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Capital budgeting practices of SME in Baden-Württemberg: findings of an emperical study

Author

Listed:
  • Bernd Britzelmaier
  • Ulrike Pöpplow
  • Lars Andraschko

Abstract

Companies' success strongly depends on the right investment decisions. This paper sets out to explore the status quo of capital budgeting from SMEs in southwestern Germany. This includes the investment decision making process in context of capital budgeting, with its functional, instrumental and institutional design. Based on a literature review including a previous study evaluation, a survey was developed and, with a final sample size of 73 SMEs, a web-based questionnaire carried out. Main results are that many decisions are based on experience values and investment appraisal techniques are used insufficiently, especially the DCF methods are not applied by a large number of companies. Furthermore, there is a lack of standardisation within capital budgeting, an overview of potential for improvement is provided. Besides this it seems that investment decisions of smaller companies are more often based on intuition. In addition, it is found that the larger the company the more tasks are split within the functional area in order specialise the finance departments.

Suggested Citation

  • Bernd Britzelmaier & Ulrike Pöpplow & Lars Andraschko, 2020. "Capital budgeting practices of SME in Baden-Württemberg: findings of an emperical study," International Journal of Business and Globalisation, Inderscience Enterprises Ltd, vol. 24(1), pages 78-93.
    • Handle: RePEc:ids:ijbglo:v:24:y:2020:i:1:p:78-93
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    Cited by:

    1. Ismail Sheik, 2023. "Navigating the digital divide: exploring the multifaceted 4IR challenges and technological disparities encountered by SMMEs within Kwazulu-Natal, South Africa," Technology audit and production reserves, PC TECHNOLOGY CENTER, vol. 5(4(73)), pages 6-11, September.

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