Investment determinants: high-investment versus low-investment Portuguese SMEs

Based on data of two subsamples of 1 557 high-investment (HINV) small- and medium-sized enterprises (SMEs) and 1 454 low-investment (LINV) SMEs, and using the GMM (General Method of Moments) system (1998) dynamic estimator, this paper seeks to analyse whether there are differences in the determinants of investment in fixed assets between HINV SMEs and LINV SMEs. The results show that the positive relationship between cash flow and investment is of greater relative importance in HINV SMEs than in LINV SMEs. Debt is a factor that stimulates HINV SME investment, but it restricts LINV SME investment. The financial crisis and firm size are negative factors of investment in HINV SMEs and LINV SMEs. Age is a positive factor of HINV SME investment, but it has no effect on LINV SME investment.