Portuguese SMEs Research Articles

Bankruptcy Prediction and Performance: the Influence of Quality Certification on Portuguese SMEs

Objective: To observe the existence of a relationship between quality certification and performance and bankruptcy prediction for Portuguese SMEs. Theoretical Reference: The search for quality and its certification, via the International Standard Organization (ISO), theoretically, is related to the going concern assumption, making it possible to enhance the company's economic and financial sustainability. Method: Multisectoral Multivariate Discriminant Analysis (ADM) models, considered the most efficient, were selected for application, as well as the commonly used Univariate Analysis indicators. In Bureau Van Dijk's SABI Database, we collected Portuguese SMEs, with financial information from 2014 to 2018, certified in the scope of quality, ISO 9000 or 9001, on 12/31/2018, of these, we focused on those with main activity in NACE D - Electricity, Gas, Steam, Hot and Cold Water and Cold Air or G - Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles as they are the most important. The Sector Average Company was also collected for the same NACE via Banco de Portugal Sector Tables. Then, having applied the models and indicators under study, we compared the results obtained between them, in order to observe the possible effect of quality certification on financial performance. Results and Discussion: No implication of quality certification in improving or optimizing the performance or economic-financial position of entities is identified. Implications of the Research: Uncover the influence of quality certification on the economic-financial position of companies, allowing for deeper investigation into bankruptcy, sustainability and value creation. Originality/Value: The specificities of the sectors and business size, crises and increasing closures make it vital to identify what will influence performance and sustainability, as no studies have been identified on this topic, focusing on Portuguese SMEs, certified via ISO 9000 or 9001.

Perceptions and configurations of balanced scorecard use: evidence from Portuguese SMEs

Purpose The purpose of this study is to identify managerial perceptions, as well as individual and organizational contingencies, that influence the use of balanced scorecard (BSC) among SMEs. Design/methodology/approach This paper adopts a mixed methods approach to study the use of the BSC from a survey database of 414 SMEs across several industries in Portugal. Findings This paper shows the perceived benefits, reasoning and obstacles that managers face when using the BSC in SMEs. The BSC is not the first choice for strategic management control of most firms in the sample. Most SMEs in this study have an explicitly formulated business strategy. The results show that it is possible to implement the BSC in SMEs without a formalized strategy. Such findings seem to suggest that the use of the BSC may stimulate the formulation of strategies for those firms. Research limitations/implications The use of fuzzy-set qualitative comparative analysis limits the generalization of the findings; nonetheless, the transparency of the report enables replication without restrictions. Practical implications This paper proposes that the size of the firm and the characteristics of the manager may compensate for the absence of a strategy to guide BSC use. Social implications This paper advises a match between the stage of development of the SMEs strategy and the gender of the manager, which may have implications for recruitment purposes. Originality/value This study reports alternative configurations of individual and organizational conditions that lead to the use of the BSC in SMEs as well as configurations that prevent its use.

Enhancing operational scale in SMEs through coopetition: Insights from the Portuguese ornamental stone industry

This study explores whether coopetition enhances scale determinants for SMEs, focusing on a case study in the Portuguese Ornamental Stone sector. The findings show that transitioning to coopetition networks positively impacts scale determinants in this sector. These improvements highlight coopetition's potential to drive operational efficiency, resource optimization, and market responsiveness, aligning with Sustainable Development Goals (SDGs) 8, 9, and 12. However, the study's limitations include a specific focus on Portuguese SMEs and a limited data collection period, indicating the need for broader and longer-term research. Future research should extend to different sectors and regions, incorporate a broader range of KPIs, and consider external factors affecting coopetition outcomes. This would provide a more comprehensive understanding of coopetition's role in fostering sustainable growth and innovation in SMEs. This research contributes to theory by leveraging S-D Logic and open innovation to enhance coopetition, showcasing their practical application in SMEs.

Mapping Circular Economy in Portuguese SMEs

The transition from a linear to a circular economy is an increasingly popular solution to the dual problems of scarcity of virgin resources at the point of extraction and the exponential growth of waste at the point of disposal. The linear economy adheres to a model wherein natural resources are extracted, transformed into products, utilized, and ultimately discarded as waste. In contrast, the circular economy is designed to promote sustainability. This is achieved by reducing the use of raw materials, waste, reuse, recycling, and recovery of materials at the end of the useful life of products. The result is a closed and regenerative cycle that preserves natural resources and minimizes environmental impacts. The manner in which each country and company responds to this reality is markedly disparate. This research endeavors to ascertain the strategies employed by Portuguese SMEs in addressing this challenge. A review of the literature was conducted to ascertain what has been published on this subject. However, the results of this review indicate that the existing literature does not fully address the intended topic. The articles identified in the literature review only partially address this issue, focus on other geographical regions, or in some cases, are dedicated to specific business sectors. In light of the dearth of research on this topic, we turned to the Portuguese context, employing the Grounded Theory methodology to conduct semi-structured interviews with 34 SMEs. Upon analysis of the results, it became evident that the circular economy is not yet a prerequisite for consumer choice. Portuguese legislation does not facilitate the implementation of the circular economy, consumers are not yet engaged with the issue itself, companies face challenges in communicating their practices, and there is a perceived lack of credibility by consumers. Additionally, the cost–benefit ratio is not always favorable for such practices.

Due Diligence Associated with Risk Management and Linked to Management Control

Abstract Objective Due Diligence is considered an internal practice that analyzes and identifies the actual situation of an organization. Having a strategic relevance and impact on Mergers and Acquisitions, it provides a solid foundation for the final decision or negotiation. Given this relevance, it is considered an input for Management tools to have information precisely collected and oriented. Methodology The aim of this article is to confirm, through empirical research, namely a case study, conducted in Portuguese enterprises, the importance of Due Diligence and its role in Risk Management, assessing its usefulness as a management control tool and its potential impact on the performance of Portuguese SMEs. Findings Managers recognize that there is a lack of empirical research in this area, especially in terms of its impact on SMEs. Value added Few studies relate to the practices of Due Diligence associated with Risk Management and linked to Management control in SMEs in order to increase transparency and performance. Recommendations This study confirms the contribution Due Diligence can have to Risk Management and the consequent impact on performance when used linked to a Management control tool.

Firms’ Investment Level and (In)Efficiency: The Role of Accounting Information System Quality

We investigate whether accounting information system quality has an impact on the level and efficiency of firms’ investments. While firms’ growth depends on investment and financing decisions, accounting information is fundamental for the decision-making of several stakeholders. We assess the accounting information system quality by discretionary accruals, whereas the investment inefficiency is estimated by the residuals of an investment regression for a sample of 3073 Portuguese SMEs from 27 industries, over the period from 2016 to 2021 using a panel regression analysis. The empirical evidence suggests that firms exhibiting higher accounting information system quality tend to invest more. In addition, firms with a lower accounting information system quality have more inefficient investments, as they tend to engage in more overinvestment, although this is not significant for underinvestment. Therefore, this study provides new evidence regarding the impact of accounting information systems on investment that may be useful for several stakeholders, such as managers, creditors, regulators, and academics, by providing evidence for SMEs, where empirical studies are scarce.

Barriers to product innovation: An empirical study in Portuguese services SME

This study aims to explore the relations between financial, knowledge and market barriers to innovation and the innovation propensity of the Portuguese SMEs services sector, specifically at the product level. Utilizing data from the Community Innovation Survey (CIS) covering the years 2018-2020, the analysis focuses on a sample of 9238 companies within the service sector, each employing between 10 and 249 individuals. The research employs a logistic regression model to assess these relationships. The findings highlight that some obstacles, such as insufficient credit or private investment and restricted access to external knowledge, are perceived as hindrances to product innovation. Interestingly, some barriers to innovation, such as the lack of skilled personnel and elevated costs, can paradoxically serve as catalysts for innovation.

R&D cooperation and innovation networks: lessons from SME participation in H2020

Portuguese SMEs are ‘catching-up’ to the European Commission’s goal of 20% for SME participation in H2020, representing16,7% of allocated funds.. Previous R&D experience, and especially R&D cooperation, have been identified as key determinants of participation in Framework Programmes, such as H2020. Thus, it is important to know SMEs that engage in these experiences and the drivers that lead them to it. This paper seeks to identify why and how SMEs gain collaborative experience with HEIs; what are the organizational characteristics that foster collaboration; the types of experiences in which SMEs are engaged with HEIs; the obstacles they face when applying for FP funding, and how these can be overcome. Lastly, we aim to draw lessons that foster SMEs’ participation in Framework Programmes. To achieve these goals, we conducted a survey with SMEs that collaborate with HEIs (N = 26), including SMEs that participated in H2020 and SMEs that didn’t. We then complemented the survey with six in-depth qualitative interviews with both FP participants and non-participants.

Os Determinantes do Crédito Comercial Durante e Após a Crise Financeira Internacional de 2008

This work analyses the determinants of trade credit granted and received and the effect of the 2008 financial crisis on it. Using a sample of 96,417 Portuguese SMEs from the non-financial sector for the period 2010–2019, we found that trade credit plays an important role in firms' financing policies. Firms with better access to the credit market act as financial intermediaries and grant financing to firms that have difficulty accessing credit. Moreover, the use of trade credit seems to be a substitute for bank financing. We also found that firms use trade credit as a marketing tool to increase their sales. Finally, we found a slump in credit granted to customers after the 2008 financial crisis, which seems to mimic the contraction in aggregate bank credit.

Strategic Organizational Sustainability in the Age of Sustainable Development Goals

This study aims to explore the implementation of sustainability strategies in Portuguese SMEs. The methodology used in this study is qualitative, and it was carried out via multiple case studies, through interviews, with companies located in Portugal. The interviewed companies revealed their management practices regarding sustainable innovation and a business model focused on sustainable economic, social, and environmental criteria. Regarding the management of sustainable innovation, we assessed the interviewed companies as having accommodative and proactive strategies. Consequently, measures were presented at the level of sustainable management that companies may implement in their operations involving the participation of various stakeholders. This study is original not only for being exclusively related to SMEs but also because it is the first to consider the context of Portuguese companies, thereby contributing to the existing literature on this subject.

The presence of women in family SMEs' succession process: a conceptual framework guided by gender perspective

PurposeThis study aims to analyze how the presence of women is seen in family small and medium-sized enterprises’ (SMEs) succession process from the successors' perspective.Design/methodology/approachTo do so, the multiple case study method (qualitative approach) was used: five Brazilian SMEs and three Portuguese SMEs, and the data-collecting techniques were the online interview and documentary analysis. Data analysis was through content analysis using NVivo software.FindingsThe empirical evidence obtained led to the conclusion that the natural succession process is predominant in the family SMEs studied here. Although succession planning is present in some firms, these plans are informal and not rigid as regards deadlines. Nor do they present stages and tasks that could be considered as a planned succession.Practical implicationsThe study shows that successors do not see gender as a relevant criterion for the choice of successor. It is concluded that women's participation in family SME succession, even to a lesser extent, is still marked by gender inequality. So, this study provides directions to policymakers and researchers to focus on developmental programmes for the presence of women in family SMEs' succession process.Originality/valueAlthough some successors consider that these firms' performance may be different due to gender characteristics, others emphasize that management is the same. Therefore, this study provides the futuristic direction to policymakers, researchers and educators for focusing on the enhancement of women entrepreneurs which plays a crucial role in the family SMEs' succession process. Therefore, a conceptual framework is proposed that explains the articulation of different categories to understand the gender perspective in family firms' succession.

The impact of gender on financial performance: Evidence for Portuguese SMEs

The impact of gender on financial performance: Evidence for Portuguese SMEs

Economic Value Added Assessment Applied to the Portuguese SME during 2007-2010 Crisis Period

Economic Value Added Assessment Applied to the Portuguese SME during 2007-2010 Crisis Period

The impact of gender on financial performance: evidence for Portuguese SMEs

The impact of gender on financial performance: evidence for Portuguese SMEs

The Reaction of Portuguese SMEs in the Face of the Covid-19 Crisis

The Reaction of Portuguese SMEs in the Face of the Covid-19 Crisis

Building competitive advantages and business success: the role of learning orientation, reward systems and entrepreneurial orientation

PurposeThe complexity of the firm’s external environment, with its constant changes, forces managers to develop novel strategies that can meet new strategic needs. The purpose of this study is to examine the role of reward systems (RSs) in strategic management, as well as their relationship to learning and entrepreneurial orientation (EO), commonly referred to as the driving force behind growth, competitive advantages (CAs) and improved performance. It also focuses on the study of the relationship between EO and business performance (BP), the introduction and testing of the possible antecedents of this relationship and potential mediating factors.Design/methodology/approachA conceptual model was tested on a sample of 1,190 Portuguese firms using a structural equation model.FindingsIt is shown for the first time that learning orientation (LO) is an antecedent of the RSs and, subsequently, of EO. Additionally, the CAs of differentiation and cost leadership play a mediating role in the relationship between EO and BP. Furthermore, RSs are also a driving force behind both CAs.Originality/valueThis study makes several empirical and theoretical contributions, addressing the gap in the literature about the role of RSs in strategic management. It tests the relationship between LO and the firm’s performance by taking the mediating effects of RSs, EO and CAs into account. Additionally, we discuss LO as an antecedent strategic variable of human resources practices, in particular, RSs. Finally, we broaden the scope of our research by examining these issues in the context of Portuguese SMEs from different industries.

Does earnings quality impact firms’ performance? The case of Portuguese SMEs from the mold sector

PurposeThis study aims to study the impact of earnings quality on firms’ financial performance.Design/methodology/approachAn unbalanced panel data of 237 small- and medium-sized Portuguese companies from the mold industry, using 2010–2018 yearly data was analyzed. While most studies focus only on earnings management when assessing earnings quality, in this study six proxies for earnings quality are used, namely, accruals quality (a proxy for earnings management), earnings persistence, earnings predictability, earnings smoothness, earnings timeliness and earnings conservatism. Moreover, two proxies of financial performance are considered, the return on assets and the economic value added. An econometric model was estimated using either a fixed-effects or a random-effects specification to account for the individual firm-specific effects and ensure heteroscedasticity corrected estimates.FindingsThe results show that managers must be concerned with the quality of reported earnings, as it can affect positively firms’ financial performance, especially regarding accruals quality. Persistence, predictability, smoothness, timeliness and conservatism are shown not to exert significant influence on financial performance in the sample.Research limitations/implicationsThis work contributes not only as a literature review on these thematic but also to firms’ managers and stakeholders, who have information that helps them select strategies that guarantee earnings quality and improve firms’ financial performance.Originality/valueThis study proposed an econometric model that studies the relationship between earnings quality (using several proxies for it) and financial performance that can be applied to all companies.

Challenges in the Integration of Quality and Innovation Management Systems

Seeking to reduce the number of inconsistencies in their processes, many organisations choose to implement the ISO 9001:2015 quality management standard. Their aim is to improve operational performance while, at the same time, they cope with increased pressures from the market to present innovative products and solutions and from the stakeholders to implement new organizational methods. This work intends to investigate how organisations can leverage ISO 9001:2015 in implementing the ISO 56002:2019 innovation management standard, given that both standards have a high degree of compatibility with each other. For that purpose, meetings were held with senior managers and quality managers of three Portuguese SMEs to discuss the existing potential challenges and gaps in the integration of both management systems. The results point to the existence of a significant set of practices in the field of quality that can support and facilitate the formalization of integrated management systems. Nevertheless, generalization of the results should be avoided, and more research is needed, since the integration of management systems is often conditioned by cost and time related issues. Furthermore, it is disputable whether a company can simultaneously reach a high level of efficiency (brought about by implementing a quality management system) and a high level of innovation (made possible by the implementation of an innovation management system) thus jeopardizing the implementation of an integrated management system.

The Presence of Foreign Capital and the Internationalization of Portuguese Industrial SMEs

The objective of this paper is to empirically examine the relationship between the firms’ ownership and control structure, in particular the presence of foreign capital, and their internationalization levels, measured in terms of intensity and diversification. The international performance of Portuguese SMEs, which is crucial for the domestic economy’s growth, depends on a multitude of factors, with the existence of foreign investment inflows directed to industrial SMEs being a usually forgotten factor. This paper fills that gap using a balanced panel data of 5722 firms for the period from 2010 to 2017, researching if the presence of foreign capital influences the level and scope of internationalization, and controlling the effects of other variables such as profitability, age, size, indebtedness and sector of activity. The origin of foreign capital is also considered, being researched if issues of institutional or development differences exert any influence over firms’ internationalization. The results evidence that the presence of foreign shareholders in SMEs positively influences internationalization and that the distance variable positively correlates with the internationalization measures. Moreover, there seems to exist a non-linear relationship between the development level of the country of origin of the share capital and internationalization, with the results indicating that firms with share capital originating from more advanced countries attain a higher degree of internationalization. As SMEs in Portugal face increasing competition, joining hands with resource-rich investors such as foreign corporations and institutional investors would be a fruitful strategy to enhance the international competitiveness of Portuguese firms.

Linking Transformational Leadership and Firm Performance: The Role of Entrepreneurial Orientation

This study aims to analyze the mediating role of entrepreneurial orientation on the relation between transformational leadership and firm performance. A survey-based quantitative study was carried out with Portuguese SMEs’ textile and clothing industry executive directors for which the questionnaire was adopted from different published sources. Data analysis was performed through the structural equation model (SEM). The findings demonstrated a positive and significant relationship between transformational leadership and entrepreneurial orientation and between entrepreneurial orientation and firm performance. On the other hand, no evidence was found that transformational leadership is a variable that influences firm performance. Nevertheless, it was possible to prove the mediating effect of entrepreneurial orientation on the relationship between transformational leadership and firm performance. These findings highlight the catalyst role of entrepreneurial orientation, leveraging transformational leadership as antecedents of firm performance. These findings are valuable inputs for managers and public entities. In the future, the Portuguese SME’s textile and clothing industry must intensify its involvement in the digital economy, allowing transformational leadership to add value to firm performance using innovative, proactive, and risk-taking digital services.