Newconnect as a Source of Financing for Small and Medium-sized EnterprisesProceeding: 5th International Conference on Innovation Management, Entrepreneurship and Sustainability (IMES)
Publication Date: 2017-05-22
Authors : Joanna Małecka;
Page : 540-552
Keywords : WSE; NewConnect; stock exchange; SME;
Given that it concentrates market demand for financial instruments offered by issuers, the stock exchange is an ideal source of raising capital on favourable terms. Public issuance allows more reliable access to potential investors, with potentially higher issue prices. Skilful seizure of such opportunities can provide companies with development funds and improve their market position in line with their stated objective. Why then do so few companies use the main tool of the capital market in Poland? The article presents NewConnect as an alternative financing source for SMEs, collating it with the awareness of Polish entrepreneurs in this respect.Design/methodology/approach: Findings are based on source data from various publications by financial market institutions. The volume and structure of Europe’s selected alternative markets are outlined by means of analyses, figures and comparisons. The focus is on commercial companies allowed to cooperate with stock exchanges. To calculate and visualise the findings, mathematical analysis tools were employed to determine quantitative and percentage shares illustrating the examined structures and to outline a trend analysis based on linear regression. 200 respondents were interviewed for recognisability of capital market instruments in Poland and their knowledge and ability to raise development capital in this way.Findings: The capital market development and increasing competition are posing new challenges for SMEs, whose changing way of thinking should be transformed into actual changes in their business activities. The data show that this change, although very slow, is nonetheless underway and SMEs’ interest in capital market solutions is increasing year by year.Research/practical implications: The author’s research results have revealed a correlation between respondents’ education and their knowledge and ability to differentiate the capital market from the money market. The better educated a respondent was at the time of the research, the more broadly he/she assessed the range of capital market solutions and opportunities for raising development capital through the stock exchange and NewConnect. This is, however, not combined with the maturity in respect of correct estimation of risks or opportunities for raising capital for development of one’s own entrepreneurship in this way.Originality/value: Small enterprises whose owners consider raising capital through the stock exchange as part of strategic management and business philosophy will be offered an additional opportunity for relatively easy access to capital, enabling companies to develop and increase their prestige. The author’s own research results have shown that it seems necessary to modify the traditional paradigm of SME management in the aspect of SME owners’ leading role.
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