Keywords: immigrant–owned firms, informal capital sources, ethnicity, small business finance, factor analysis, immigrants, capital acquisition, start–ups, entrepreneurship, small firms, native–owned firms, Sweden
Ethnicity and the pattern of capital acquisition at start–up stage: differences between small Swedish native and immigrant–owned firms
The purpose of this study is to investigate empirically the differences in external capital acquisition between Swedish native and immigrant–owned firms at start–up stage. The study based on unique and comprehensive database consisting of 304 immigrant– and 2,512 native–owned firms for 2008, applying ANOVA and factor analyses. Overall the empirical results provide support for the hypotheses that there is a difference in the pattern of external capital acquisition at start–up stage between Swedish native and immigrant–owned firms. Whereas, the native–owned firms tends to follow a hierarchical order in business financing from formal capital sources to informal ones, the counterpart group seems to behave oppositely preferring informal capital sources as the first financing alternative. Furthermore, each of the firm groups follows different hierarchical order to combine financing sources. Finally, the findings pinpoint that the conventional previous research are relevant to explain the financing behaviour of immigrant–owned firms in Swedish context.