scholarly journals Capital structure of small, medium and micro enterprises: major factors for a developing economy

2019 ◽  
Vol 17 (2) ◽  
pp. 124-133
Author(s):  
Sharon Zunckel ◽  
Celani John Nyide
Keyword(s):  
Capital Structure ◽  
Structural Equation ◽  
Empirical Studies ◽  
Research Approach ◽  
Developing Economy ◽  
Firm Level ◽  
Cross Sectional ◽  
Major Factors ◽  
Micro Enterprises ◽  
The Capital Structure

Managing capital structure is an imperative decision made by all firms. The manner in which financing is organized is a strategic financial decision and managers must settle on the amount of debt in relation to equity that it requires to maintain. Despite many empirical studies investigating the choice of capital structure for large corporates, minimal research has been conducted on capital structure decisions in small, medium, and micro enterprises (SMMEs). This study identifies major factors influencing the capital structure of SMMEs in a developing economy and enlightens owners/managers on the importance thereof. This investigation used a quantitative research approach, which was cross-sectional. A convenience sampling method was adopted, and data were collected from 136 respondents, only confined to the retail and whole sector, which is the second largest sector in KwaZulu-Natal, South Africa. The partial least squares structural equation modelling was utilized to determine the statistical results. It was discovered that managerial factors such as individual goals and financing preference of the owner/manager, network ties, attitude to debt, maintaining control and asymmetric information; and firm-level factors such as size of the firm, profitability and firm age are major factors that influence the capital structure of SMMEs. Therefore, capital structure decisions are made motivated by the attitudes of the owners/managers.

scholarly journals An analysis of factors influencing the capital structure of small, medium and micro enterprises : a growth and survival perspective

2018 ◽  
Author(s):  
◽  
Zunckel Sharon
Keyword(s):  
Capital Structure ◽  
Empirical Studies ◽  
Firm Level ◽  
Growth And Survival ◽  
Factors Influencing ◽  
Kwazulu Natal ◽  
Survival And Growth ◽  
Retained Earnings ◽  
Micro Enterprises ◽  
The Capital Structure

In South Africa, there is a need for small, medium and micro enterprises (SMMEs) to become established and be sustainable. These organisations play a crucial role in the economy of South Africa, as well as across the globe. Empirical studies have acknowledged the contribution of SMMEs to the economy, as well as to the gross domestic product. However, the failure rate of these firms has also been emphasised in the same studies. The lack of finance has been identified as one of the contributing factors towards the discontinuance of small firms, hence, managing capital is an importance task for organisations. Managers need to understand the capital structure of the firm in order to make the best decisions regarding the finances of the firm. The growth of SMMEs is also crucial to all economies around the world. Despite many empirical studies on capital structure decisions in large firms, minimal studies have investigated the capital structure decisions in SMMEs. Therefore, this study is expected to shed more light on the capital structure of SMMEs and enlighten owners/managers on the importance thereof. The aim of this study was to identify the factors influencing the capital structure in terms of the survival and growth of SMMEs in KwaZulu-Natal. The study addressed the following primary questions: what factors influence the capital structure of small, medium and micro enterprises in Durban, KwaZulu-Natal? Furthermore, what is the influence of the capital structure on the survival and growth of small, medium and micro enterprises in Durban, KwaZulu-Natal? The study used a quantitative research design and was cross-sectional in nature. A survey questionnaire was the primary data collection tool utilised. The target population was 204 SMMEs from the retail and wholesale sectors. A convenience sampling method was adopted which resulted in a sample size of 136, with 103 responses received. The Partial Least Squares Structural Equation Modelling 5.0 software was utilised to determine the statistical results. The findings revealed that both managerial and firm-level factors influence the capital structure of SMMEs. Managerial factors included individual goals and financing preferences of the owner/manager, network ties, attitude to debt, asymmetric information and maintaining control; whilst the firm-level factors were size of the firm, profitability and firm age. The findings also revealed that personal savings was the most important financing choice at the initial phase of the firm, however once the firm was established, retained earnings was utilised more than any other source of finance. Retained earnings was also revealed to have a significant influence on the growth and survival of small, medium and micro enterprises

scholarly journals Interplay between capital structure choice and survival and growth of small, medium, and micro enterprises: A South African context

2019 ◽  
Vol 17 (4) ◽  
pp. 121-130 ◽  
Author(s):  
Celani John Nyide ◽  
Sharon Zunckel
Keyword(s):  
Capital Structure ◽  
Significant Influence ◽  
Structural Equation ◽  
Trade Credit ◽  
Empirical Studies ◽  
Statistical Tool ◽  
Growth And Survival ◽  
Survival And Growth ◽  
Retained Earnings ◽  
Micro Enterprises

It is essential for small, medium, and micro enterprises (SMMEs) to become established, be sustainable and grow. These firms play a vital role in the economy of both developed and developing countries. Empirical studies have acknowledged the contribution of SMMEs to the economy, as well as to the gross domestic product. However, the failure rate of these firms has also been emphasized in the same studies. SMME survival is critical for economic growth, which is measured by increases in profits. Capital structure decisions are significant to the survival and growth of these entities. This study was conducted to examine the interplay between capital structure and SMMEs` survival and growth in a developing economy. A sample size of 103 SMMEs was chosen on a non-probability basis using convenience sampling within the eThekwini area, KwaZulu-Natal, South Africa. The statistical tool used for analysis in this study was the Partial Least Squares Structural Equation Modelling (PLS-SEM) 5.0 software. Capital structure was found to have a significant influence on the growth and survival of small, medium, and micro enterprises. The study concludes that utilizing retained earnings, personal savings, trade credit and funds from friends and family has a significant influence on the growth and survival of the firm. Debt and external equity financing, on the other hand, have an insignificant influence on the growth the firm.

The Joint Determinants of Capital Structure and Stock Rate of Return: A LISREL Model Approach

2019 ◽  
Vol 22 (02) ◽  
pp. 1950013
Author(s):  
Hong-Yi Chen ◽  
Cheng Few Lee ◽  
Tzu Tai
Keyword(s):  
Capital Structure ◽  
Stock Returns ◽  
Structural Equation ◽  
Equation Modeling ◽  
Financial Policy ◽  
Macroeconomic Factors ◽  
Managerial Entrenchment ◽  
Pricing Factors ◽  
Major Factors ◽  
The Capital Structure

We develop a simultaneous determination model of capital structure and stock returns. Specifically, we incorporate the managerial investment autonomy theory into the structural equation modeling with confirmatory factor analysis to jointly determine the capital structure and stock return. Besides attributes introduced in previous studies, we introduce indicators affecting a firm’s financing decision, such as managerial entrenchment, macroeconomic factors, government financial policy, and pricing factors. Empirical results show that stock returns, asset structure, growth, industry classification, uniqueness, volatility, financial rating, profitability, government financial policy, and managerial entrenchment are major factors of the capital structure.

Organizational social capital, resilience and innovation validation of a theoretical model for specialized workers

2019 ◽  
Vol 12 (1) ◽  
pp. 137-152 ◽  
Author(s):  
Antonio Martinez Fandiño ◽  
Nilton Soares Formiga ◽  
Rui Manuel de Menezes
Keyword(s):  
Social Capital ◽  
Structural Equation ◽  
Quantitative Research ◽  
Empirical Studies ◽  
Equation Model ◽  
Research Approach ◽  
Mathematical Tool ◽  
Cross Sectional ◽  
Content Type ◽  
Organizational Social Capital

Purpose The purpose of this paper is to understand the interactions and their cause/effect consequences of three aspects present inside organizational realities, namely, organizational social capital (OSC), worker resilience and innovation derived from the workers. Design/methodology/approach A cross-sectional study for analyzing the subjects was chosen. As a quantitative research approach, after the theoretical review, two possibilities were hypothesized for how they act as a system. In order to verify the hypotheses, the authors chose the structural equation model, a suitable instrument for this analysis, as a mathematical tool. Findings The results show that OSC is a mediator between resilience and innovation in the organizational dynamics. This suggests that workers’ resilience need OSC, acting as the mediator, to improve their level of innovation capacity. Research limitations/implications The study gives information at a specific point in time. Follow-up studies are needed to understand the phenomena’s transformation, and no distinction was made between exploratory and exploitative innovation. More empirical studies should be carried out to enhance its understanding. Practical implications These findings can help organizations deal better with these resources to reach their goals because the first, as stated in the purpose, is the amalgamated goodwill necessary for individuals to work together; the second is workers’ capacity to bounce back; and the last is the creativity inherent in people. All of which are significant for an enterprise thrive in its market. Originality/value The cited dynamic has few studies, and this work provides evidence about its existence and magnitude, shedding light on a critical factors’ relationship net, especially for enterprises based on the creativity of their workers.

Factors influencing the structure of the Russian companies' capital

2020 ◽  
Vol 26 (7) ◽  
pp. 1647-1660
Author(s):  
O.N. Likhacheva ◽  
A.S. Belikevich
Keyword(s):  
Correlation Analysis ◽  
Capital Structure ◽  
Systems Approach ◽  
Empirical Studies ◽  
Factors Influencing ◽  
Oil Contracts ◽  
Economic Landscape ◽  
Relationship Of ◽  
Trade Wars ◽  
The Capital Structure

Subject. In the uncertain market environment, the optimal structure of capital is getting more important because it influences the competitiveness of a firm, its financial sustainability and solvency and, consequently, a success. Herein we dwell upon the hypothesis presuming the existence of capital structure determinants. Objectives. We review empirical studies on the subject, analyze determinants of the Russian companies’ capital structure. Methods. The study is based on the systems approach and methods of statistical analysis. Results. It is necessary to monitor how capital is shaped and formed. We investigated proceedings on factors influencing the capital structure and discovered relevant hypotheses, carrying out the correlation analysis of such factors. Conclusions and Relevance. It is especially important to examine factors influencing the capital structure, and find the appropriate format for the economy struggling through the crisis. The coronavirus pandemic unavoidably reshapes the global economic landscape, which has already been under the pressure of deglobalization processes (trade wars, repudiation of oil contracts). The correlation analysis did not reveal any relationship of the variables in question (the company’s age, ROE, ROA, MOEX, key rate, GDP, PPI) and the capital structure. Further research should be devoted to other factors and consider the unreasonableness and psychological background of managers’ behavior who make decisions concerning the capital structure.

Impact of social media usage on performance of construction businesses (CBs) in Abuja, Nigeria

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Luqman Oyekunle Oyewobi ◽  
Olufemi Seth Olorunyomi ◽  
Richard Ajayi Jimoh ◽  
James Olabode Bamidele Rotimi
Keyword(s):  
Social Media ◽  
Social Interaction ◽  
Structural Equation ◽  
Building Materials ◽  
Positive Impact ◽  
Research Approach ◽  
Cross Sectional ◽  
Content Type ◽  
Business Interest ◽  
The Impact

Purpose Many construction businesses are currently building and keeping social media pages for their enterprises to be visible to the public to improve their social interaction, promote business interest, build trust and relationships with their targeted audience on social media. The purpose of this study is to examine the impact of social mediausage on performance of construction businesses (CBs) in Abuja, Nigeria. Design/methodology/approach This study used a quantitative research approach by identifying constructs that reveal three aspects of organisation’s physiognomies that impact the process of espousing, implementing and using technological innovations in conducting businesses. Well-structured questionnaire was used to obtain data from 113 purposively sampled building materials’ merchant operating in Dei-Dei Market, Abuja, Nigeria. This study used partial least squares structural equation modelling technique to establish the relationship among the constructs. Findings The results of this study indicated that technology has significant relationship with social media adoption, whereas social media adoption has a very strong positive impact on organisation’s performance (P < 0.001) with respect to improved customer relations and services and enhanced information accessibility. Research limitations/implications This study has implications for CBs that wish to adopt social media to promote their businesses by presenting to them the opportunity to understand the impact of technology, environment and organisational potential in improving business performance. This study is cross-sectional in nature, and this calls for caution in interpreting the results. Originality/value This paper developed and tested a conceptual framework presented to understand the interrelationships amongst the constructs, which would be of great significance to business owners in developing their social interaction and promote business interest via social media. The outcome of this research is beneficial to researchers to further study how the different social media tools could help in influencing business decisions.

scholarly journals Supply chain resilience and measurement dimensions: The case of halal pharmaceuticals in Malaysia

2018 ◽  
Vol 56 ◽  
pp. 05001
Author(s):  
Osaro Aigbogun ◽  
Zulkipli Ghazali ◽  
Radzuan Razali
Keyword(s):  
Supply Chain ◽  
Structural Equation ◽  
Empirical Studies ◽  
Partial Least Square ◽  
Least Square ◽  
Manufacturing Companies ◽  
Cross Sectional ◽  
Supply Chain Resilience ◽  
Manufacturing Supply Chain ◽  
Cross Sectional Design

Resilience is the vital feature of supply chains that confers the ability to withstand the adverse effects of disruptive events. Most of the previous studies have been conceptual, theoretical, normative, or at best qualitative in approach, concentrating on identifying the elements of resilience. In spite of the proliferation of studies, an empirically validated quantitative study on justifying the measurement dimensions of supply chain resilience is rare, thus the need for further quantitative empirical studies. The context of the present study is the manufacturing supply chain of halal pharmaceuticals in Malaysia. A quantitative cross-sectional design was applied by means of self-administered structured questionnaire survey, using the Supply Chain Resilience Assessment and Management instrument (SCRAM© 2.0). The survey yielded usable responses from 106 manufacturing companies engaged in the production of halal pharmaceuticals in Malaysia. Descriptive statistics as well as partial least square-based structural equation modelling was used to analyze the survey data. This was facilitated by IBM SPSS statistics software (version 21.0), and Smart PLS 3.2.4 respectively. The results suggest that the psychometric properties of the supply chain resilience dimensions (vulnerabilities and capabilities) in the context of the present study are reliable and valid.

scholarly journals Post-Acquisition Performance of Emerging Market Firms: A Multi-Dimensional Analysis of Acquisitions in India

2021 ◽  
Vol 14 (12) ◽  
pp. 567
Author(s):  
Arindam Das
Keyword(s):  
Structural Equation ◽  
Emerging Market ◽  
Empirical Studies ◽  
Short Term ◽  
Firm Level ◽  
Acquisition Performance ◽  
Long Term Performance ◽  
Term Performance ◽  
A Performance

M&A performance is a multifaceted, compound construct with no overarching factor that captures all different dimensions. This paper examines the concept of acquisition performance and proposes a model that links firm-level factors and transaction parameters with firms’ short-term and long-term performance, extending to financial-, market- and innovation measures. Building on past empirical studies on the influence of various factors on M&A performance, a multi-dimensional structural equation model has been developed and it has been tested with a dataset on acquisitions in the Indian technology sector over a period of ten years. The results suggest that: (a) smaller acquirers with higher book value and leveraged firms demonstrate better long-term performance; (b) contrary to established understanding, short-term market returns are not influenced by deal parameters; (c) majority stake purchases show relatively lesser gains—suggesting the possible presence of post-acquisition integration issues and, (d) acquirers with high intangible assets continue to do well on innovation performance post-acquisition. By indicating situations and conditions under which an acquisition would potentially lead to a performance gain for the acquirer, these results provide significant insight to practitioners pursuing M&As for growth opportunities.

Unveiling business school interns' satisfaction toward online summer internship program amid COVID-19

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rashmi Maini ◽  
Sanandi Sachdeva ◽  
Guneet Kaur Mann
Keyword(s):  
Business School ◽  
Structural Equation ◽  
Empirical Studies ◽  
North India ◽  
Equation Modeling ◽  
Successful Implementation ◽  
Cross Sectional ◽  
Content Type ◽  
Global Pandemic ◽  
The University

PurposeThe objective of this research is to explore factors that influence interns' satisfaction (is) toward the e-internship program, an alternate adopted by management institutes in lieu of the regular summer internship amidst the global pandemic, coronavirus disease 2019 (COVID-19).Design/methodology/approachA cross-sectional research design with a self-reported questionnaire was conducted on business school (B-school) interns to rate the factors that contribute to their e-internship satisfaction. Structural equation modeling was used to examine the responses obtained from 203 B-school interns with a diverse demographic background belonging to a government university of North India. Convenience sampling was employed to get valid responses from interested respondents.FindingsResults revealed that although all the four factors under consideration, faculty mentors' preparedness (FMP), industry mentors' preparedness (IMP), interns' readiness toward online internship and interns' Internet efficacy (IIE) are significantly related to IS, industry mentors' role was found to have a major impact on the IS. The study unravels that industry mentors' interaction has a potential role in the successful implementation of e-internships.Research limitations/implicationsThe study has implications for the university as well as the companies to ponder on factors that satisfy interns during the virtual internship and designing an effective internship program by having a collaborative approach.Originality/valueThere is a dearth of empirical studies on internships in general and e-internship in particular, so this study fills the gap and contributes to the existing literature and provides ways to satisfy B-school interns toward e-internship by addressing the key factors.

scholarly journals Hotel Employees’ Pro-Environmental Behaviour: Effect of Leadership Behaviour, Institutional Support and Workplace Spirituality

2019 ◽  
Vol 11 (15) ◽  
pp. 4135 ◽  
Author(s):  
Olawale Fatoki
Keyword(s):  
Environmental Sustainability ◽  
Structural Equation ◽  
Institutional Support ◽  
Workplace Spirituality ◽  
Survey Method ◽  
Research Approach ◽  
Cross Sectional Survey ◽  
Cross Sectional ◽  
Hotel Employees ◽  
Leadership Behaviour

Pro-environmental behaviours (PEB) depict behaviours that cause minimal harm to or even benefit the environment. Employees are an important stakeholder in organisational environmental initiatives; however, there is little understanding of the leadership mechanisms and workplace support that can nurture these behaviours. In addition, empirical studies on the effect of workplace spirituality on employees’ PEB are limited. Understanding the factors that can influence employees’ workplace PEB is of significance in improving environmental sustainability in the hospitality industry. This study investigated the effect of leadership behaviour, institutional support and workplace spirituality on hotel employees’ PEB in South Africa. This study utilised a quantitative research approach and a causal research design. The cross-sectional survey method was used for data collection. Convenience sampling method was used to identify the participants in the survey. Data analysis included descriptive statistics and structural equation modelling. The results of this study showed significant positive relationships between leadership behaviour, institutional support and workplace spirituality and hotel employees’ PEB. Theoretically, the study linked spirituality to employees’ workplace PEB as spiritual discourses have been marginalised in tourism research. Empirically, the study adds to the literature on the determinants of employees’ workplace PEB in the hospitality sector. Practically, the study makes recommendations that can improve the workplace PEB of hotel employees.

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