Open Access

Determinants of equity financing: a demand-side analysis of Irish indigenous technology-based firms

Jane Power

Jane Power

Cork University Business School, University College CorkCork, Ireland
Search for this author on
Sciendo|Google Scholar
Power, Jane
, 
Bernadette Power

Bernadette Power

Cork University Business School, University College CorkCork, Ireland
Search for this author on
Sciendo|Google Scholar
Power, Bernadette
 and 
Geraldine Ryan

Geraldine Ryan

Cork University Business School, University College CorkCork, Ireland
Search for this author on
Sciendo|Google Scholar
Ryan, Geraldine
  
May 13, 2022
Determinants of equity financing: a demand-side analysis of Irish indigenous technology-based firms's Cover Image
About this article
Previous Article
Next Article
Cite
Download Cover
Article Category: Research Article
Published Online: May 13, 2022
Page range: 52 - 68
DOI: https://doi.org/10.2478/ijm-2022-0002
Keywords
© 2022 Jane Power et al., published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Probit Results

I II III
Probit(Std. Error) Marginal Effects(Std. Error) Elasticities(Std. Error)
Financing
Personal Investment 0.614* (0.465) 0.107* (0.0611) 0.906 (0.586)
FConnections 0.306* (0.192) 0.0770 (0.0570) 0.152 (0.0960)
Debt −0.455** (0.182) −0.104** (0.0498) −0.286** (0.129)
Innovation
Innovation 0.201*** (0.0787) 0.0478** (0.0222) 2.148** (0.862)
R&D 0.135 (0.121) 0.0321 (0.0300) 0.465 (0.429)
Patent 0.106 (0.210) 0.0257 (0.0497) 0.0492 (0.0931)
Firm−Specific
Size 0.00136 (0.00167) 0.000324 (0.000423) 0.0529 (0.0702)
Age −0.0283 (0.0208) −0.00676 (0.00516) −0.335 (0.243)
ServiceFirm −0.256 (0.256) −0.0665 (0.0856) −0.331 (0.366)
Incubator 0.317 (0.270) 0.0839 (0.0748) 0.0728 (0.0612)
Market & Product
Rivalry −0.0693*** (0.0182) −0.0165*** (0.00159) −2.361** (1.054)
Exports 0.00780*** (0.00236) 0.00186** (0.000853) 0.647*** (0.221)
ProdDiff −0.239* (0.141) −0.0570** (0.0282) −0.765 (0.523)
Human Capital
FoundEdu 0.438*** (0.154) 0.104** (0.0468) 1.029*** (0.387)
FoundIndExp 0.0159 (0.0126) 0.00378 (0.00326) 0.452 (0.367)
FoundIntExp 0.328* (0.204) 0.0727* (0.0434) 0.360 (0.233)
WorkQual 0.00981** (0.00518) 0.00234* (0.00133) 1.290* (0.707)
Constant −3.321*** (0.985)
Observations 294
Log Likelihood −138.469
Wald Chi−square (17) 80.39
Pseudo R2 0.3197
Prob > Chi2 0.0000

Definition and Descriptive Statistics

Variable Definition All Firms(N = 294) Equity(N = 153) Non-Equity(N = 141)
Number (percentage)a / Mean (std. dev.)b
Financing
PersInvest =‘1’ if firm used founder personal funding; =‘0’ otherwise 282 (95.9%) 148 (96.7%) 134 (95%)
FConnections =‘1’ if firm received f-connection funding; =‘0’ otherwise 95 (32.3%) 57 (37.3%) 38 (27%)
Debt =‘1’ if firm obtained debt financing; =’0’ otherwise 120 (40.8%) 49 (32%) 71 (50.4%)
Firm-specific
Size Number of full-time equivalent employees in 2011 25.3 (55.7) 28.7 (65.8) 21.6 (41.9)
Age Elapsed years from foundation to exit; to Dec. 2016 otherwise 7.70 (5.58) 6.64 (3.70) 8.84 (6.91)
ServiceFirm =‘1’ knowledge-intensive service firm (NACE 58–63, 66, 69–75, 78, 79, 82); =‘0’ otherwise 247 (84%) 130 (85%) 117 (83%)
Incubator =‘1’ if located in an incubation centre; =‘0’ otherwise 44 (15%) 29 (19%) 15 (10%)
Market & Product
Rivalry Number of major rivals the firm faces in its main market 22.15 (116.19) 4.60 (5.17) 41.2 (165.9)
Exports Export sales as a percentage of total sales for the last fiscal year 53.96 (39.68) 68.18 (35.52) 38.52 (38.27)
ProdDiff =‘1’ (very similar); =‘2’ (similar); =‘3’ (different); =‘4’ (very different) 2.08 (0.79) 2.22 (0.75) 1.94 (0.81)
Human Capital
FoundEdu =‘1’ (up to Degree); =‘2’ (Masters); =‘3’ (Ph.D.) 1.53 (0.63) 1.68 (0.65) 1.36 (0.58)
WorkQual Percentage of employees who possess a third level or equivalent qualification 85.51 (20.76) 90.75 (13.47) 79.82 (25.34)
FoundIndExp Number of years’ experience working in the firm’s industrial sector 18.54 (7.60) 18.69 (7.02) 18.38 (8.21)
FoundIntExp =‘1’ if experience working abroad prior to current role; =‘0’ otherwise 210 (71.4%) 123 (80.4%) 87 (61.7%)
Innovation
Innovation Sum of product and process innovation, where 2 is the lowest and 8 the highest 6.97 (1.34) 7.37 (0.97) 6.45 (1.55)
R&D =‘1’ (longer); =‘2’ (weekly); =‘3’ (daily) 2.25 (0.82) 2.46 (0.73) 2.01 (0.85)
Patent =‘1’ patent holder; =‘0’ otherwise 89 (30.3%) 62 (40.5%) 27 (19.1%)
Language:
English
Publication timeframe:
3 times per year
Journal Subjects:
Business and Economics, Business Management, Marketing, Sales, Customer Relations, Management, Organization, Corporate Governance, Entrepreneurship, Human Resources, Labor Practice, Job and Career
Journal RSS Feed