International expansion is critical for firm survival and growth. However, lack of finance can significantly hinder a firm’s ability to develop export markets. There has been limited research on how a lack of finance can impact SME aspirations for exports. We also know very little about SME exports in one of the world’s fastest growing markets, China.

This project addresses the following research question: Do firms with an aspiration to expand into international markets find finance more difficult to access? Our sample includes proprietary data of over 4,000 medium size firms (interviews with senior executives) from the UK, Germany, France and Italy. Our data enables us to conduct a comparative analysis of the four largest European economies and has significant implications for policy makers who aim to develop the British ‘Mittelstand’.

As John Longworth, the Director General of the British Chambers of Commerce (BCC) said at the 2015 annual BCC conference, “only if we fix our business finance system will we have a British, home-grown Microsoft, Google, Samsung, Miele, Siemens, L’Oreal or Tata in the years ahead”.



Stakeholder meeting

An initial stakeholder meeting was held to discuss this project on 16th May 2016. A brief presentation from Nicos Nicolaou provided an overview of the data to be used in the study and the key research questions. Data is available for mid-market firms for four countries – the UK, Germany, Italy and France – and so a comparative perspective on the financing of innovation is possible. This was thought to be useful given the different mechanisms used to finance exporting in the different countries.

There was some discussion of the way in which finance might influence exporting in medium sized companies and smaller firms and a recognition that the situation in terms of finance had changed somewhat since the recession. Discussion centred on the role of finance and other barriers to exporting and internationalisation and suggested the possibility of considering these other influences – e.g. skills, managerial competences, information – on exporting.

The possibilities of using other data sources to consider the barriers to exporting for smaller firms – particularly the Longitudinal Small Business Survey was also discussed.



Project Seminar – December  2016

The ERC held a project day on 13th December 2016 at the WBS offices in  The Shard. The day was split into two sessions. In the morning we discussed the findings relating to the projects we have coming to a close in our current core research programme. The event was attended by over 40 stakeholders, and generated interesting discussion and useful feedback to help inform the research.

Project 2-

THE RELATIONSHIP BETWEEN MIDDLE MARKET FIRMS’ ACCESS TO FINANCE AND INTERNATIONALISATION INTENTIONS. This project examines the relationship between middle market firms’ access to finance and their exporting intentions. We hypothesise that this relationship is positive but moderated by a firm’s age. We test our hypotheses using a novel dataset of middle market firms across four large EU economies. Contrary to our expectations, our analysis demonstrates that easier access to finance is associated with a lower likelihood of firms’ intending to enter new geographic markets. This relationship is different for younger and older firms. While older firms tend to demonstrate higher intention to enter new markets when access to finance is easy, the relationship is the reverse for younger firms.



We are always happy to receive feedback from stakeholders on our research. If you would like to submit a comment, or  you would like to be involved in future ERC research events, please email Dr Vicki Belt, Deputy Director – impact and Engagement.  


CompletionNovember 2016
KeywordsInternationalisation, finance, SME, barriers, export
ThemeExporting and Innovation and Finance and Governance
Project Lead Nicos Nicolaou