Small Business Growth, Finance and Innovation.

摘要

The purpose of this thesis was to investigate a potential systemic missing variables problem in the literature involving growth, finance and innovation. Until now, these three constructs have not been modeled simultaneously possibly resulting in omitted variable bias in the regression coefficients. To address this problem, this thesis developed an integrated model of growth, one in which growth, finance and innovation are treated as mutually dependent endogenous variables that share a set of exogenous variables. This model is then empirically analysed using a large, representative, weighted sample of Canadian small and medium enterprises that combines information gathered from a national survey with longitudinal firm-specific taxation data. In addition to empirically analysing the sample as a whole, the sample was also divided and analysed based on six groups: growth rate, exporter/non-exporter, innovator/non-innovator, use of government support versus not, financially constrained and not-constrained, and based on firm size (number of employees).;When analysing the SME sample as a whole, no significant relationships were found between growth, finance and innovation, but when the sub-groups were analysed relationships were found. This research illustrates the importance of analysing sub-groups of SMEs in order to reveal distinct characteristics. The assumption of linearity (one model fits all SMEs) is not tenable. Targeting sub-groups not only applies to researchers but to policy as well. Effective policy needs to be focussed on specific types of SMEs if it is to be effective. For employment growth policy, this research has found that it is young and larger firms that have higher growth rates not small firms per se. From a financial constraint perspective, it was found that innovating firms with 20 or more employees experienced financial constraint rather than smaller firms. Policies such as tax incentives for venture capital targeting this group are suggested. Access to funding supports growth. It was found that for innovating SMEs that could borrow more funds had higher growth rates. Lastly, as a positive finding for government support programs, they were shown to be associated with higher growth rates (both employment and sales) and with higher rates of innovation.