The mechanism for SMEs growth by applying stochastic dynamical approach

Huiqi Wang, Wei Yuan and George Yuan

Finance Research Letters, 2022, vol. 48, issue C

Abstract: The purpose of this paper is to establish an interpretable framework to describe the growth mechanism of small and micro enterprises (SMEs) under the tech-economic paradigm and develop a new measurement method for growth performance. Based on stochastic resonance theory, as the inherent capital–product switches are applied with capital driving and risk incentive, SMEs’ growth might exhibit an optimal state subject to the implementation of different strategies. Simulation results verify these strategies from management orientation, specialization level, and environmental uncertainty to reveal some nonintuitive phenomena. These findings lead us to create useful decision rules in risk management, growth path optimization or SME loans. Finally we wish the framework established in this paper may provide another new mathematical way to explain Schumpter’s economic development theory based on SMEs growth with innovation.

Keywords: Small and micro enterprise (SME); Tech-economic paradigm; Risk management; Value at response risks (VaRR) (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:48:y:2022:i:c:s1544612322001416

DOI: 10.1016/j.frl.2022.102850

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