Table 6. Overview of financing channels:...

Table 6.

Overview of financing channels: Complementarity, substitution and impact on innovation and financial performance

Type of channel	Financing channel	Complementarity	Substitution	Impact on innovation	Relationship with financial performance
Traditional	Bank credits	Complements public resources and self-financing	Substitutes self-financing in case of low internal resources	High impact on innovation, especially in mature companies (Ayyagari et al., 2011)	Negative due to the cost of debt (Ali et al., 2024)
	Public resources	Complements credits and self-financing	Can substitute insufficient private investment	Significant in product innovation, especially in manufacturing (Aiello et al., 2020)	Varies by context, generally positive
	Self-financing	Complements credits and venture capital	Substitutes for credits when retained earnings are insufficient	Self-sustaining cycle of innovation (Hall and Lerner, 2010)	Positive, as it reduces dependence on external capital
Emerging	External Capital/Venture Capital	Complements self-financing and crowdfunding	Can substitute credits in high-risk companies	Stimulates innovation in high technology (Rossi, 2015)	Positive, provides support and networks that enhance performance
	Crowdfunding	Complements venture capital	Can replace traditional financing for specific projects	Promotes innovation in early stages (Eldridge et al., 2021)	Generally positive, depends on the success of the financed project
	Supply chains	Complements R&D and other functional associations	Does not usually replace other financing	Improves response capacity and innovation (Rezaei et al., 2015)	Positive, optimizes resources and enhances competitiveness
	Family and Friends	Complements when there are barriers to accessing other funds	Replaces formal financing when inaccessible	Varies by context, more informal (Allen et al., 2019)	Limited, depends on the context and the market

Type of channel	Financing channel	Complementarity	Substitution	Impact on innovation	Relationship with financial performance
Traditional	Bank credits	Complements public resources and self-financing	Substitutes self-financing in case of low internal resources	High impact on innovation, especially in mature companies (Ayyagari et al., 2011)	Negative due to the cost of debt (Ali et al., 2024)
	Public resources	Complements credits and self-financing	Can substitute insufficient private investment	Significant in product innovation, especially in manufacturing (Aiello et al., 2020)	Varies by context, generally positive
	Self-financing	Complements credits and venture capital	Substitutes for credits when retained earnings are insufficient	Self-sustaining cycle of innovation (Hall and Lerner, 2010)	Positive, as it reduces dependence on external capital
Emerging	External Capital/Venture Capital	Complements self-financing and crowdfunding	Can substitute credits in high-risk companies	Stimulates innovation in high technology (Rossi, 2015)	Positive, provides support and networks that enhance performance
	Crowdfunding	Complements venture capital	Can replace traditional financing for specific projects	Promotes innovation in early stages (Eldridge et al., 2021)	Generally positive, depends on the success of the financed project
	Supply chains	Complements R&D and other functional associations	Does not usually replace other financing	Improves response capacity and innovation (Rezaei et al., 2015)	Positive, optimizes resources and enhances competitiveness
	Family and Friends	Complements when there are barriers to accessing other funds	Replaces formal financing when inaccessible	Varies by context, more informal (Allen et al., 2019)	Limited, depends on the context and the market

Note(s):

This table was compiled by the authors as a comprehensive summary of the review. It synthesizes the interactions and effects of various financing channels on innovation and financial performance within SMEs, providing an integrated perspective on their roles and impacts

Source(s): Created by the authors

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