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SME investment best strategies

Marcel Ausloos 

University of Leicester, University Road, Leicester LE17RH, United Kingdom
GRAPES, U Lg, Sart Tilman, B5a, Liège 4000, Belgium

Abstract

The relation between investments and business performance is a standard question. Due to the recent financial crisis, the effect of   investments on the growth, productivity, and performance of companies after the crisis is of interest for managerial and planning purposes. Some study of a well defined case will not only bring some quantitative measure, but also may lead to further discussion. A priori, one expects some positive correlation. What are the findings, - a posteriori?   Thus, a search is implemented for finding  correlations between relevant variables, pertaining to i investment implemented before a crisis, and those measuring companies   performance   thereafter. The case of SME  on the Italian STAR market is   studied. Practically, the indicators, representing: the level of investments are (1) total  intangible assets   (excluding goodwill)     and (2) total tangible assets. The financial/economic indicators   representing business performance, defining "growth", are (3) sales variations, (4) total assets variations, (5)  labour" variations; for "profitability",  one considers (6) returns on investments   and  (7) returns on sales;   finally for  "productivity"  the measures are   (8) asset turnover and (9) sales/employee. The data distributions are statistically analyzed and  relevant histograms presented.

It is argued that the outlier companies are those giving a better view of the success or failure of the investment strategies. It is found that the outlier companies with positive performance are those with the lowest TTA, the outlier with negative performance has also a low TTA, but the company which did not increase its TTA, before the crisis, becomes "negative outlier". It is concluded that extreme performance forecasted from investment strategies, for SMEs, at time of financial crisis, there is no question: it is "To be, - Not to do". Thus the findings are not those a priori expected.

 

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Related papers

Presentation: Invited oral at Econophysics Colloquium 2017, Symposium A, by Marcel Ausloos
See On-line Journal of Econophysics Colloquium 2017

Submitted: 2017-03-26 23:04
Revised:   2017-03-26 23:20