Writing in the “Academic View” section of The Economist, Christoph says that small firms regularly complain that banks and other lenders won’t provide needed growth capital.
“But I have some candid news for such companies: it’s not only them, it’s also you,” he says.
A lack of transparency means that banks often don’t know enough about small and medium-sized firms to feel confident enough to lend money that would allow them to grow – and “the last thing they want is to invest in an SME, only to find out later that the firm is struggling or going bankrupt,” he writes.
Christoph has other tips for SMEs as well: investment in developing new technology can be risky and not lead to growth, and there is plenty of good off-the-shelf technology they can buy; and innovation often comes not through tech but by better understanding your customers.
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Visit Professor Christoph Loch’s faculty webpage