Entrepreneur characteristics and financing patterns in SMES of MENA countries: Overcoming the burdens of liability of newness

Abstract

This study examines the impact of entrepreneur attributes on financing channels of small and medium-sized enterprises (SMEs) as well as the moderating role of firm age on this relationship. It examines a comprehensive dataset of 4139 firm-year observations operating in the Middle East and North Africa (MENA) region observed over the 2013–2019 period. The results are four-fold. First, our overall findings reveal that experienced entrepreneurs tend to use internal funds. Second, the university education of entrepreneurs positively correlates with debt financing. Third, female entrepreneurs are more eager to use internal funds and less debt. Fourth, firm age is found to moderate these relationships. Indeed, in young SMEs, experienced entrepreneurs are shown to rely on debt, graduated entrepreneurs on internal funds, and in older SMEs, female entrepreneurs use debt. Our results bear on the proposals of upper echelons and organizational lifecycle theories.