scholarly journals Interactions between business and financial strategies in Serbian companies

2014 ◽  
Vol 59 (203) ◽  
pp. 55-74 ◽  
Author(s):  
Djordje Kalicanin ◽  
Miroslav Todorovic
Keyword(s):  
Small Businesses ◽  
Business Strategy ◽  
Financial Risk ◽  
Order Theory ◽  
Current Level ◽  
Business Strategies ◽  
Financial Strategy ◽  
Pecking Order Theory ◽  
General Managers ◽  
Financial Strategies

We surveyed financial and general managers of 58 companies in Serbia in order to examine their views on the interactions between business and financial strategies. Although the theoretical views are well known and clear, in practice, when there is limited availability of funding sources, a meaningful combination of business and financial risk can be very difficult. We found moderate interactions between business and financial strategies. Managers of companies in Serbia are very aware of the fact that the high volatility of operating profit suggests that they should limit borrowing. However, ordinary practical problems in day-to-day operations, such as long periods of collection of accounts receivable, force the companies to take additional debt. There are significant differences between the views of managers of large companies and managers of small businesses on how business strategy dictates financial strategy. However, firm size is not relevant to the current level of debt, although earlier decisions on business strategy in terms of diversification and internationalization are relevant to the level of leverage. Somewhat surprisingly, the current level of debt does not affect the intended financial strategy in the sense of the managers? preferences to take additional debt to finance possible diversification and internationalization or other high-risk financially demanding business strategies. As the pecking order theory advocates, managers have a strong tendency towards internal financing.

scholarly journals The Business Strategy, Competitive Advantage and Financial Strategy: A Perspective from Corporate Maturity Mismatched Investment

2021 ◽  
Vol 13 (1) ◽  
pp. 164-181
Author(s):  
Can Wang ◽  
Tomas Brabenec ◽  
Peng Gao ◽  
Ziyu Tang
Keyword(s):  
Competitive Advantage ◽  
Internal Control ◽  
Business Strategy ◽  
Composite Index ◽  
Free Cash Flow ◽  
Financial Behavior ◽  
Business Strategies ◽  
Risk Level ◽  
Financial Strategy ◽  
Financial Strategies

Competitive advantage is the key to a company’s success, and the business strategy represents a long-term plan to achieve a competitive advantage by affecting the company’s financial behavior. This research studies the interaction of business strategy, competitive advantage, and financial strategy to explore whether companies choose different financial strategies based on their business strategies as well as what role competitive advantage plays in their decision-making. By building a composite index and observing maturity mismatched investment, this research quantifies the risk level of business strategies and financial strategies. Using text analysis of a company’s annual report, the research builds a dummy variable to measure the competitive advantage. Based on the samples of A-shares listed on the China Shanghai and Shenzhen stock exchanges from 2007 to 2016, the research shows that the risk level of business strategy and financial strategy tends to move in opposite directions. If a company embraces an aggressive business strategy, it is more likely to choose a conservative financial approach in terms of lower overall risks, but for the company with a competitive advantage, the negative correlation between these two strategies is weakened. Further analysis found that company ownership, free cash flow, and the quality of internal control also play a significant role in the interaction between business strategy and financial strategy. Our findings not only enrich research on business strategy and financial behavior, but also deepen the understanding of competitive advantage and corporate financial strategy theoretically.

The Qualitative Relationship Between Banks and SMEs in Wales

2017 ◽  
pp. 86-110
Author(s):  
Atsede Woldie ◽  
Hooman Hagshenas ◽  
Brychan Celfyn Thomas
Keyword(s):  
Asymmetric Information ◽  
Small Businesses ◽  
Order Theory ◽  
The Other ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
External Finance ◽  
Other Hand ◽  
Qualitative Relationship

A long-term or close and intense relationship with banks could help overcome the main problems like asymmetric information. Using collateral is another way to overcome the effects of asymmetric information. The findings show that having collateral does not reduce loan costs, and on the other hand it will increase the availability of finance for small businesses. In general, small businesses use pecking order theory in choosing their formal sources of finance. Because of their lack of knowledge, they are not completely aware of available sources of finance. Banks are the first and most important external finance provider for small businesses, so having a good long-term relationship with banks can help them to overcome problems like asymmetric information, which would influence their access to more finance. Collateral is the other way to access more finance and it can help small businesses in their relationship with banks, especially in a period of unsustainability to reduce the risks for banks.

Financial Structure of the Family Business: Evidence From a Group of Small Spanish Firms

2007 ◽  
Vol 20 (4) ◽  
pp. 269-287 ◽  
Author(s):  
José López-Gracia ◽  
Sonia Sánchez-Andújar
Keyword(s):  
Financial Distress ◽  
Small Businesses ◽  
Family Firms ◽  
Order Theory ◽  
Family Businesses ◽  
Financial Behavior ◽  
Control Group ◽  
Financial Policy ◽  
Pecking Order Theory ◽  
Internal Resources

This article presents empirical evidence on the determinants of the financial behavior of small family businesses and their differences from nonfamily small businesses. Taking into account two consolidated financial approaches, (1) the trade-off theory and (2) the pecking order theory, several hypotheses on the financial behavior of both groups of firms have been tested. By estimating these models through panel data methodology, using a sample of Spanish family businesses together with another control group of nonfamily businesses, we have obtained results confirming that a business's family nature does lead it to employ financial policy different from the rest of businesses. Furthermore, results indicate that growth opportunities, financial distress costs, and internal resources appear to be the main factors that differentiate the financial behavior of family firms from their nonfamily counterparts.

scholarly journals THE EFFECT OF INFORMATION AND COMMUNICATION TECHNOLOGY (ICT) AND BUSINESS STRATEGY ON BUSINESS PERFORMANCE IN SMALL AND MEDIUM BUSINESSES

2019 ◽  
Vol 17 (1) ◽  
pp. 53
Author(s):  
Siti Maemunah
Keyword(s):  
Information And Communication Technology ◽  
Communication Technology ◽  
Small Businesses ◽  
Business Strategy ◽  
Business Performance ◽  
Small And Medium Enterprises ◽  
Rapid Development ◽  
Business Strategies ◽  
Information And Communication ◽  
Medium Enterprises

This study aims to analyze the influence of information and communication technology (ICT) and business strategies on business performance in small and medium enterprises. This research is quantitative, descriptive survey that uses SEM methodology. Data collection is carried out in small and medium enterprises that have a workforce of 5-19 people for small businesses and 20-99 people for medium-sized businesses. Second, small and medium enterprises have assets of 50 million-500 million rupiah for small businesses and more than 500 million to 5 billion rupiah for medium-sized businesses. The number of samples is 250. The results of the study were processed using LISREL 8.80, in the model and hypothesis testing. The results of this study prove that small and medium enterprises are more open in responding to the rapid development in the field of information and communication technology to build competitive advantages against competitors.

The Qualitative Relationship Between Banks and SMEs in Wales

2021 ◽  
pp. 175-199
Author(s):  
Atsede Woldie ◽  
Hooman Hagshenas ◽  
Brychan Celfyn Thomas
Keyword(s):  
Asymmetric Information ◽  
Small Businesses ◽  
Order Theory ◽  
The Other ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
External Finance ◽  
Other Hand ◽  
Qualitative Relationship

A long-term or close and intense relationship with banks could help overcome the main problems like asymmetric information. Using collateral is another way to overcome the effects of asymmetric information. The findings show that having collateral does not reduce loan costs, and on the other hand it will increase the availability of finance for small businesses. In general, small businesses use pecking order theory in choosing their formal sources of finance. Because of their lack of knowledge, they are not completely aware of available sources of finance. Banks are the first and most important external finance provider for small businesses, so having a good long-term relationship with banks can help them to overcome problems like asymmetric information, which would influence their access to more finance. Collateral is the other way to access more finance and it can help small businesses in their relationship with banks, especially in a period of unsustainability to reduce the risks for banks.

Qualitative Research on Critical Issues In Halal Logistics

2013 ◽  
Vol 1 (2) ◽  
pp. 131 ◽  
Author(s):  
Mohamed Syazwan Ab Talib ◽  
Lim Rubin ◽  
Vincent Khor Zhengyi
Keyword(s):  
Capital Structure ◽  
Agency Theory ◽  
Random Effect ◽  
Random Effect Model ◽  
Order Theory ◽  
Specific Factor ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Financing ◽  
Financing Decision

This is a preliminary study developed to explore the determinants of capital structure of Shariah-compliant firms listed in Bursa Malaysia. This study is primarily motivated by the issue of the determinants still being inconclusive in the area of capital structure. The study is performed using the static models namely Pool Ordinary Least Square, Fixed Effect and Random Effect Model. Empirical analysis on the determinants reveals that country specific factor which is GDP and sector specific factor which is industry concentration are also significant in influencing the corporate financing decisions in this country along with firm specific factors such as efficiency, bankruptcy risk, profitability, tangibility, liquidity and size of the firm. The findings revealed that results are sensitive to models employed in the study. Nevertheless, the applicability of capital structure theories such as the trade-off theory, agency theory and pecking order theory diverge across sectors in Malaysia. The pecking order theory and agency theory are found to be the dominant theories governing the corporate financing decision in the country as well. It indicates strong evidence of hierarchy practised in firms’ financing decision. The finding on agency theory being dominant justifies the function of short-term debt as a controlling mechanism to mitigate the agency problem arises within firms across sectors. 

scholarly journals Testing the pecking order theory of capital structure: the case of Islamic financing modes

2020 ◽  
Vol 6 (1) ◽  
Author(s):  
Moncef Guizani
Keyword(s):  
Capital Structure ◽  
Random Effect ◽  
Order Theory ◽  
Equity Financing ◽  
Pecking Order ◽  
Pecking Order Theory ◽  
Corporate Financing ◽  
Financing Decisions ◽  
Executive Managers ◽  
The Capital Structure

AbstractThe purpose of this paper is to examine whether or not the basic premises according to the pecking order theory provide an explanation for the capital structure mix of firms operating under Islamic principles. Pooled OLS and random effect regressions were performed to test the pecking order theory applying data from a sample of 66 Islamic firms listed on Kingdom of Saudi Arabia stock market over the period 2006–2016. The results show that sale-based instruments (Murabahah, Ijara) track the financial deficit quite closely followed by equity financing and as the last alternative to finance deficit, Islamic firms issue Sukuk. In the crisis period, these firms seem more reliant on equity, then on sale-based instrument and on Sukuk as last option. The study findings also indicate that the cumulative financing deficit does not wipe out the effects of conventional variables, although it is empirically significant. This provides no support for the pecking order theory attempted by Saudi Islamic firms. This research highlights the capital structure choice of firms operating under Islamic principles. It explores the implication of the relevant Islamic principles on corporate financing preferences. It can serve firm executive managers in their financing decisions to add value to the companies.

The relationship between MNCs’ strategies and executive staffing

2017 ◽  
Vol 25 (2) ◽  
pp. 233-250 ◽  
Author(s):  
Sangeetha Lakshman ◽  
C. Lakshman ◽  
Christophe Estay
Keyword(s):  
International Business ◽  
Business Strategy ◽  
Global Strategy ◽  
Business Strategies ◽  
Future Research ◽  
Research Approach ◽  
Global Integration ◽  
Content Type ◽  
Managerial Implications ◽  
The Relationship

Purpose The purpose of this paper is to examine the relationship of business strategies with executive staffing of multinational companies (MNCs). Design/methodology/approach Based on in-depth interviews conducted with top executives of 22 MNCs’, the authors identify important connections between international business strategies and staffing orientation. The authors used the qualitative research approach of building theory from interviews; thus, creating theoretical propositions from empirical evidence. Findings The authors find that when the pressure for global integration is high, MNCs use more parent-country national (PCNs) (ethnocentric staffing) as against the use of host-country managers (HCNs) (polycentric staffing) when this pressure is low. Additionally, MNCs using a global strategy are more likely to use an ethnocentric staffing approach, those using a multi-domestic strategy use a polycentric approach and firms using transnational strategy adopt a mix of ethnocentric and polycentric approaches. Research limitations/implications Although the authors derive theoretical patterns based on rich qualitative data, their sample is relatively small and comprises mostly of French MNCs. Generalizability to a broader context is limited. However, the authors’ findings have critical implications for future research. Practical implications The authors’ findings provide critical managerial implications for MNCs in matching their HR strategies with business strategies. These are important for effective strategy implementation. Originality/value Although MNC staffing orientations have been studied for a long time, their relationship to international business strategies is still not clearly understood. The authors contribute to the literature by investigating the relationship between MNCs’ business strategy types with staffing orientations.

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