Author(s): Laurent Yacoub
Purpose: This study investigates the effect of the financing gap on entrepreneurship in the United Arab Emirates. This is based on the premise that entrepreneurship has become the mainstay of economic activity in emerging markets and plays an essential role in creating jobs, generating income, and contributing to the countries’ GDP. The proliferation of Small and Medium-Sized Enterprises (SMEs) has been phenomenal, justifying the growing importance of entrepreneurship. At the same time, entrepreneurs in emerging markets are facing myriad challenges revolving around financing gaps.
Design/methodology/approach: It is qualitative research and data were collected through interviews with entrepreneurs in the UAE. Purposive sampling was used to maximize the acquisition of relevant information. Potential respondents were identified by recommendations from professional organizations, such as regional Small Business Development Centers and incubators. A sample size of 26 was considered adequate for generating themes in an exploratory analysis.
Findings: Financial gaping negatively impacts entrepreneurship in emerging markets in various ways: lack of funding can be considered the main challenge of many entrepreneurs in emerging markets. Most small and medium enterprises (SMEs) face severe constraints in accessing credits. Our findings identify a lack of creditworthiness by major financial institutions in turning down requests made by SMEs. Loan bias is another key factor affecting the financing of entrepreneurs in emerging markets since most financial institutions only lend money to credit-worthy or well-established businesses, most SMEs find it difficult to prove worthy of loans.
Originality/value: This study focuses on the financing issues affecting entrepreneurs in the United Arab Emirates and evaluates the approaches applied by entrepreneurs in the UAE to overcome financial challenges. Its purpose is to assess the effect of the financing gap on entrepreneurship in emerging markets by focusing on the United Arab Emirates.