerging market.

In-Kind Finance: A Theory of Trade Credit

2004 ◽  
Vol 94 (3) ◽  
pp. 569-590 ◽  
Author(s):  
Mike Burkart ◽  
Tore Ellingsen
Keyword(s):  
Small Firms ◽  
Trade Credit ◽  
Credit Markets ◽  
Bank Credit ◽  
Theoretic Model ◽  
Competitive Markets ◽  
Simple Argument ◽  
The Core ◽  
Accounts Payable

It is typically less profitable for an opportunistic borrower to divert inputs than to divert cash. Therefore, suppliers may lend more liberally than banks. This simple argument is at the core of our contract theoretic model of trade credit in competitive markets. The model implies that trade credit and bank credit can be either complements or substitutes. Among other things, the model explains why trade credit has short maturity, why trade credit is more prevalent in less developed credit markets, and why accounts payable of large unrated firms are more countercyclical than those of small firms.

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