The Impact of Perceptual Attributes on Entrepreneurs’ Preferences to External Financing

The aim of this study is to examine the implications of type of ‘discouragement’, ‘discrimination’ and ‘risk-taking’ perception in external financing preferences of the business owners from five major ethnic groups (Indian, Pakistani, Bangladeshi, Black African and Afro-Caribbean) in England. A five-point Likert-Scale questionnaire was used to collect data. Questionnaire was distributed via e-mail, post and face-to-face survey was conducted to enhance representation and sample size. Multiple regression was performed to assess the impacts of perceptual attributes on entrepreneurs’ preferences to external financing. Findings suggest that the discouragement perception has a significant impact in shaping external financing preferences particularly for other than bank financing sources. Discrimination feeling to apply for bank financing has significant implication in preferences to alternative financing. Whilst risk-taking propensity has implication in preferences to bank financing. Furthermore, this study also established the types of discouraging factor in applying for bank financing among ethnic minority business owners. The practical and theoretical implications are discussed, and future research directions are presented.