Pecking Order Theory and Innovativeness of Companies

Paweł Prędkiewicz , Katarzyna Prędkiewicz


The purpose of this paper is to explore whether the “pecking order hypothesis” applies to the capital finance preferences of innovative companies. The research is based on a survey of 409 companies. We asked them about attitude towards innovation—three answers were possible (neutral, innovation “on occasion” and pro-innovative attitude) and to indicate the financing hierarchy for five sources of capital (retained earnings, bank credit or loan, additional capital from the current owners, loan from the owners and new external equity capital). We found that in general, the hierarchy is consistent with the pecking order theory. On the first place with the higher frequency, retained earnings were pointed out, on the second place—bank credit or loan, and on the last (fifth)—new external equity. Innovativeness of companies changes the hierarchy of financing in the third and fourth place. Innovative companies after retained earnings and bank loans prefer loans from the owners, whereas companies with neutral attitude towards innovation, additional capital from the current owners. Moreover, the group that describes their attitude towards innovations as “innovation on occasion” is the most diverse in their preferences, whereas the group with “pro-innovative” strategy has consistent preferences.
Author Paweł Prędkiewicz (ES / DF)
Paweł Prędkiewicz,,
- Department of Finance
, Katarzyna Prędkiewicz (EaE / IES / DLaC)
Katarzyna Prędkiewicz,,
- Department of Labor and Capital
Publication size in sheets0.55
Book Procházka David (eds.): New Trends in Finance and Accounting. Proceedings of the 17th Annual Conference on Finance and Accounting, Springer Proceedings in Business and Economics, no. 1, 2017, Springer International Publishing, ISBN 9783319495590, [9783319495583], 850 p., DOI:10.1007/978-3-319-49559-0
Keywords in EnglishCapital structure, Innovation, Pecking order theory
Languageen angielski
Score (nominal)20
Score sourcepublisherList
Publication indicators WoS Citations = 0
Citation count*2 (2020-09-20)
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* presented citation count is obtained through Internet information analysis and it is close to the number calculated by the Publish or Perish system.