Financing decisions of migrant family businesses: The case of a Ghanaian-owned shop in Kent

Abstract

The analysis of new enterprise funding and the financial strategies once in operation has been usually associated to mainstream sources of finance for which there is a standard quantitative method of analysis that relies on readily available information such as interest rates, credit risk analysis, collateral and guarantees, business and sector performance metrics among others. These variables are usually considered at the detriment of other qualitative factors that are difficult to measure and adapt to the rational analysis methodologies generally used and accepted by financial markets and institutions: these include but are not limited to the influence of family ties, cultural traditions, social networks, human capital, and individual attitudes towards money management and financial institutions. Thus we can hypothesise that the influence of social and cultural elements will tend to be more nuanced when the financial decision-making process within the realm of an immigrant family business with transnational social networks and distinct financial goals. The aim of the paper is to share the preliminary findings of a study on the social and cultural factors influencing the financial decision making process of Ghanaian migrant family businesses in the UK. The overarching goal of the research project is to deepen our understanding of immigrant Ghanaian family businesses in the UK and the strategies they adopt when interacting with mainstream financial institutions and informal sources of funding to start up and manage their ventures. The data was obtained through face-to-face interviews with a Ghanaian shop owner in Kent and her observations and thoughts on the process of making financial decisions and developing their enterprise. This was analysed through the prism of Social Network theory and focused on influences such as family, cultural and social factors. The main elements identified as having perceptible yet varying effects on the business owner’s decision making included but were not limited financial decisions being influenced to family, cultural, social networks, and individual attitudes towards mainstream institutions. Significantly, ‘Family ties and Influence’ was the factor identified as having the most influence in the financial decision making process. The key finding of this initial research exercise was that ‘non-rational’ drivers of financial decision-making were skewed towards an internally generated process unrelated to commonly accepted business growth strategies. This is of course a very limited finding as the case study by definition signifies the information is insufficient to support a clear conclusion; however the next phase of the research exercise should provide deeper and richer data for analysis.