Conference Issue 2019

Marko Kolaković
Mladen Turuk
Ivan Turčić

Abstract: Access to finance for small and medium enterprises still represents one of the biggest problems that entrepreneurs face when launching their business or when they want to enhance their production capacities in other stages of the enterprise life cycle. Entrepreneurs generally use informal sources of financing when starting their business (3F: family, friends and fools) if they do not have other available sources of financing. There is a common classification in the literature that divides the sources of financing to: informal investors, debt financing, equity financing, government support programs and the entrepreneurs’ own sources. The purpose of the survey conducted for this paper is to determine the sources of used finance of Croatian SMEs and the main problems that SMEs encountered while accessing finance. The second main goal of this article is to identify future needs for financing with potential financing problems that may occur. We gathered data from Croatian SMEs about the sources of funding used over the past three years and about the funding sources that they intend to use in the next three years. In last part of the paper we analyze the results from the survey and from that draw the implications for policy makers and market participants.
 
Keywords: access to finance; Croatian SMEs; financing SMEs; state grants; equity
 
JEL Classification: L26, G23, G32


Advanced System of SME Financing in Market Economy

Jerzy Różański

Abstract: Increasing competitiveness of small and medium enterprises, especially in the situation of growing economic globalization in the member countries of European Union and internationalization of activity of such enterprises, requires overcoming numerous obstacles the enterprises have to face. One of the most substantial of them is deficiency of means for the enterprises’ growth, particularly the means earmarked for innovative activity. This is mainly the consequence of lack of knowledge about how the enterprises could gain financial means from the alternative financing sources. This hinders establishing the optimal configuration of financing for an enterprise. Consequently, the purpose of the paper to improve enterprises’ access to external capital so as to be able to carry out the investments oriented towards strengthening of the enterprises and launching innovative products and services. The main result of research (sample of Polish SME) is preparing of advanced system of financing including alternative forms of financing of SME on each stages of their life cycle, connected with multicriteria forms of their assessment.

Keywords: small and medium enterprises; alternative financing sources; financing system of enterprises

JEL Classification: G21, G24, M21


Dividend Policies and Business Groups: the Case of Croatia

Martina Sopta
Mihaela Mikić
Tin Horvatinović

Abstract: There are two competing hypothesizes on whether firms that are part of a business group should pay higher or lower dividends. Under one hypothesis, that can have different theoretical assumptions, firms that are a part of a business group should pay higher dividends. In contrast, if the pecking order hypothesis holds, firms that operate within a business group should pay lower dividends. The purpose of this paper is to examine the effect of group affiliation of Croatian firms, which are listed on the Zagreb Stock Exchange, on their propensity to pay dividends. Two panel data models were used in line with recent literature and the results of the study show some evidence that the pecking order theory was followed by Croatian firms. From this result the conclusion is that Croatian firms are more likely to pay dividends if they are not part of a business group.

Keywords: Business Group; Dividend Policy; Internal Capital Market; Pecking Order Theory

JEL Classification: G30, G35, L26


Effects of the Establishment of Entrepreneurial Orientation on the Performances of Small and Medium Enterprises in Transition Countries: Empirical Evidences from Bosnia and Herzegovina

Saša Petković
Snežana Sorak 

Abstract: Bosnia and Herzegovina (BiH) has a relatively low level of entrepreneurial activity as evidenced by GEM reports but also has an economic structure in which SMEs account for about 99% of the total number of enterprises. The goal of this paper was to examine the level of entrepreneurial orientation (EO) and influence of EO on business performances of SMEs in the Republic of Srpska (RS), one of the two BiH entities, in which the empirical research was done. We have used adapted Covin & Slevin (1989) version of the questionnaire. We found out that only 12.28% of sampled SMEs have all three dimensions of EO pronounced. The least pronounced dimension is risk-taking and the most pronounced dimension is proactiveness. Our research did not confirm the impact of EO on selected indicators of business performances.

Keywords: Small and medium enterprises; transition; strategies; entrepreneurial orientation; performances

JEL Classification: L25, L26


Quality of Government and Well-being: Assessing the Gap in European Countries

Oana Ramona Lobont 
Sorana Vatavu
Oana Ramona Glont 
Lavinia Daniela Mihit

Abstract: This paper analyses the influential factors which determine the differences between social and economic dimensions in the European Union. The main objective was to construct a composite indicator of the quality of government and citizens’ well-being, and rank the EU countries based on it. The dataset refers to variables specific to economic and social wellness (latest year available is 2015), focusing on both, the objective and subjective dimension of the governance and well-being. The results obtained indicate that the countries with the highest performance in terms of the quality of government and citizens’ well-being are Denmark, Sweden, Finland, followed by Austria and the Netherlands. Differences to the rest of the EU member states are based on economic and social policies, as these countries have the highest employment rates and social protection expenditures, focusing on the risks related to unemployment, social exclusion, invalidity or aging to increase citizens’ overall life satisfaction.

Keywords: quality of government; well-being; composite indicators; EU

JEL Classification: E02, I31, C43


Organization in New Business Environment: a Franchisor’s View

Matej Lahovnik 
Edith Bečić Steiner

Abstract: This paper investigates the basic risk and incentives relationship in franchising companies. The results of past research reflect volatile influence of risk and incentives. An in-depth analysis of this relationship was conducted using case study approach, including 12 international franchise firms of two types. Our study included retail and service franchising. Findings from this research confirm basic agency theory predictions. The risk-incentives relationship is negatively correlated in retail franchise companies, due to lower royalties in the sector. Service franchise companies do not follow the same concept, due to their adaptability of franchise system to local markets. We believe service franchise systems might be responsible for volatility. However, both types of companies nurture and develop strategies based on experience and intuition. Findings of the research offer important insights in understanding the nature of franchisor’s risk perception, as the basic underlying mechanism to the risk and incentives relationship.

Keywords: franchising; risk; royalties; incentives

JEL Classification: M10, M16


Senior Entrepreneurship. Self-employment by Older People – an Uncharted Territory

Uwe Fachinger 

Abstract: An ageing population means a growing number of healthy older people with human capital, financial resources, and time available to contribute to economic activities. However, the economic potential of older people remains mostly underused, which leads to the question, how to make best use of the underused. One way would be fostering senior entrepreneurship. The paper discusses which factors may positively influence or hinder the self-employment of older people. Overall, attention will be drawn to the relevance of older people in the field of business and entrepreneurial economics. From an economic point of view, it seems necessary not only to focus on young people but also to take into account the large and still growing economic potential of the elderly. There seems to be a treasure in waiting.

Keywords: Senior entrepreneurship; self-employment; older people

JEL Classification: J14, J21, L26


Examining Financial Management Practices in the Context of Smart ICT Use: Recent Evidence from Croatian Entrepreneurs

Bisera Karanović 
Gordana Nikolić
Goran Karanović

Abstract: Recent research demonstrates that entrepreneurs who learn contribute to lower failure rates of their startups. Nowhere is this more evident than in the area of financial management, where the entrepreneurs’ lack of skills and competencies – and their willingness to acquire them - can be a critical factor to the success of the business venture. The purpose of this paper is to examine the financial management practices among Croatian entrepreneurs in relation to budgeting, raising capital, cash flow management, and the use of ICT tools for enhanced efficiency of their businesses. The survey was conducted on a sample of 58 entrepreneurs whose answers provide valuable insight into their grasp of financial concepts in the context of smart ICT use. The ensuing analysis of the level of proficiency in combining smart tools with financial management reveals increased adoption of ICT practices for budgeting and purchasing among Croatian entrepreneurs. Additionally, the findings indicate that the entrepreneurs’ acquisition of skills and competencies for smart financial management presents a sound basis for increased overall financial sustainability of the startups.

Keywords: entrepreneurial finance; financial management; survey; smart ICT; Croatia

JEL Classification: G32, M15