Social capital of non-resident family members and small business financing

2016 ◽  
Vol 12 (5) ◽  
pp. 558-582 ◽  
Author(s):  
Amarjit Gill ◽  
Min Thu Maung ◽  
Reza H. Chowdhury
Keyword(s):  
Social Capital ◽  
Small Business ◽  
Financial Management ◽  
Small Businesses ◽  
Family Members ◽  
Debt Financing ◽  
Content Type ◽  
Management Consultants ◽  
Business Financing ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of social capital of non-resident family members on small business debt financing. Recent literature in entrepreneurship suggests that small businesses can borrow social capital to improve their access to debt financing. Design/methodology/approach Micro-entrepreneurs from India were interviewed regarding their ability to raise capital from family members as well as their relationship with banks and politicians. Findings The survey indicates that small business entrepreneurs are able to borrow social capital from non-resident Indians. Results also suggest that these small businesses are more likely to be connected to banks and politicians facilitated by their non-resident family members, which not only improves micro-entrepreneurs’ access to debt financing but also reduces their cost of borrowing. Research limitations/implications This is a co-relational study that investigates the association between social capital of non-resident family members and small business debt financing. There is not necessarily a causal relationship between the two. The findings of this study may only be generalized to firms similar to those that were included in this research. Originality/value This study contributes to the literature on the factors that improve the access to small business debt financing. The findings may be useful for financial managers, investors, financial management consultants, entrepreneurs, and other stakeholders.

Social identity and family business: exploring family social capital

2015 ◽  
Vol 5 (2) ◽  
pp. 157-181 ◽  
Author(s):  
Torsten Schmidts ◽  
Deborah Shepherd
Keyword(s):  
Social Capital ◽  
Social Identity ◽  
Family Business ◽  
Social Identity Theory ◽  
Identity Theory ◽  
Family Members ◽  
Content Type ◽  
Family Social Capital ◽  
The Family ◽  
The Impact

Purpose – The purpose of this paper is to use social identity theory to explore factors that contribute to the development of family social capital. Effects are investigated both for the family and the business. Design/methodology/approach – A single in-depth case study focussing on the family unit was coducted within a fourth-generation family business involved in the arts retailing. Findings – The findings suggest that social identity theory is a useful lens to explore the development of family social capital. The six themes identified highlight that there is a normative and an affective dimension, leading to family members’ desire to uphold the status of the business. Evidence suggests that the normative factors may be both positively and negatively related to the development of family social capital, due to their potentially restrictive nature. Originality/value – The paper’s findings imply that social identity can contribute to understanding family dynamics. Evidence highlights various factors for family members that are not involved in the family business to uphold its status. This is attributed to the emotional significance of the business to the family’s identity. Furthermore, this paper suggests that the strong focus on norms and values, which developed gradually, may have adverse effects on the identification with the business and the willingness to uphold its status. Propositions are offered to provide guidance for future research to investigate this controversial evidence regarding the impact of value orientation on family social capital.

scholarly journals Are international small business owners really that different?

2019 ◽  
Vol 27 (1) ◽  
pp. 92-117
Author(s):  
Sarah Gundlach ◽  
Andre Sammartino
Keyword(s):  
Small Business ◽  
Small Businesses ◽  
Business Owners ◽  
Small Business Owners ◽  
Female Entrepreneurs ◽  
Content Type ◽  
Individual Traits ◽  
Tolerance For Ambiguity ◽  
The Impact ◽  
Do So

Purpose The purpose of this paper is to investigate the impact of individual traits and attributes on the entrepreneurial and internationalization actions of Australian businesswomen, many of whom run small businesses. Design/methodology/approach This study is exploratory and quantitative, based on a questionnaire survey of 323 Australian businesswomen. Drawing upon the extant literature on internationalization, gender and entrepreneurship, the study explores two micro-foundational relationships of interest – personality and capability assessment differences between female business owners and their employed counterparts, and the impact of such traits and assessments on their internationalization. A further question is explored in terms of any differentials in perceptions of barriers in internationalization. Findings The findings show key personality dimensions do not differ dramatically between Australian businesswomen working in their own businesses (i.e. entrepreneurs) or as employees in organizations, while there are surprisingly few differences between women who are engaged internationally and those yet to do so. When comparing the female entrepreneurs and employees, in particular, the findings around tolerance for ambiguity and management efficacy are notably counterintuitive. This leads to the development of testable propositions to refine the causal claims in this domain. Practical implications The study calls into question the distinctiveness of entrepreneurs and entrepreneurial endeavors, at least for female businesswomen. Originality/value By including entrepreneurs and employees, women who have engaged internationally and those that are yet to do so, the study avoids some of the potential self-selection and confirmation biases inherent in studies of only entrepreneurs or small business owners. The investigation of individual traits, attributes and experiences as micro-foundations for internationalization motivations challenges existing theories of small business expansion.

The impact of personal income tax rates on the employment decisions of small businesses

2018 ◽  
Vol 7 (1) ◽  
pp. 74-104
Author(s):  
Kathleen Grace
Keyword(s):  
Small Business ◽  
Small Businesses ◽  
Income Tax ◽  
Personal Income ◽  
Tax Rates ◽  
Personal Income Tax ◽  
Employment Decisions ◽  
Wage Bill ◽  
Content Type ◽  
The Impact

Purpose Small businesses file taxes in accordance with the personal income tax code because they are considered flow-through entities. Thus, personal income tax reforms directly affect the incentives small business owners face regarding employment and operations. The paper aims to discuss these issues. Design/methodology/approach The authors use the changes in personal income tax rates during the 1993 and 2001-2003 reforms and micro-level data to estimate the effect of statutory tax rate changes on small business employment decisions. Findings The authors add two contributions to the current literature: first, the author allow for intertemporal tax planning and second, the author allow the firm’s decision to employ labor to be correlated with the firm’s wage bill decision. Estimation of a Heckman selection model for wage bills shows that the probability that a business will employ labor is 1.18 percent higher when current tax rates increase by one percentage point and 0.70 percent lower when future rates are expected to increase by one percentage point. Among firms that already employ labor, the median wage bill elasticity with respect to current tax rates is −0.64. These estimates are larger than those reported in previous research because my model includes future taxes and allows for correlation between the firm’s employment and wage bill decisions. Omitting the intertemporal tax responses biases the estimates of previous researchers upwards, whereas assuming the two firm decisions are independent biases estimates towards zero. Originality/value This paper has been cited in publications published in Journal of Entrepreneurship and Public Policy.

Efficient working capital management, bond quality rating, and debt refinancing risk

2019 ◽  
Vol 45 (7) ◽  
pp. 869-885 ◽  
Author(s):  
Amarjit Gill ◽  
Afshin Amiraslany ◽  
John Obradovich ◽  
Neil Mathur
Keyword(s):  
Financial Management ◽  
Capital Management ◽  
Working Capital ◽  
Bond Quality ◽  
Working Capital Management ◽  
Content Type ◽  
Data Services ◽  
Management Consultants ◽  
Quality Ratings ◽  
The Impact

PurposeThe purpose of this paper is to investigate the impact of efficient working capital management (WCM) on a firm’s bond quality ratings (BQR) and debt refinancing risk (RFR).Design/methodology/approachTo fulfill its purpose, this study adopted a co-relational research design. Additionally, the COMPUSTAT of Wharton Research Data Services was used to collect data from American production firms for a period of five years (from 2013 to 2017).FindingsThe results of this study suggest that efficient WCM does, in fact, play a role in improving BQR of American production firms. Furthermore, the findings go on to suggest that efficient WCM plays a very little role in reducing RFR for American production firms.Research limitations/implicationsThis is a correlational study that investigated the presence of an association between efficient WCM and firms’ BQR and between efficient WCM and RFR. However, the two do not necessarily share a causal relationship. Moreover, the findings of this study may only be generalized to firms that are similar to those that were included in this research.Originality/valueThis study contributes to the literature on financial factors that improve a firm’s BQR. Firms should consider maintaining an optimal net working capital as it improves BQR. Moreover, the findings of this study may prove useful for financial managers, investors, financial management consultants and other stakeholders.

Entrepreneurial decision-making and family social capital

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cizhi Wang ◽  
Giulia Flamini ◽  
Kai Wang ◽  
Rong Pei ◽  
Chiyin Chen
Keyword(s):  
Decision Making ◽  
Social Capital ◽  
Family Firms ◽  
Family Members ◽  
Chinese Family ◽  
Content Type ◽  
Family Social Capital ◽  
The Family ◽  
Entrepreneurial Decision ◽  
The Impact

PurposeThe purpose of this paper is to adopt a collective perspective in the study of entrepreneurial decision-making processes and empirically analyse the ways in which social relationships between family members can shape their collective entrepreneurial decision-making behaviour (ED).Design/methodology/approachThis paper considers the family social capital (FSC) in inducing overall conformity to the focal family member's decision to exploit an opportunity. In terms of the seminal construct of social capital, the authors propose three FSC dimensions that can be used to induce conformity: structural, relational and cognitive dimensions. Then, the authors design questionnaires to collect data pertaining to the relationships between the family members' ED and the FSC. Finally, the authors collect 152 valid questionnaires from Chinese family firms.FindingsThe data analysis consists of two parts. The first section of this paper analyses conformity by testing the discriminant validity of models. Regression analysis is then used to test the relationship between family members' ED and the FSC. Significant relationships between the cognitive dimension of FSC and the entrepreneur's decision-making are found.Originality/valueThe research contributes towards academic literature concerning both entrepreneurship and social capital. On the one hand, this paper is one of the rare pieces of entrepreneurial research that responds to the call for the study of entrepreneurship from a collective perspective. On the other hand, our study quantitatively tests the impact of FSC at a multidimensional level. It provides conclusions regarding the social influence of other family members and provides insights into social capital by studying entrepreneurship from a social/community perspective.

The impact of financial support from non-resident family members on the financial performance of newer agribusiness firms in India

2018 ◽  
Vol 8 (2) ◽  
pp. 303-319 ◽  
Author(s):  
Amarjit Gill ◽  
Harvinder Singh Mand ◽  
John D. Obradovich ◽  
Neil Mathur
Keyword(s):  
Financial Performance ◽  
Financial Support ◽  
Design Methodology ◽  
Family Members ◽  
Content Type ◽  
Management Consultants ◽  
Internal Financing ◽  
Perceived Impact ◽  
The Impact ◽  
Better Than

PurposeThe purpose of this paper is to examine the impact of financial support from non-resident family members (FSNRFM) on the financial performance of newer agribusiness firms in India.Design/methodology/approachOwners of newer agribusiness firms (five years old or less) from India were surveyed regarding the perceived impact ofFSNRFMon the financial performance of newer agribusiness firms.FindingsThe results show that newer agribusiness firms withFSNRFMperform better than those withoutFSNRFM; and build higher levels of internal financing sources relative to the newer agribusiness firms withoutFSNRFM, which, in turn, improves their performance.Research limitations/implicationsThis is a co-relational study that investigated the association betweenFSNRFMand financial performance of newer agribusiness firms. There is not necessarily a causal relationship between the two. The findings of this study may only be generalized to firms similar to those that were included in this research.Originality/valueThe study enriches the literature concerning newer agribusiness firms and the factors that improve their financial performance. The results of this study can be of great significance for owners of these firms, financial managers, farm management consultants, and other stakeholders to understand the impact ofFSNRFMon financial performance of newer agribusiness firms.

Influence of religious beliefs and spirituality on decision to insure

2018 ◽  
Vol 13 (5) ◽  
pp. 780-800 ◽  
Author(s):  
Amarjit Gill ◽  
Harvinder S. Mand ◽  
Nahum Biger ◽  
Neil Mathur
Keyword(s):  
Small Business ◽  
Financial Management ◽  
Financial Risk ◽  
Religious Beliefs ◽  
Business Owners ◽  
Small Business Owners ◽  
Content Type ◽  
Individual Spirituality ◽  
Management Consultants ◽  
The Relationship

Purpose The purpose of this paper is to examine the influence of the level of religious beliefs and individual spirituality of small business owners on their decision to insure. Design/methodology/approach Small business owners from India were asked about their perceptions regarding the relationship between their level of religious beliefs and spirituality and their decision to insure. Findings The results of this study show that the level of religious beliefs and individual spirituality of small business owners positively influence their decisions to purchase commercial insurance and life insurance to manage financial risk in India. Research limitations/implications This is a co-relational study that investigated the association between the level of religious beliefs, spirituality, and decision to insure. There is not necessarily a causal relationship between the two. The findings of this study may only be generalized to individuals similar to those that were included in this research. Originality/value This study adds to literature on the relationship between the level of religious beliefs, spirituality, and decision to insure. The findings may be useful for financial planners, small business owners and financial management consultants.

Real estate ownership and closely-held firm value

2014 ◽  
Vol 32 (3) ◽  
pp. 229-243 ◽  
Author(s):  
John Edward Graham ◽  
Craig Galbraith ◽  
Curt Stiles
Keyword(s):  
Small Business ◽  
Real Estate ◽  
Small Businesses ◽  
Business Strategy ◽  
Firm Value ◽  
Private Equity ◽  
Data Set ◽  
Content Type ◽  
The Impact ◽  
Estate Ownership

Purpose – The authors aim to measure the value of leasing, versus owning, business locations for the closely-held firm. Design/methodology/approach – The authors examine the sales transactions of small businesses in the USA – those with revenues of less than $20 million per year – between 1995 and 2010. The authors contrast the values of firms that own, and do not own, their real estate. Findings – In general, the authors find negative relationships between closely-held firm values and real estate ownership. Nowhere did the authors observe firm value being enhanced by property ownership. Research limitations/implications – The data set may be limited by the accuracy of the data provided by business brokers. Compared to the capital markets, the small business “exchange” is less efficient, but it is the only source of unlisted business sales data. Practical implications – The findings are important to the small-business broker and the investor. The broker might better advise the buyer and seller with the findings. Business owners, private equity investors, and their advisors, are all reminded to focus on the core business strategy and avoid getting “locked into” real estate ownership in a business investment. Originality/value – The impact of real estate on the valuations of closely-held firms is a largely unexamined area. And there is a lack of consistency on publicly-held company valuations as a function of real estate ownership; these public company findings and the dearth of work on the privately-held company's real estate attract the attention in this study.

The impact of industry, firm age and education level on financial management performance in small and medium-sized enterprises (SMEs)

2017 ◽  
Vol 9 (3) ◽  
pp. 300-314 ◽  
Author(s):  
Hande Karadag
Keyword(s):  
Small Business ◽  
Financial Management ◽  
Education Level ◽  
Equation Modeling ◽  
Firm Age ◽  
Management Performance ◽  
Content Type ◽  
Significant Difference ◽  
The Impact ◽  
Practical Implications

Purpose Small- and medium-sized enterprises (SMEs) are crucial for socio-economic growth due to their significant role in creating new workforce, gross domestic product increase, innovation and entrepreneurship. This paper aims to examine financial management performance in SMEs with regard to industry, firm age and education level of owner/managers differences. Design/methodology/approach The data used in the study are collected from 188 SMEs through structured questionnaires, and three hypotheses regarding the associations are tested by using structural equation modeling. Findings Findings of one-way ANOVA tests indicate that performance in financial management practices has a strong and positive correlation with education level of small business owner/managers, whereas no significant difference is found regarding SMEs operating in different industries. For the impact of company age, independent samples t-test is conducted, and a meaningful difference between small- and medium-sized companies which are five years or older and younger is found. Research limitations/implications This study shows that a significant difference for age of an SME is present between over and under five-year-old SMEs, with respect to financial management performance, which is an important finding for both small business and financial management literatures. The tests regarding the particular hypotheses about education level of SME owner/managers indicate that education level of SME owner/managers significantly impacts financial management performance. Practical implications The present study provides important practical implications. First, the importance of education level of owner/managers on SME financial performance is highlighted. Second, strong empirical support is found for the impact of company age on SME performance, which might be discussed as the importance of accumulation of knowledge of the owner/managers and the changes required with the growth patterns of the company, with increasing company age. Third, the study shows that industry differences do not exhibit a significant performance variation factor in financial management of SMEs, with respect to other demographic factors. Overall, these contributions help us better understand the financial management performance indicators in small and medium sized businesses. Originality/value This study focuses on company age, education level and industry differences with respect to financial management performance in SMEs in emerging economies, therefore provides additional empirical evidence to a research area where very few empirical studies exist.

Revisiting control aversion: the role of financiers in connecting entrepreneurs to the marketplace

2015 ◽  
Vol 22 (3) ◽  
pp. 417-432 ◽  
Author(s):  
Lars Silver ◽  
Nicolaus Lundahl ◽  
Björn Berggren
Keyword(s):  
Small Business ◽  
Small Businesses ◽  
Structural Equation ◽  
Small Firms ◽  
Market Failure ◽  
Credit Rationing ◽  
Chief Executive ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this paper is to investigate the effects of small business entrepreneurs’ relinquishment of control aversion and the impact of their interaction with external financiers on market connection. Design/methodology/approach – Questionnaires were sent to the chief executive officers of small businesses in the manufacturing and professional services sectors. A total of 459 valid responses were analyzed in a structural equation model. Findings – The attitude of small business entrepreneurs in relying on financiers’ advice is marked by control aversion. This fear of losing control creates information asymmetry, which in itself leads to decreased financing opportunities for small business entrepreneurs. The results of the study suggest that small firms seeking the aid of financiers will be provided with substantial additional information about the market. Issues pertaining to supply seem to be less relevant than those relating to demand, thus indicating that greater focus should be placed on the investment readiness of small businesses. Originality/value – This study emphasizes the importance of the role of attitudes among SMEs in understanding capital market failure and credit rationing.

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