Content area
Full Text
Abstract
Firm growth has received considerable attention in entrepreneurship research. Most of the researchers have focused their research efforts on organic growth even though SMEs can achieve growth in different ways (e.g. acquisition). Acquisitions as a phenomenon have predominantly been studied on large companies, therefore published research and theories have been developed almost exclusively from the studies of large acquisition deals. The acquisitive growth of SMEs represents an under-researched topic in entrepreneurship research, as do different barriers hindering acquisitive growth. The aim of this paper is to identify and further explore barriers to the acquisitive growth of SMEs in a specific entrepreneurial ecosystem context of Croatia. Qualitative research design, primarily semistructured interviews with SME owners provided identification and a deeper understanding of barriers to acquisitive growth. The research pointed to deficiencies of the entrepreneurial ecosystem in Croatia regarding acquisitive growth, especially regarding financing and commercial and legal infrastructure, and provided recommendations for improvement of its certain components.
Keywords: SME, acquisition, growth, entrepreneurial ecosystem, barriers
JEL classification: L20, L26, L29
Introduction
Firm growth has been in the focus of entrepreneurship research for past decades (Adomako and Mole, 2018; Lockett et al., 2011; Davidsson et al., 2010). Apart from scholars, policymakers have been also interested in scaling businesses due to their contribution to employment and GDP growth (OECD, 2018; Henrekson and Johansson, 2008). Entrepreneurial growth as such has traditionally been viewed and referred to as organic growth, even though SMEs can achieve growth in different ways (e.g. by acquisition).
Acquisition as a growth method has often been mentioned in the context of larger enterprises, however, that does not mean that small and medium enterprises do not use it as a way of achieving growth. According to OECD (2018) in the period from 1996 to 2007, across Europe and the US, mergers and acquisitions (M&A) by SMEs accounted for 20% of total deals involving firms from the same country. Also acquisition is becoming an interesting growth strategy recognized by Croatian SMEs. Global Entrepreneurship Monitor (GEM) data for Croatia indicates that 9,1% of entrepreneurs had experience with business takeover in buying or taking over another firm (GEM dataset 2019).
Different growth modes represent different management challenges. Furthermore, by choosing different growth modes SME owners come across a different...