Investment determinants of fitness SMEs in Portugal

    Paulo Maçãs Nunes Affiliation
    ; Zélia Serrasqueiro Affiliation
    ; Pedro Guedes de Carvalho Affiliation


Based on a sample of 182 Portuguese fitness SMEs we study the investment determinants of fitness SMEs in Portugal. The multiple empirical evidence obtained in this study lets us conclude that the main explanatory theories of firm investment cannot be considered mutually exclusive in explaining the investment of Portuguese fitness SMEs, since: 1) they adjust investment as a function of sales, corroborating the assumptions of Neoclassical theory; 2) cash flow is an important financial resource for investment, corroborating the assumptions of Free Cash Flow theory; and 3) external finance, namely debt, is a restrictive determinant of investment, which corroborates the assumptions of Agency theory. Besides these results, we find that growth opportunities and government subsidies are positive determinants of investment in Portuguese fitness SMEs, and the financial crisis of 2008 has a negative influence on investment in Portuguese fitness SMEs. The financial crisis of 2008 also means greater relative importance of cash flow and government subsidies for increased investment, and debt for diminished investment, in fitness SMEs.

Keyword : agency theory, fitness SMEs, free cash flow theory, investment, neoclassical theory, strategic property management

How to Cite
Nunes, P. M., Serrasqueiro, Z., & Guedes de Carvalho, P. (2014). Investment determinants of fitness SMEs in Portugal. Technological and Economic Development of Economy, 19(1), S496-S523.
Published in Issue
Jan 28, 2014
Abstract Views
PDF Downloads