Understanding established women-owned micro, small and medium enterprises’ access to finance: The case of Mauritius

Abstract

Although WSMEs are key drivers in the economic development of developing economies, access to finance has been a major constraint; many investors take a negative attitude towards them based on their smallness and newness. Indeed, researchers have often indicated that WSMEs face challenges to finance their business due to their firm and individual characteristics as well as several other barriers, for example, cultural, societal, and political issues. The purpose of this quantitative multi-level study is to help understand the access to finance by established WSMEs; that is, those who were able to overcome the bottleneck of access to finance and continue to grow and survive despite the financial limitations. The theories that this study draws on are the resource-based view, the institution-based view, the bricolage theory, and the psychological capital theory, which underpin the development of this study’s conceptual model. Data were collected from an online questionnaire completed by 257 established WSMEs in Mauritius who had been in business more than 3 years and had at least one source of external finance in their businesses. The analysis was conducted via structural equation modelling (SEM), using IBM SPSS and IBM AMOS software version 26. The findings show that there is a strong relationship between WSMEs’ perceived institutions (both formal and informal perceived institutions) and their access to finance. It could be concluded that in Mauritius, established WSMEs’ perceived institutions are supportive and strong for their access to finance. For the WSMEs’ business development factors, the findings show a strong association between the three key factors of WSMEs’ growth expectation, financial knowledge, bricolage approach and their access to finance, while firm performance and firm creditworthiness have no significant relationship to WSMEs’ access to finance. Moreover, the findings reveal the effect of the moderating factor, the psychological capital of successful women entrepreneurs, on the relationships between WSMEs’ access to finance and their firm’s past performance, their bricolage approach, their perceived financial support from formal institutions, their perceived networking from informal institutions and their perceived mentoring from informal institutions. Overall, the most important factors that help WSMEs overcome the challenges of access to finance are perceived institutions (both the formal and the informal) and the bricolage approach. By studying established WSMEs in Mauritius, this thesis makes a vital contribution to the field of entrepreneurship, especially to empirical studies on WSMEs’ access to finance in developing markets. Considering the direct effects of the relevant factors in this context, the R2 of this thesis shows a value of 0.59, explaining half of the variances for the dependent variable which can be justified by the total of independent variables used in the model. This result is better than existing studies on WSMEs’ access to finance whose R2 ranges between 0.20 and 0.40. Most importantly, the moderating effect shows a higher R2 value than the direct effects, 0.68, which is also higher than in previous studies. Since this thesis uses a multi-level in-depth analysis, it shows a better R2 that future studies could employ. Finally, this research has several theoretical, empirical and methodological contribution as well as the managerial implications benefiting academia, WSMEs and policy makers promoting women entrepreneurship in developing markets.