Debt Characteristics Knowledge of Entrepreneurs in the SME Sector of the Czech Republic

Abstract

Due to lack of internal and own sources in small and medium-sized enterprises (SMEs), the debt financing is an inevitable part of a total amount of capital used in business. The aim of this paper is to find out what knowledge of debt financing (e.g., in the sense of its costs and risk) the SMEs entrepreneurs have. We also tried to reveal the differences regarding such knowledge in relation to age and education of the entrepreneurs and the length of doing their business. The data was collected through the questionnaire survey undertaken on the sample of 352 SMEs entrepreneurs in the Czech Republic. Our results revealed that 83% of entrepreneurs understand the most important aspects of credit risk and 73% of them think that an entrepreneur needs to use a certain amount of loans. There were found statistically significant differences in this statement between male and female entrepreneurs.

Factors Influencing the continuation of start-up companies

“…Crossland and Hambrick (2007) analysed U.S. firms, German firms and Japanese firms and found that the effect of CEOs on firm performance is substantially greater in U.S. firms than in German and Japanese firms and the CEOs of Japanese companies had barely any statistical effect on performance, suggesting that CEOs in Japan are essentially interchangeable. Kozubikova et al (2017) surveyed Czech SMEs and found that entrepreneurs' knowledge of debt financing varied by education and gender. Au et al (2016) surveyed future entrepreneurs on how they consider funding from family and outsiders and found that they tend to seek outsider funding when the venture risk was high and the family was not close.…”