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Financing stages of technology-based firms in Germany

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  • Christian Schultz

Abstract

In this paper, we use a capital life stage model to characterise the capital structure of technology-based firms. First, the relevant work on technology-based firms and the financial growth cycle theory is presented. Hypotheses regarding the level of leverage and the mixture of short-term and long-term debt are developed and grounded in the relevant literature. Then, an integrated capital life stage model for technology-based firms is designed. The model is tested on data of a sample of technology-based firms of the two sectors of leading-edge engineering (R&D intensity above 8.5%) and high-technology engineering (R&D intensity above 3.5%) founded between 1990 and 2005 in Germany. The technological complexity has no observable influence on the level of equity and debt. Only slightly different levels of equity and debt can be observed. While the firms mature, equity is substituted by debt. Differences in the mixture of short and long-term debt are found in the growth stage of the sectors' companies. In the last section, explanations for these findings are discussed and the significance of the study for practitioners and researchers as well as limitations and further areas of research are outlined.

Suggested Citation

  • Christian Schultz, 2011. "Financing stages of technology-based firms in Germany," International Journal of Entrepreneurship and Innovation Management, Inderscience Enterprises Ltd, vol. 14(2/3), pages 206-221.
    • Handle: RePEc:ids:ijeima:v:14:y:2011:i:2/3:p:206-221
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    Cited by:

    1. Yang Fuming & WeiLun Huang & Liu Xiaojing, 2022. "Micro- and small-sized enterprises’ willingness to borrow via internet financial services during coronavirus disease 2019," International Entrepreneurship and Management Journal, Springer, vol. 18(1), pages 191-216, March.

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