Title: A partial least squares approach to the financing behaviour of micro, small and medium enterprises

Authors: Vibhuti Mittal; T.V. Raman

Addresses: Amity Business School, Amity University Uttar Pradesh, Noida, F-3 Block, Amity University Campus, Sector-125, Noida 201-313, GautamBudh Nagar, U.P., India ' Amity Business School, Amity University Uttar Pradesh, Noida, F-3 Block, Amity University Campus, Sector-125, Noida 201-313, GautamBudh Nagar, U.P., India

Abstract: The present study explores the financing behaviour of micro, small and medium enterprises (MSME) owners. A nexus of owners' personal attributes (PC) and behavioural aspects including financial knowledge (FK), financing motivation (M), and risk taking ability (R) has been created to determine the financing preferences (FP) and capital structure decision (CSD) of firm owners. The research framework adopts quantitative approach to the analysis. 274 responses were collected and analysed through partial least squares structural equation modelling on SmartPLSv2. The findings support the direct and mediating role of M and R in predicting FP and its relationship with PC. Moreover, the study confirms the role of FP in determining CSD in terms of pecking order behaviour among firm owners. The integration of owners' personal characteristics and behavioural factors in determining firms' financial decision adds value to the theory and practice of MSME financing.

Keywords: MSMEs; micro; small and medium enterprises; MSME financing; small business finance; entrepreneurial financing; financing motivation; financing risk.

DOI: 10.1504/IJEV.2022.124963

International Journal of Entrepreneurial Venturing, 2022 Vol.14 No.3, pp.277 - 302

Received: 28 Aug 2020
Accepted: 19 Jul 2021
Published online: 18 Aug 2022 *

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