image: Antti Norkio
Credit: University of Vaasa / Riikka Kalmi
Finnish growth firms are dependent on the access to credit, according to a new study from the University of Vaasa. Growth firms typically take on more short-term debt while other companies reduce their debts and increase their equity ratio over the years. The significant role played by short-term debt can become problematic for growth firms and increase the risk of insolvency, especially in times of tightening credit market.
According to Antti Norkio’s doctoral dissertation at the University of Vaasa, the education of an entrepreneur is linked to their company’s growth and access to debt financing.
The companies of entrepreneurs who have a master’s degree in engineering grow, on average, faster than other companies, but they can also face difficulties when trying to access debt financing. Meanwhile, an entrepreneur’s master’s degree in business is linked to better access to credit.
– A master’s degree in business can provide the entrepreneur with better competence for things such as loan negotiations, says Norkio.
In addition, the research found that a skilled workforce is extremely important for companies seeking growth.
Intangible capital is good for the growth of the company, but it does not really facilitate the obtaining of debt financing, because it is a poor collateral.
– Calculating the collateral value of things such as warehouses or vehicles is quite simple for the financier, but determining the value of the quiet knowledge accumulated in the company, for example, is almost impossible. And then it would be even more impossible to liquidate this resource in the event the company becomes insolvent, says Norkio.
According to Norkio, another problem of intangible capital in terms of financing is that it can disappear when employees leave. Intangible capital describes, among other things, the company’s brand, employees’ skills and information systems.
The study examined Finnish small and medium-sized limited liability companies. Statistics Finland’s register data have been used as material.
Public defence
The public examination of M.Sc. Antti Norkio’s doctoral dissertation “Generating and Financing Growth : Essays on Intangible Capital, Entrepreneurship, and Capital Structure in Finnish SMEs” will be held on Thursday 10 October 2024 at noon at the University of Vaasa in the auditorium Kurtén.
It is possible to follow the defence online via Zoom, password: 68090
Senior Research Fellow, Dr Arvid Raknerud (Statistics Norway) will act as an opponent and Professor Hannu Piekkola (University of Vaasa) as a custos.
Doctoral dissertation
Norkio, Antti (2024) Generating and Financing Growth: Essays on Intangible Capital, Entrepreneurship, and Capital Structure in Finnish SMEs. Acta Wasaensia 535. Doctoral dissertation. Vaasan yliopisto / University of Vaasa.