Swedish Small And Medium-sized Enterprises Research Articles

The role of board design in small-firm crisis response

ABSTRACT The COVID-19 pandemic had an unprecedented effect on business firms, offering a unique opportunity to advance business research. Given the concentration of authority at the organizational apex during crises, the role of boards of small- and medium-sized enterprises (SMEs) is crucial, but studies exploring this role in crisis response are lacking. We develop a capability view on boards, investigating the relationship between board design and crisis response in 472 Swedish SMEs. We show that the board design influences crisis response and that SMEs with mature boards respond more decisively to crises. Our findings contribute to the literature on the effects of COVID-19 on business management and emphasize the role of SME boards in crisis management. By demonstrating how board design influences crisis response, the study offers valuable insights for theory and practice.

Equity capital financing of Swedish SMEs, innovation, and decentralized management

Purpose The purpose of this paper is to investigate the potential link between Sweden’s high reliance on equity capital financing among small and medium-sized enterprises (SMEs) and its recognition as the most innovative economy in Europe according to the European Innovation Scoreboard (EIS). This paper examines the idea that the high levels of trust within Swedish society can explain why private equity financing is more prevalent among Swedish SMEs. Design/methodology/approach To test these ideas, the authors use data from the Survey on Access to Finance for Enterprises to measure the private equity reliance of firms. The authors also use the EIS to measure the innovation capacity of nations and various aspects of SMEs’ innovation activities. Finally, societal levels of trust are measured through the World Value Survey. Findings First, the authors find that European countries with a higher proportion of SMEs relying on equity financing tend to be ranked as more innovative by the EIS. Second, the authors find that the correlation between a nation’s share of SMEs relying on equity financing and their level of innovation activities is marginally stronger for product innovations than for business process innovations. Third, the authors find that countries with higher levels of trust tend to have higher equity capital reliance among SMEs. Originality/value This study builds upon previous research on equity capital and SMEs’ innovation activity while introducing new insights into the relationship between societal trust and equity financing.

The Usefulness of the Digitalization Integration Framework for Developing Digital Supply Chains in SMEs

Although studies in the field of digital supply chains (DSC) have increased in recent years, there is still a lack of theoretical and empirical studies that show how DSC can be successfully implemented. There is a lack of studies in small and medium-sized enterprises (SMEs) in particular. This paper addresses this situation and explores the usefulness of the digitalization integration framework (DIF) proposed by Büyüközkan and Göçer in 2018 for the development of DSC in SMEs. More precisely, based on a case study design involving Swedish SMEs operating in the same supply chain, this paper provides insight into the DSC process of these Swedish SMEs adopting the DIF. The results of the study enable the proposal of an updated framework consisting of five main components in the digitalization process, namely: digital strategy, digital organization and culture, digital operations, digital products and services, and digital customer experience. Furthermore, each component consists of several steps, called sub-components, which could be considered by SMEs when developing DSC to increase the success of this challenging activity.

Small and medium-sized enterprises response to Covid-19: The effect of external openness and procedural management

Crisis management research is strongly influenced by the behaviour of large multinationals with few insights into how small and medium sized enterprises (SMEs) mitigate the negative effects of exogenous shocks such as the Covid-19 pandemic. Inspired by the capability-based view on crisis management, we postulate that management openness and degree of interactivity determine SME crisis response. We test our theoretical model with an original dataset of 902 Swedish SMEs compiled from a telephone-based survey conducted in June 2020. We find that formalised procedures for crisis management and openness to input from others, particularly external actors, enhances an organisation’s ability to make a decisive rapid response. We discuss our findings and suggest that formalised procedures and openness are important components of an SME’s rapid response capability.

Pace of innovation and speed of small and medium-sized enterprise international expansion

The literature emphasises that technological advances have enabled firms to expand internationally at accelerated speed. Yet, technological advances are treated as a contextual variable and little is known about how firm-level technological innovations influence the internationalisation speed of small and medium-sized enterprises (SMEs). To address this shortcoming, we draw on insights based on capability development theory to establish the effects of innovation timing and pace on SME international expansion speed. We test our conceptual model using a sample of 180 Swedish SMEs and show that the faster the innovation pace, the faster the internationalisation. We then address the boundary conditions of this relationship to show that the elapsed time between a firm’s founding and first innovation negatively moderates the positive effects of its innovation pace. Our findings have theoretical, managerial and policy implications.

Barriers to and Drivers of Energy Management in Swedish SMEs

The energy efficiency gap is known as the difference between optimal level of energy efficiency and the actual level of achieved energy efficiency. Energy management has proven to further close the energy efficiency gap. Energy management may differ depending on whether it concerns a large, energy-intensive company or small and medium-sized enterprises (SMEs). SMEs are of high interest since they form a large share of the economy today. For SMEs, a lighter form of energy management, in the form of energy efficiency network participation, has proven to deliver sound energy efficiency impact, while for larger, energy-intensive firms, a certified energy management system may be more suitable. However, various barriers inhibit adoption of energy efficiency measures. While there is an array of research on barriers to and driving forces for energy efficiency in general, research on barriers to, and driving forces for, energy management is rare, one exception being a study of energy-intensive pulp and paper mills. This holds even more so for industrial SMEs. This paper aims to identify the barriers to, and drivers for, energy management in manufacturing SMEs. Results of this explorative study show that the top four barriers to energy management are lack of time/other priorities, non-energy-related working tasks are prioritized higher, slim organization, and lack of internal expert competences, i.e., mainly organizational barriers. The top four drivers for energy management are to reduce production waste, participation in energy efficiency networks, cost reduction from lower energy use, and commitment from top management. Furthermore, results show that energy management among the studied SMEs seems to not be as mature, even though the companies participated in an energy management capacity building program in the form of energy efficiency networks, which, in turn, shows a still largely untapped potential in the societal aim to reduce the energy efficiency and management gaps. The main contribution of this paper is a first novel attempt to explore barriers to, and drivers for, energy management among SMEs.

Crisis management as practice in small‐ and medium‐sized enterprises during the first period of COVID‐19

This article draws attention to the social context and working methods in crisis management. Based on 1000 interviews with business leaders in Swedish small‐ and medium‐sized enterprises (SMEs), we analyze crisis management in practice and ask: What social contexts do business leaders use in crisis management, and what working methods do they rely on? Most companies in this study do not have any form of crisis group; rather, they deal with issues reactively as they occur. Few of the companies work continuously with a crisis plan and only slightly more than half of those that have crisis plans report that it has been helpful in dealing with the COVID‐19 situation. The study concludes that Swedish SMEs seem reliant upon a process that has an emerging nature whereby decisions are largely based on gut feeling. However, the companies in our sample that experienced a significant revenue decline due to the COVID‐19 situation report that they employ a more centralized and deductive approach with reports and documents as a basis for their work. The study contributes to a developed understanding of how crisis management works in practice.

Maintaining Sustainable Practices in SMEs: Insights from Sweden

By addressing the scarce knowledge of sustainability practices in small and medium-sized enterprises (SMEs), the purpose of the paper is to identify drivers for the maintenance of such practices and their extent. Based on a series of semi-structured interviews conducted with small Swedish firms, our findings reveal certain external (i.e., suppliers and customers) and internal (i.e., employees, organizational culture, and competitive advantage) factors that are strongly linked to the maintenance of sustainability practices. Apart from these, the longevity of the business was identified as an additional sustainability maintenance factor. This factor has not been discussed previously in the literature, so given its strength, we suggest to have it stand separately. The findings further indicate that Swedish SMEs are not limited by size concerning their sustainability practices but they are consciously working on progressing in their efforts. Furthermore, drawing on our findings we provide practical implications that will help business owners’, managers, and policymakers to better enable sustainability practices.

Opportunity novelty, improvisation and network adaptation in the internationalization of Swedish SMEs

AbstractBy deviating from previous ways of working and improvising new solutions to problems in the internationalization process, small and medium‐sized enterprises (SMEs) will increase the likelihood of developing novel international opportunities. In this way, for instance, unforeseen customer demand, rather than following a specific plan, may govern market choice. Such novel opportunities, in turn, are likely to require network adaptation in order for the firm to reach an insidership position in the international business network. By integrating international opportunity theory with theories on improvisational behavior, three hypotheses are developed between the constructs of international opportunity novelty, improvisation, and network adaptation. The hypotheses were tested with Structural Equation Modelling on 258 realized international opportunities developed by Swedish SMEs (European Union definition: number of employees 10–250) and were observed through on‐site visits. It is revealed that improvisation increases the degree of international opportunity novelty as well as the need for network adaptation. The degree of novelty of realized international opportunities positively influences the need for adaptation to a foreign network. Novelty can be seen as a proxy for opportunity's wealth‐creating potential, and developing improvisation capabilities seems to be a way to increase the novelty of international opportunities developed. Managers that are risk averse and therefore refrain from improvisation risk missing valuable novel opportunities.

Financial distress determinants among SMEs: empirical evidence from Sweden

PurposeThe purpose of this study is to empirically investigate determinants of financial distress among small and medium-sized enterprises (SMEs) during the global financial crisis and post-crisis periods.Design/methodology/approachSeveral statistical methods, including multiple binary logistic regression, were used to analyse a longitudinal cross-sectional panel data set of 3,865 Swedish SMEs operating in five industries over the 2008–2015 period.FindingsThe results suggest that financial distress is influenced by macroeconomic conditions (i.e. the global financial crisis) and, in particular, by various firm-specific characteristics (i.e. performance, financial leverage and financial distress in previous year). However, firm size and industry affiliation have no significant relationship with financial distress.Research limitationsDue to data availability, this study is limited to a sample of Swedish SMEs in five industries covering eight years. Further research could examine the generalizability of these findings by investigating other firms operating in other industries and other countries.Originality/valueThis study is the first to examine determinants of financial distress among SMEs operating in Sweden using data from a large-scale longitudinal cross-sectional database.

Financial crisis and SME capital structure: Swedish empirical evidence

PurposeThe purpose of this paper is to empirically examine capital structure determinants of small- and medium-sized enterprises (SMEs) during and after the global financial crisis.Design/methodology/approachStatistical methods, including ordinary least squares and the generalised method of moments, were used to analyse a sample of over 40,800 Swedish SMEs operating in four industries during the 2008–2015 period.FindingsThe results indicate that the independent variables – i.e. financial crisis, profitability, size, tangibility and industry affiliation – to various degrees explain changes in short-term debt (STD) and long-term debt (LTD) ratios. In particular, the empirical findings indicate that the sampled SMEs tended to rely more on STD and LTD during (2008–2009) than after (2010–2015) the financial crisis.Research limitations/implicationsDue to data availability, the current study is limited to a sample of Swedish SMEs in four industries covering eight years. Further research could examine the generalisability of these findings by investigating other firms operating in other industries and other countries.Originality/valueThis study is one of few examining determinants of short- and long-term SME debt during and after the global financial crisis, using data from a large-scale cross-sectional database.

Growth and job creation at the firm level: Swedish SME data

Purpose The purpose of this study is to investigate the association between firm sales growth and employment level as a proxy for job creation among small and medium-sized enterprises (SMEs). Design/methodology/approach The hypotheses were empirically examined by performing several univariate and multivariate regressions to investigate a large panel data set of 13,548 Swedish SMEs in four industry sectors in the four-year period from 2009 to 2012. Findings The results indicate that growth, in terms of sales, as a competitive advantage is positively related to the number of employees hired by the sampled firms. In addition, the size and age variables are also positively associated with the number of employees hired. The results support the suitability of implementing the resource-based view to explain job creation by SMEs. Originality/value While previous studies have mostly ignored the impact of these firm-level variables on job creation, the current study highlights the effect of firm-specific characteristics such as sales growth, size, age and industry. The authors use a combination of models to analyse a large cross-sectoral data set regarding the association, in SMEs, between the firms’ sales growth and job creation.

New product development in foreign customer relationships: a study of international SMEs

This study identifies a gap in research concerning how small and medium-sized enterprises (SMEs) can benefit from pursuing locally (rather than globally) oriented internationalization strategies. Becoming overly dependent on one single foreign market could potentially reduce the inflow and diversity of new knowledge that can serve as input for new product development. This study discusses how this risk can be minimized. In this endeavour we create a theoretical model that investigates how the local sales concentration and relationship-specific commitment of SMEs relates to new product development. To do this we draw on the behavioural internationalization process framework. The theoretical model is tested on an effective sample of 188 Swedish SMEs. The results show that relationship-specific commitment mediates the effect of local sales concentration on new product development. The implication is that investments which enable collaboration in important business relationships are crucial requisites for keeping firms innovative and in pace with market fluctuations. The findings thus contribute to international business literature by showing that a local market scope of operations combined with a relationship orientation are beneficial for new product development in international SMEs.

Short- and long-term debt determinants in Swedish SMEs

PurposeThis paper aims to empirically investigate the capital structure determinants of small and medium-sized enterprises (SMEs) with a particular focus on short- and long-term debt.Design/methodology/approachSeveral methods were used to analyse a sample of 15,897 Swedish SMEs for which complete financial information was available for a four-year period following the 2008 financial crisis, i.e. the 2009-2012 period.FindingsThe results indicate that eight explanatory variables – i.e. size, age, growth, profitability, liquidity, asset tangibility, non-debt tax shields and industry affiliation – are associated to various extents with SME debt policy.Research limitations/implicationsThe current study is limited to examining a sample of Swedish SMEs in five industry sectors covering the 2009-2012 period. Further research could examine the generalizability of the present results by considering other countries, industry sectors and periods.Practical implicationsAs debt policy influences firm performance, value and survival, SME owners and managers, regulators and financial institutions may benefit from studies considering a relatively large number of capital structure determinants, several of which are linked to short- and long-term debt in various ways.Originality/valueThis study is one of the few to examine the determinants of short- and long-term debt in SMEs, which play a fundamental role in the economy, using a large-scale cross-sectional database covering a period following the 2008 financial crisis.

Substitute or complement? The use of trade credit as a financing source among SMEs

PurposeThis study aims to investigate trade credit as a financing source among small- and medium-sized enterprises (SMEs), particularly the influence of short-term debt, long-term debt and profitability on the use of such credit.Design/methodology/approachOrdinary least squares (OLS), fixed-effects and generalized method of moments (GMM) system models were used to analyze a large cross-sectional panel data set of 15,897 Swedish SMEs in five industry sectors for the 2009-2012 period.FindingsThe study provides empirical evidence that long-term debt and profitability each significantly and negatively influence trade credit (i.e. accounts payable) and that short-term debt positively influences trade credit. Notably, while trade credit seems to complement other short-term debt, it replaces long-term debt. Moreover, firm size in terms of sales is positively related and firm age is negatively related to accounts payable. Industry affiliation is another significant explanatory variable.Practical implicationsThe results provide debt holders, potential investors, policymakers and academic researchers with insights into the relationship between trade credit demand, on the one hand, and external financing (i.e. short- and long-term debt) and internal retained earnings (i.e. profit), on the other. From a manager’s perspective, the findings may be important for decision-making regarding trade credit use.Originality/valueWhen investigating trade credit determinants, the literature has seldom distinguished between short- and long-term debt and considered that they may influence the use of trade credit in different ways. The present study adds to the literature by using OLS, fixed-effects and GMM system models to analyze a large cross-sectoral sample in a high-tax country where both bank loans and trade credit are considered important financing instruments.

The Role of SMEs in Global Production Networks

Anti-sweatshop activists have turned global production networks (GPNs) into contested organizational fields. Although this contest has triggered the growth of an extensive literature on contested GPNs, the scholarly conversation is still limited in two important ways: First, it ignores or dismisses the role of small and medium-sized enterprises (SMEs) in GPNs and, second, it assumes that firms are driven solely by rational profit-maximizing motives. Based on a study of a Swedish SME’s payment of living wages at its Indian supplier, this article addresses these limitations by demonstrating how SMEs’ peculiarities allow them to assume a distinct role in contested GPNs. Furthermore, this article contributes to the scholarly conversation about living wages by providing a much-needed move beyond conceptual discussions into empirical studies of the underlying trade-offs of paying living wages.

Sustainable production indicators at factory level

PurposeSustainable production (SP) is a very broad area and the awareness and communication of the concept differ between varying levels in a company. The supposition is that the awareness and improvement of sustainability on shop floor level would improve, if a suitable set of indicators for measuring sustainability was available. The purpose of this paper is therefore to identify a list of performance indicators relevant for a production manager.Design/methodology/approachThis paper presents a two-step analysis, where the first step is a literature review with the purpose of compiling a gross list of sustainability indicators relevant on shop floor level. In the second phase, the relevance of this list for production managers in Swedish small- and medium-sized enterprises (SMEs) is tested in a questionnaire survey.FindingsThe conclusion from the survey is that 27 out of 52 proposed indicators were relevant with statistical significance and that another 20 indicators were supported by at least 50 percent of the respondents. The respondents found the economic indicators to be most relevant for their purpose. However, the economic field seems to need more indicators in order to be more useful for daily operation.Practical implicationsThis set of indicators may be beneficial for companies seeking relevant indicators to drive sustainability improvements.Originality/valueThis paper takes a new perspective on SP, as it focusses on shop floor production, which is possible to influence for a production manager.

The impact of opportunity connectedness on innovation in SMEs’ foreign-market relationships

Small and medium-sized enterprises (SMEs) use of business networks has grown significantly during the last decades, partly due to increasingly complex innovation processes. This article investigates how different kinds of networks, depending on location, contextualize innovation in specific foreign market business relationships. Building on internationalization, network, and innovation research we develop a model that views opportunity connectedness in specific host-markets, home-markets, and other international markets as prerequisites to innovative collaboration and innovation outcomes in foreign business relationships. The results of our linear structural relations (LISREL) analysis of Swedish SMEs provide empirical evidence that the effect of opportunity connectedness on innovation outcomes in foreign business relationships is mediated by the level of innovative collaboration. These results indicate that SMEs need a relatively higher level of innovative collaboration in their partnerships with foreign market customers to convert opportunities conceived in home- and international- market networks into innovative outcomes in comparison to opportunities conceived in host-market networks. This finding implies that as opportunities become increasingly contextually remote, the importance of collaborative business relationships increases. By showing these results, the study contributes to research in the international small-business domain that seeks to identify important prerequisites of SME innovation.

The impact of trade credit use on firm profitability: empirical evidence from Sweden

Purpose – The purpose of this paper is to examine the impact of trade credit as a funding source on profitability among small and medium-sized enterprises (SMEs). Design/methodology/approach – A large cross-sectional panel data set covering 15,897 Swedish SMEs in five industry sectors from 2009 to 2012 was analysed using several statistical techniques. Findings – The study provides empirical evidence that the use of trade credit significantly and negatively affects firm profitability, indicating that SMEs with lower accounts payable are more profitable. Furthermore, liquidity level and firm size are positively related to profitability, while firm age is negatively related to profitability. Practical implications – If firms rely, or are forced to rely, too heavily on accounts payable as a funding source, their long-term profitability could be jeopardized. An efficient financing policy should make the costs related to the use of trade credit more transparent. Thus, firm managers could explicitly use trade credit agreements with their suppliers to control the costs related to this particular financial source. Originality/value – To the authors’ knowledge, this study is the first to focus on the impact of trade credit on profitability in the Swedish context, where SMEs are encouraged to use trade credit as a funding source. In addition, the study is based on an extensive sample of SMEs across several industry sectors.

Commitment to Sustainability in Small and Medium‐Sized Enterprises: The Influence of Strategic Orientations and Management Values

AbstractEcosystem degradation and social sustainability have become important issues in the corporate sphere during the last few decades. However, research discussing corporate social responsibility and related concepts has often focused on larger companies, sometimes neglecting the specifics of small and medium‐sized enterprises (SMEs). The main purpose of this study is to examine the relationships between two common strategic orientations, market orientation (MO) and entrepreneurial orientation (EO), in relation to sustainability commitment, sustainability practices and management values in SMEs. Questionnaire responses from 450 Swedish SMEs were analyzed, confirming the influence of MO, EO and sustainability practices on commitment to sustainability, implying that firms committed to sustainability see both market and entrepreneurial advantages of sustainability. The results also show that different parts of MO and EO differ in importance for commitment to sustainability among SMEs. Implications concern the importance for firms and policymakers to work with sustainability issues using both internal and external perspectives. © 2015 The Authors. Business Strategy and the Environment published by ERP Environment and John Wiley & Sons Ltd