23 The Impact of Entrepreneurial Capital on Preferences for External Financing: An Empirical Study of Ethnic Minority Business Owners in the UK

Abstract

This chapter examines the impact of entrepreneurial capital (a pool of social, cultural and human capital) on preferences for external financing among ethnic minority business owners in the UK. The findings show that entrepreneurial capital has an impact on ethnic entrepreneurs’ finance seeking behaviours. More specifically, entrepreneurs who choose to embrace extended social networks prefer bank financing and ethnic entrepreneurs who embrace multiculturalism and have a propensity for acculturation prefer alternative sources of financing. Similarly, business owners with postgraduate education have aa positive preference for alternative financing and a high level of education has a positive impact on shaping preferences for asset financing. The empirical study is based on 114 responses obtained through three different survey approaches. Multiple regression models are used to analyze data. This study provides a number of recommendations for policymakers, finance providers and practitioners.

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