Trust and SME attitudes towards equity financing across Europe

Michael Dowling, O’Gorman, Colm, Petya Puncheva and Dieter Vanwalleghem

Journal of World Business, 2019, vol. 54, issue 6, -

Abstract: The decision by a small and medium-sized enterprise (SME) to take on equity requires trust, due to reliance on the good intentions of the parties involved. Drawing on a social capital perspective, we argue that national interpersonal and institutional trust positively influences SME attitudes towards equity financing. We also hypothesize a substitution effect between interpersonal and institutional trust. Through a large survey of European SMEs in 26 countries, we confirm the presence of these direct and interaction effects. By making explicit the link between trust and attitudes to equity financing we extend the theory on institutional drivers of SME financing.

Keywords: SME; Interpersonal trust; Institutional trust; Equity financing; Social capital (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:worbus:v:54:y:2019:i:6:7

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DOI: 10.1016/j.jwb.2019.101003

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