Financing family firms in the Middle East: the choice between Islamic and conventional finance
International Journal of Entrepreneurial Behavior & Research
ISSN: 1355-2554
Article publication date: 10 November 2017
Issue publication date: 23 May 2018
Abstract
Purpose
The purpose of this paper is to investigate the role of non-economic factors on the financing decisions of family firms in the Middle East. To contextualize the study, the authors steer away from the traditional capital structure debate toward the choice of financing paradigm: conventional vs Islamic.
Design/methodology/approach
This study uses Ajzen’s theory of planned behavior due to its ability to delineate the influence of non-economic motivational factors on the financing decisions of family firms. This study also examines the influence of “familial stewardship (FS),” another non-economic factor which is highly relevant in a collectivistic context. The authors initially use SEM with Amos to analyze 115 surveys of family firm owner-managers. For deeper probing, the authors undertook an additional post hoc qualitative analysis of six case studies using semi-structured interviews.
Findings
The findings of this study suggest that owner-managers’ attitude toward Islamic finance plays a primary motivational role in influencing their intentions to use it. More importantly, the findings depict a significant influence of “FS” and subjective norm on the attitudes of owner-managers. This implies that financing decisions which involve religious beliefs are directly influenced by the decision maker’s personal attitude, which, in turn, is significantly influenced by familial and social pressures.
Originality/value
This study fills a gap in the family-firm financing literature by suggesting that when choosing religion-related financial products, attitude plays a far more significant role than other motivational factors. This study also contributes to the “familiness” area of research by empirically demonstrating that FS has a significant influence on owner-managers’ attitude toward financing choices.
Keywords
Acknowledgements
The authors would like to express their sincere gratitude to the reviewers whose valuable remarks and insightful suggestions contributed significantly to the outcome of this paper.
Citation
Bizri, R., Jardali, R. and Bizri, M.F. (2018), "Financing family firms in the Middle East: the choice between Islamic and conventional finance", International Journal of Entrepreneurial Behavior & Research, Vol. 24 No. 4, pp. 842-865. https://doi.org/10.1108/IJEBR-10-2016-0349
Publisher
:Emerald Publishing Limited
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