Abstract
Small and medium-sized enterprises (SMEs) are central to the global economy, but innovative SMEs often struggle to obtain the financing required to sustain their innovation efforts. It is difficult for these firms to secure investment for their innovative projects due to financial constraints, information asymmetries, and a lack of guarantees. This research examines the various sources of financing available to innovative SMEs throughout their innovation process. Based on a review of the literature, this study explores both internal and external sources of financing for innovation, as well as the financial instruments used by innovative SMEs, including debt, equity, government support, crowdfunding, and bootstrapping. Although there is no consensus in the literature on a universal capital structure for innovative SMEs, several factors shape their financing decisions. These include the firm’s stage of development, risk profile, ownership structure, innovation intensity, and type of innovation. This study provides a theoretical contribution by improving understanding of the relationship between innovation and financial structure. Finally, this study offers practical insights to support entrepreneurs and policymakers develop effective financing strategies for innovation-oriented SMEs.
Presenters
Yan CastonguayProfessor, Administration, University of Quebec at Rimouski, Alberta, Canada
Details
Presentation Type
Paper Presentation in a Themed Session
Theme
KEYWORDS
Innovative SMEs; Innovation Financing; Capital Structure; Financial Sources and Instruments
