Improving the financial performance of SMEs

Abstract

Purpose The purpose of this paper is to assess the influence of the presence in foreign markets on small- and medium-sized enterprises’ (SMEs) financial performance. Furthermore, it seeks to examine the moderating effect of corporate group and alliance portfolio size on this relationship. Design/methodology/approach First, the authors develop hypotheses concerning the relationship between the presence in foreign markets and SMEs’ financial performance as well as the moderating role of the size of an SME’s corporate group and alliance portfolio. Afterward, the authors used ordinary least square regression to the test the hypotheses based on a sample of 5,885 high-tech US SMEs registered in the Orbis database (Bureau van Dijk). Findings Results of the study reveal that the presence in foreign markets is positively associated with an SME’s financial performance, with the size of the corporate group enhancing this relationship, hence confirming the conjectures. Instead, the size of the alliance portfolio appears to not exert any moderating effect, in contrast with the last hypothesis. Originality/value Form a theoretical perspective, the authors dig into the literature assessing the performance outcomes of SMEs and contingent effects of the possibility to tap into external resources of other firms. By so doing, the findings support a specific stream of the literature in claiming the positive effects deriving from being part of a corporate group. Conversely, the findings seem to go in the opposite direction of the majority of the literature that claim a positive impact of alliances on financial performances, while supporting those studies stressing that alliances pose significant challenges for SMEs and should be carefully identified and managed.

Does innovation stimulate performance? The case of small and medium enterprises in regional Australia

“…Hence, an ICT strategy could be a mediating factor in determining profitability between the agricultural and the non-agricultural sectors when the results in Panel A are compared with Panel B. Therefore, the agricultural industry in this study lacks the resources and capabilities to harness digital technology to their advantage and may need to secure agreements and cooperative efforts with other SMEs external to the industry to create value for the economy (Ardito et al, 2019;Capaldo & Petruzzelli, 2011;Ceipek et al, 2020;Correani et al, 2020;Elia et al, 2019;Petruzzelli, 2019). In Panel C, the aggregated results indicate that an enterprise having ICT strategy depends on the industry to a significant extent.…”

“…In contrast, Welsch, Price, and Stoica (2013) concluded that entrepreneurs share similar sets of values, regardless of culture. Regardless of the differences and/or similarities among entrepreneurs, however, firms sometimes engage in alliances in an attempt to complement their innovation capabilities although such alliances may be exploitative instead of being explorative and may not have a positive effect on the financial performance of the SME (Ardito, Galati, Messeni Petruzzelli, & Corvino, 2019;Capaldo & Petruzzelli, 2011;Elia, Petruzzelli, & Piscitello, 2019;Petruzzelli, 2019). Saunila (2014) adopted a linear regression model to analyse the innovation capability of SMEs and their perceived performance and had four key findings.…”

The past, present and future of open innovation

“…Particular emphasis should be put on those companies that have never been involved in collaboration activities, as current policy measures tend to support companies that have already experienced cooperation. Second, policy measures should consider OI efficiency, particularly for SMEs, with a particular focus on the diminishing returns of OI in relation to innovation performance (Greco et al, 2017;Ardito et al, 2019). Such a process may challenge the usefulness of establishing several and merely formal collaborations aimed at matching the constraints requested by public authorities, which can be ineffective in terms of innovation performance in that funds are dispersed.…”

Geographic proximity to socially dominant partners and firms' innovation outcomes: Empirical evidence from the medical device industry

“…Thus, the capacity variable of hospital partners was defined as the ratio of the top five hospitals to the total number of participant hospitals in government‐funded R&D projects. Meanwhile, the socially dominant partner portfolio size was measured by the absolute number of participant hospitals (Ardito et al, 2020). It is worth noting that we counted it as one even when a hospital was involved in multiple R&D projects in the same year.…”

“…Firms form inter‐organisational relationships with multiple partners through various joint projects to retain complementarity and increase knowledge transfer based on their partner portfolios (Ardito et al, 2020; Kale & Singh, 2009; Laursen & Salter, 2006). A similar reasoning can be applied to inter‐organisational relationships with socially dominant partners.…”