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Lookup NU author(s): Dr Thao Nguyen, Professor Matthew GortonORCiD, Professor Jeremy Phillipson
This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).
Small and Medium-sized Enterprises (SMEs) make a substantial contribution to regional development and economic prosperity. Access to external finance is an important determinant of business growth, and the growth potential of rural firms maybe hindered by limited access to external finance. Using data from the UK Longitudinal Small Business Survey, this article examines the impact of external finance on SME growth, paying attention to differences between rural and urban enter-prises. Results from an extended ordered probit model incorporating year- and firm-effects indicate that the impact of external finance on growth is stronger for rural businesses than their urban counterparts. This holds for both microbusinesses and SMEs. A lack of perceived direct competitors positively moderates the impact of external finance on business growth, with more rural businesses operating in competition voids. The results are robust after controlling for firms’ characteristics and endogeneity bias.
Author(s): Khafagy A, Nguyen T, Gorton M, Phillipson J
Publication type: Article
Publication status: Published
Journal: Journal of Small Business Management
Year: 2025
Pages: epub ahead of print
Online publication date: 20/12/2024
Acceptance date: 26/11/2024
Date deposited: 09/01/2025
ISSN (print): 0047-2778
ISSN (electronic): 1540-627X
Publisher: Wiley-Blackwell Publishing, Inc.
URL: https://doi.org/10.1080/00472778.2024.2436985
DOI: 10.1080/00472778.2024.2436985
ePrints DOI: 10.57711/taw8-xf80
Data Access Statement: The study uses secure data of the UK Longitudinal Small Business Survey (LSBS) available at the UK data service.
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