The Theoretical Relationship between the Strategic Objective of Sales Growth and the Financial Policy of the Entrepreneurial Firm

Abstract

ANDREAS MERIKAS IS WITH THE Department of Finance, Mississippi State University, Garry D. Bruton with the Department of Management and Marketing, University of Tulsa, Oklahoma, and George S. Vozikis holds the Alvan H. Chapman Jr. Chair in Business Administration, at The Citadel, Charleston, South Carolina, all in the United States of America. The purpose of this paper is to develop a simplified theoretical model which integrates an entrepreneurial firm's strategic objective of sales growth with its capital structure and dividend policy objectives. Several theoretical relationships are developed betweent hese strategic and financial objectives, showing their strong interdependency, and the fact that the ultimate goal should be the management of this relationship rather than the maximisation of sales growth.

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