How Firm Characteristic on Capital Structure Can Improve Technology Improvement in Malaysian Manufacturing SMEs?

Small and medium enterprises (SMEs) is a important contribution to boost the economies overall the world. In fact, SMEs always struggle to access the financing compared list company. There are several factors influence the capital structure decision in SMEs. This study focuses on manufacturing SMEs companies and examines the influence of firm characteristics (firm size, tangible asset, liquidity, profitability and firm growth) on capital structure towards technology improvement. The results showed only liquidity and firm growth were found to be positive significantly affect the external financing. Furthermore, internal and external financing also able improve the manufacturing’s technology performance. Conclusion, different firm characteristics have different leverage privileges which trying to attain optimal capital structure. The variations in the capital structures affect the costs of equity or debt and cost of capital. This study provides benchmarks for corporate managers in SMEs when making a company’s decision on the company’s performance.