Credit Risks and Internationalization of Smes

Abstract. Recent years have seen considerable work at the interface between business, management, entrepreneurship and strategy and as a result, new research domains have appeared including corporate entrepreneurship and entrepreneurial strategy. The purpose of this article is to understand the effect that corporate entrepreneurship strategy has on firms to revitalize, reconfigure resources and transform into firms that are ready to compete in the global economy. Empirical tests are conducted to determine to what extent elements of pro-entrepreneurship architecture are able to predict development capability, strategic repositioning, and growth based outcomes. A first-phase survey is conducted to verify the presence and strength of entrepreneurial orientation while the second phase of the study identifies elements of organizational architecture able to predict firm outcomes. The main contribution of this article is that firms resourcing and rewarding policies, as well as cultural and structural orientations, derived from a corporate entrepreneurship strategy, play a significant role in realizing desired outcomes. The study has important implications for emerging economies where growth is often the primary goal of organizations, and where corporate entrepreneurship can be critical for firm profitability and survival.

Section: Introductionmentioning

confidence: 99%

The Effect of Pro-Entrepreneurship Architecture on Organisational Outcomes

Urban

2012

“…If we use EBIT instead of net sales in the numerator of the ratio, we obtain a measure of profitability that is well known in the literature, namely, the return on total assets (ROA), which is considered to be an indicator of how effectively a company is using its assets to generate earnings before its contractual obligations must be paid. Moreover, in accordance with the customary practices of the literature (e.g., Arslan, Karan 2009), a third profitability ratio of net income divided by total assets (NI/TA) is also constructed. A negative relationship between all of these ratios and the CDS spreads is expected.…”

Section: Accounting-based Independent Variablesmentioning

confidence: 99%

Examining What Best Explains Corporate Credit Risk: Accounting-Based Versus Market-Based Models

Trujillo‐Ponce

Samaniego‐Medina

Cardone‐Riportella

2013

This paper uses a sample of 2,186 credit default swap spreads quoted in the European market during the period 2002–2009 to empirically analyze which model – accounting- or market-based – better explains corporate credit risk. We find little difference in the explanatory power of these two approaches. Our results indicate that a comprehensive model that combines accounting- and market-based variables is the best option to explain the credit risk, suggesting that both types of data are complementary. We also demonstrate that the explanatory power of credit risk models is particularly strong during periods of high uncertainty, such as those experienced in the recent financial crisis. Finally, the comprehensive model continues to produce the best results if the credit rating is used as the proxy for credit risk; however, accounting variables currently appear to have a more important role than market variables in determining corporate credit ratings.

“…Due to the expansion of SMEs to the foreign markets, researchers started to explore different aspects of SME's internationalization (O'Cass, Weerawardena 2009;Arslan, Karan 2009;Manolova et al 2002). O'Cass and Weerawardena (2009) investigated the role of international entrepreneurship and innovation in SME internationalization.…”

Section: A Market Range As a Determinant Of Sme Profitabilitymentioning

confidence: 99%

The Determinants of Enterprise Profi Tability During Reduced Economic Activity

Steinerowska-Streb

2012

The aim of this study was to identify the characteristic features of small and medium enterprises (SMEs) which contribute to the decrease of profits of those SMEs during a period of reduced economic activity. The investigation was based on a sample of 1107 SMEs functioning in the Polish market. The empirical evidence found the type of manager, market range and legal form as determining factors of SME profits during a period of reduced economic activity. The received results led to the development of a model of firm-specific variables that resul in the decrease of SMEs profits through an economic slowdown.