An empirical study on SMEs growth in connection to investments in tangible and intangible assets

Sammanfattning: Background: SMEs directly influence the economic growth of the countries, however these companies are facing several challenging problems, among others, an increasingly competitive environment and financial limitations. Therefore, improving knowledge on the relation between the SMEs growth and different investments is of importance for SMEs decision makers and strategy developers.    Objectives: In this work the goal is to examine the relation between the SMEs growth and investments in tangible and intangible assets. The focus of the study is on Swedish SMEs from the industrial sector with the aim of examining the six hypotheses on the relation between different investment and growth parameters.  Methodology: 57 Swedish publicly listed SMEs are selected, and their financial data related to firm’s growth, i.e. KPIs such as Revenue and EBITDA growth, and investments, i.e. investments in tangible and intangible assets. Lastly, moderating variables, i.e. firm’s size and employee growth index, are collected from three well-known and precise databases. The secondary data is analyzed employing both fundamental and regression analyses.  Results: Analyses indicate that growth KPIs are in a positive relationship with the total investments in tangible and intangible assets. In particular, a clear relationship between the investments in tangible assets and Revenue growth is obtained while a strong relationship between the investments in intangible assets and EBITDA growth is achieved. The firm's age is found to be an important moderating parameter impacting the relationship between the growth and investment parameters, but the influence of the employee growth index is mainly reflected upon increased robustness, reliability and validity of the model, seen by improvement of the regression fitting.  Conclusions: Results suggest that statistically there is a positive relationship between the firm's growth and targeted investments, however the amount of investments and the division of investments between tangible and intangible assets cannot be easily based on the statistical analysis. Although much in line with the statistical analysis, some deviating trends of both independent and dependent variables could be identified through the fundamental analysis, making it a good complement to the regression analysis. With our results and answers to the research questions being in hand, it is our belief that investment decisions should be more carefully evaluated focusing on the firm's strategies, life cycle and growth stage, capacity, type, age and the organizational structure of the specific firm that stakeholders are managing.  Recommendations for future research: A suggestion for the future research is to expand the present analysis on data from more firms, including several other growth KPIs in the statistical analysis and include other categories of investments compared to that of the present study such as M&As and partnership investments. This will strengthen the arguments and conclusions presented in this study and contribute to future research within the field.