Factors influencing alternative financing of entrepreneurship through crowdfunding
Article Sidebar
Main Article Content
Abstract
Access to finance is one of the main challenges faced by innovative SMEs, particularly in the early stages of their development. This study analyzes the factors influencing access to alternative finance, with a particular focus on crowdfunding as a viable solution to alleviate the limitations of traditional financing. Using data from the SAFE survey conducted by the European Central Bank for September 2022, key variables related to the firm’s profile are examined to determine their impact on the choice of funding sources. The findings reveal that innovative companies face greater challenges in securing bank loans due to the perceived risk and uncertainty associated with their projects. In this context, crowdfunding emerges as an effective alternative, particularly for startups and younger firms, which find in this model a flexible and accessible way to obtain capital. Unlike bank financing, access to crowdfunding is not determined by the sector in which a company operates but rather by its capacity for innovation and growth potential. This study underscores the importance of promoting alternative financing mechanisms to strengthen the entrepreneurial ecosystem. Diversifying funding sources, along with public policies that encourage investment in innovation, can contribute to the sustainable development of innovative SMEs by facilitating their access to financial resources and enhancing their economic impact.
Article Details
The digital version of the journal is registered under the BY-NC-ND 4.0 Creative Commons license. Therefore, this work may be copy and redistribute the material in any medium or format, as long as you give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
The authors keep the copyright and give the journal the right of the first publication and the possibility of editing, reproducing, distributing, exhibiting and communicating in the country and abroad through printed and electronic means. On the other hand, the author declares to assume the commitment on any litigation or claim related to the rights of intellectual property, exonerating of responsibility to the Business School of the Costa Rica Institute of Technology.
References
Agarwal, R., & Pokhriyal, A. K. (2022). The moderating effect of attitude to risk on the role of microfinance in entrepreneurship development in Uttarakhand region, India. Journal of Global Entrepreneurship Research, 12(1), 107-117. https://doi.org/10.1007/s40497-022-00317-1
Aldieri, L., Makkonen, T., & Vinci, C. P. (2021). Spoils of innovation? Employment effects of R&D and knowledge spillovers in Finland. Economics of Innovation and New Technology, 30(4), 356-370. https://doi.org/10.1080/10438599.2019.1703754
Allen, F., Carletti, E., & Valenzuela, P. (2013). Financial intermediation, markets, and alternative financial sectors. Handbook of the Economics of Finance, 2, 759-798. https://doi.org/10.1016/B978-0-44-453594-8.00011-2
Andreassi, T. (2003). Innovation in small and medium sized enterprises. International Journal of Entrepreneurship and Innovation Management, 3 (1–2), 99-106. https://doi.org/10.1504/IJEIM.2003.002222
Angilella, S., & Mazzù, S. (2015). The financing of innovative SMEs: A multicriteria credit rating model. European Journal of Operational Research, 244(2), 540-554. https://doi.org/10.1016/j.ejor.2015.01.033
Armstrong, A., Davis, E. P., Liadze, I., & Rienzo, C. (2013). An assessment of bank lending to UK SMEs in the wake of the crisis. National Institute Economic Review, 225, R39-R51. https://doi.org/10.1177/002795011322500106
Ayyagari, M., Beck, T., & Demirguc-Kunt, A. (2007). Small and medium enterprises across the globe. Small Business Economics, 29, 415-434. https://doi.org/10.1007/s11187-006-9002-5
Baum, J. A., & Silverman, B. S. (2004). Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology startups. Journal of Business Venturing, 19(3), 411-436. https://doi.org/10.1016/S0883-9026(03)00038-7
Bayon, M. C., Lafuente, E., & Vaillant, Y. (2016). Human capital and the decision to exploit innovative opportunity. Management Decision, 54(7), 1615-1632. https://doi.org/10.1108/MD-04-2015-0130
Beck, T., & Demirguc-Kunt, A. (2006). Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & finance, 30(11), 2931-2943. https://doi.org/10.1016/j.jbankfin.2006.05.009
Berger, A. N., Miller, N. H., Petersen, M. A., Rajan, R. G., & Stein, J. C. (2005). Does function follow organizational form? Evidence from the lending practices of large and small banks. Journal of Financial economics, 76(2), 237-269. https://doi.org/10.1016/j.jfineco.2004.06.003
Bertoni, F., Colombo, M.G. & Quas, A. (2023). The long-term effects of loan guarantees on SME performance. Journal of Corporate Finance, 80, 102408. https://doi.org/10.1016/j.jcorpfin.2023.102408
Bolton, P., Freixas, X., Gambacorta, L., & Mistrulli, P. E. (2016). Relationship and transaction lending in a crisis. The Review of Financial Studies, 29(10), 2643-2676. https://doi.org/10.1093/rfs/hhw041
Bongini, P., Ferrando, A., Rossi, E., & Rossolini, M. (2021). SME access to market-based finance across Eurozone countries. Small Business Economics, 56(4), 1667–1697. https://doi.org/10.1007/s11187-019-00285-z
Brancati, E. (2015). Innovation financing and the role of relationship lending for SMEs. Small Business Economics, 44, 449-473. https://doi.org/10.1007/s11187-014-9603-3
Brancati, R., Marrocu, E., Romagnoli, M., & Usai, S. (2018). Innovation activities and learning processes in the crisis: evidence from Italian export in manufacturing and services. Industrial and Corporate Change, 27(1), 107-130. https://doi.org/10.1093/icc/dtx022
Bruderl, J., & Schussler, R. (1990). Organizational mortality: The liabilities of newness and adolescence. Administrative Science Quarterly, 35(3), 530-547. https://doi.org/10.2307/2393316
Calabrese, R., Girardone, C., & Sclip, A. (2021). Financial fragmentation and SMEs’ access to finance. Small Business Economics, 57, 2041–2065. https://doi.org/10.1007/s11187-020-00393-1
Campello, M., Graham, J. R., & Harvey, C. R. (2010). The real effects of financial constraints: Evidence from a financial crisis. Journal of Financial Economics, 97(3), 470-487. https://doi.org/10.1016/j.jfineco.2010.02.009
Canales, R., & Nanda, R. (2012). A darker side to decentralized banks: Market power and credit rationing in SME lending. Journal of Financial Economics, 105(2), 353-366. https://doi.org/10.1016/j.jfineco.2012.03.006
Casey, E., & O’Toole, C. M. (2014). Bank lending constraints, trade credit and alternative financing during the financial crisis: Evidence from European SMEs. Journal of Corporate Finance, 27, 173–193. https://doi.org/10.1016/j.jcorpfin.2014.05.001
Cenni, S., Monferrà, S., Salotti, V., Sangiorgi, M., & Torluccio, G. (2015). Credit rationing and relationship lending. Does firm size matter? Journal of Banking & Finance, 53, 249-265. https://doi.org/10.1016/j.jbankfin.2014.12.010
Chavis, L. W., Klapper, L. F., & Love, I. (2011). The impact of the business environment on young firm financing. The World Bank Economic Review, 25(3), 486-507. https://doi.org/10.1093/wber/lhr045
Choi, Y. R., Ha, S., & Kim, Y. (2022). Innovation ambidexterity, resource configuration and firm growth: is smallness a liability or an asset? Small Business Economics, 58(4), 2183-2209. https://doi.org/10.1007/s11187-021-00507-3
Cichy, J., & Gradoń, W. (2016). Innovative economy, and the activity of financial market institutions. Case of Poland. Journal of International Studies, 9(1), 156-166. https://doi.org/10.14254/2071-8330.2016/9-1/11
Coakley, J. & Lazos, A. (2021). New developments in equity crowdfunding: a review. Review of Corporate Finance, 1 (3-4), 341-405. https://doi.org/10.1561/114.00000008
Comeig, I., Fernández-Blanco, M. O., & Ramírez, F. (2015). Information acquisition in SME’s relationship lending and the cost of loans. Journal of Business Research, 68(7), 1650-1652. https://doi.org/10.1016/j.jbusres.2015.02.012
Cosh, A., Cumming, D., & Hughes, A. (2009). Outside entrepreneurial capital. The Economic Journal, 119(540), 1494-1533. https://doi.org/10.1111/j.1468-0297.2009.02270.x
Degryse, H., de Goeij, P., & Kappert, P. (2012). The impact of firm and industry characteristics on small firms’ capital structure. Small Business Economics, 38, 431-447. https://doi.org/10.1007/s11187-010-9281-8
Dierkes, M., Erner, C., Langer, T., & Norden, L. (2013). Business credit information sharing and default risk of private firms. Journal of Banking & Finance, 37(8), 2867-2878. https://doi.org/10.1016/j.jbankfin.2013.03.018
Farinha, L., & Félix, S. (2015). Credit rationing for Portuguese SMEs. Finance Research Letters, 14, 167-177. https://doi.org/10.1016/j.frl.2015.05.001
Ferri, G., & Murro, P. (2015). Do firm–bank ‘odd couples’ exacerbate credit rationing? Journal of Financial Intermediation, 24(2), 231-251. https://doi.org/10.1016/j.jfi.2014.09.002
Fombang, M. S., & Adjasi, C. K. (2018). Access to finance and firm innovation. Journal of Financial Economic Policy, 10(1), 73-94. https://doi.org/10.1108/JFEP-10-2016-0070
Forte, R., & Moreira, A. (2018). Financial constraints and small and medium-sized firms’ export propensity: evidence from Portuguese manufacturing firms. International Journal of the Economics of Business, 25(2), 223-241. https://doi.org/10.1080/13571516.2018.1437011
Freel, M. S. (2007). Are small innovators credit rationed? Small Business Economics, 28(1), 23-35. https://doi.org/10.1007/s11187-005-6058-6
Garcia-Appendini, E., & Montoriol-Garriga, J. (2013). Firms as liquidity providers: Evidence from the 2007–2008 financial crisis. Journal of Financial Economics, 109(1), 272-291. https://doi.org/10.1016/j.jfineco.2013.02.010
Gimenez-Fernandez, E. M., Sandulli, F. D., & Bogers, M. (2020). Unpacking liabilities of newness and smallness in innovative start-ups: Investigating the differences in innovation performance between new and older small firms. Research Policy, 49(10), 104049. https://doi.org/10.1016/j.respol.2020.104049
Godlewski, C. J., & Weill, L. (2011). Does collateral help mitigate adverse selection? A cross-country analysis. Journal of Financial Services Research, 40, 49-78. https://doi.org/10.1007/s10693-010-0099-y
Guercio, M. B., Vigier, H. P., Briozzo, A., & Martínez, L. B. (2016). Financing SME in the software and informatics services sector in Argentina. Cuadernos de Economía, 35(69), 615-635. https://doi.org/10.15446/cuad.econ.v35n69.46654
Gulati, R., & Higgins, M. C. (2003). Which ties matter when? The contingent effects of interorganizational partnerships on IPO success. Strategic Management Journal, 24(2), 127-144. https://doi.org/10.1002/smj.287
Hall, B. H. (2010). The financing of innovative firms. Review of Economics and Institutions, 1(1), article 4. https://doi.org/10.5202/rei.v1i1.4
Hemer, J. (2011). A snapshot on crowdfunding (No. R2/2011). Arbeitspapiere Unternehmen und Region. Huang, X., & Liu, X. (2017). How do firms finance their exports?–evidence from China. The Journal of International Trade & Economic Development, 26(2), 154-173. https://doi.org/10.1080/09638199.2016.1227869
Jiménez, G., Ongena, S., Peydró, J. L., & Saurina, J. (2012). Credit supply and monetary policy: Identifying the bank balance-sheet channel with loan applications. American Economic Review, 102(5), 2301-2326. https://doi.org/10.1257/aer.102.5.2301
Kaur, N., & Kaur, P. (2021). What drives innovation in micro, small, and medium enterprises? Journal of Public Affairs, 21(2), e2336. https://doi.org/10.1002/pa.2336
Kaur, P., Kaur, N., & Kanojia, P. (2021). Firm innovation and access to finance: firm-level evidence from India. Journal of Financial Economic Policy, 14(1), 93-112. https://doi.org/10.1108/JFEP-07-2020-0161
Kirschenmann, K. (2016). Credit rationing in small firm-bank relationships. Journal of Financial Intermediation, 26, 68-99. https://doi.org/10.1016/j.jfi.2015.11.001
Klapper, L. F., Sarria-Allende, V., & Sulla, V. (2002). Small-and Medium-Size Enterprise financing in Eastern Europe. World Bank Policy Research Working Paper No. 2933. URL: http://www.worldbank.org, Retrieved, 6, 2014
Konhäusner, P., Semmerau, S. M., & Grunert, M. (2021). Microtransactions in games–an analysis of a crowdfunding perspective. Forum Scientiae Oeconomia, 9 (4), 31-58. https://doi.org/10.23762/FSO_VOL9_NO4_2
Lafuente, E., Alonso-Ubieta, S., Leiva, J. C., & Mora-Esquivel, R. (2021). Strategic priorities and competitiveness of businesses operating in different entrepreneurial ecosystems: a benefit of the doubt (BOD) analysis. International Journal of Entrepreneurial Behavior & Research, 27(5), 1351-1377. https://doi.org/10.1108/IJEBR-06-2020-0425
Lafuente, E., Szerb, L., & Rideg, A. (2020). A system dynamics approach for assessing SMEs’ competitiveness. Journal of Small Business and Enterprise Development, 27(4), 555-578. https://doi.org/10.1108/JSBED-06-2019-0204
Lafuente, E., Vaillant, Y., & Rabetino, R. (2023). Digital disruption of optimal co-innovation configurations. Technovation, 125, 102772. https://doi.org/10.1016/j.technovation.2023.102772
Lee, N., Sameen, H., & Cowling, M. (2015). Access to finance for innovative SMEs since the financial crisis. Research Policy, 44(2), 370-380. https://doi.org/10.1016/j.respol.2014.09.008
Lefebvre, V. (2022). Performance, working capital management, and the liability of smallness: a question of opportunity costs? Journal of Small Business Management, 60(3), 704-733. https://doi.org/10.1080/00472778.2020.1735252
Martinez, L. B., Guercio, M. B., & Bariviera, A. F. (2022). A meta-analysis of SMEs literature based on the survey on access to finance of enterprises of the European central bank. International Journal of Finance & Economics, 27(2), 1870-1885. https://doi.org/10.1002/ijfe.2247
Masiak, C., Block, J. H., Moritz, A., Lang, F., & Kraemer-Eis, H. (2017). Financing micro firms in Europe: An empirical analysis (No. 2017/44). EIF Working Paper. https://hdl.handle.net/10419/176674
Mason, C. (2013). Access to Finance—A ‘thought piece’for the North East LEP Independent Economic Review. Adam Smith Business School, University of Glasgow, Glasgow.
Mina, A., Lahr, H., & Hughes, A. (2013). The demand and supply of external finance for innovative firms. Industrial and Corporate Change, 22(4), 869-901. https://doi.org/10.1093/icc/dtt020
Moritz, A., Block, J. H., & Heinz, A. (2016). Financing patterns of European SMEs–an empirical taxonomy. Venture Capital, 18(2), 115-148. https://doi.org/10.1080/13691066.2016.1145900
OECD (2018). Guidelines for collecting, reporting, and using data on innovation: The measurement of scientific, technological and innovation activities. Luxembourg: OECD Publishing, Paris: Eurostat.
Pacheco, L. (2017). Financial structure effects on export intensity and diversification: The case of Portuguese industrial firms. International Journal of Globalisation and Small Business, 9(4), 252-276. https://doi.org/10.1504/IJGSB.2017.089900
Pederzoli, C., Thoma, G., & Torricelli, C. (2013). Modelling credit risk for innovative SMEs: The role of innovation measures. Journal of Financial Services Research, 44, 111-129. https://doi.org/10.1007/s10693-012-0152-0
Popov, A., & Udell, G. F. (2012). Cross-border banking, credit access, and the financial crisis. Journal of International Economics, 87(1), 147-161. https://doi.org/10.1016/j.jinteco.2012.01.008
Rahman, A., Rahman, M. T., & Belas, J. (2017). Determinants of SME finance: evidence from three central European countries. Review of Economic Perspectives, 17(3), 263-285. https://doi.org/10.1515/revecp-2017-0014
Rahman, A., Rahman, M. T., & Ključnikov, A. (2016). Collateral and SME financing in Bangladesh: an analysis across bank size and bank ownership types. Journal of International Studies, 9(2), 112-126. https://doi.org/10.14254/2071-8330.2016/9-2/8
Rocca Espinoza, E., García Pérez de Lema, D., & Duréndez Gómez Guillamón, A. (2018). Determinants of credit supply to Micro, Small and Medium enterprises by financial institutions. TEC Empresarial, 12(1), 19-30. https://doi.org/10.18845/te.v12i1.3568
Rohatgi, S., Gera, N., & Nayak, K. (2024). Has digital banking usage reshaped economic empowerment of urban women? Journal of Management and Governance, 28(2), 543-563. https://doi.org/10.1007/s10997-023-09676-7
Sanga, B., & Aziakpono, M. (2023). FinTech and SMEs financing: A systematic literature review and bibliometric analysis. Digital Business, 3(2), 100067. https://doi.org/10.1016/j.digbus.2023.100067
Segal, M. (2016). What is alternative Finance. Office of Advocacy, U.S. Small Business Administration (Economic research Series). Available at www.sba.gov/advocacy
Shefer, D., & Frenkel, A. (2005). R&D, firm size and innovation: an empirical analysis. Technovation, 25(1), 25-32. https://doi.org/10.1016/S0166-4972(03)00152-4
Stefanelli, V., Ferilli, G.B. and Boscia, V. (2022). Exploring the lending business crowdfunding to support SMEs’ financing decisions. Journal of Innovation and Knowledge, 7 (4), 100278. https://doi.org/10.1016/j.jik.2022.100278
Uchida, H., Udell, G. F., & Yamori, N. (2012). Loan officers and relationship lending to SMEs. Journal of Financial Intermediation, 21(1), 97-122. https://doi.org/10.1016/j.jfi.2011.06.002
Wagner, J. (2019). Access to finance and exports–comparable evidence for small and medium enterprises from industry and services in 25 European countries. Open Economies Review, 30(4), 739-757. https://doi.org/10.1007/s11079-019-09534-w
Wiklund, J., Baker, T., & Shepherd, D. (2010). The age-effect of financial indicators as buffers against the liability of newness. Journal of Business Venturing, 25(4), 423-437. https://doi.org/10.1016/j.jbusvent.2008.10.011
Yang, Y. P. (2019). Crouching tigers and hidden dragons on the great wall street: Decoding the corporate governance of Chinese commercial banks. Washington International Law Journal, 28(1), 1-63. Available at https://digitalcommons.law.uw.edu/wilj/vol28/iss1/3
Yin, M. and Li, J. (2023). How market orientation affects open innovation? Exploring the role of information and communication technology capability. European Journal of Innovation Management, 27 (6), 1885-1911. https://doi.org/10.1108/EJIM-08-2022-0401
Zuo, Y., Jiang, S., & Wei, J. (2022). Can corporate social responsibility mitigate the liability of newness? Evidence from China. Small Business Economics, 59, 573-592. https://doi.org/10.1007/s11187-021-00551-z