This research is about financing practices of Pakistani-immigrant and indigenous-owned
small travel agents. The study provides an understanding of the capital structures of
businesses owned by both groups and compares these to draw similarities and differences
between both groups. The research integrates the "ethnic enclave" immigrant theory, the
capital structure theory in particular the Pecking Order Hypothesis, the role of "networks"
in business financing, and the business life-cycle theories.
The research question and the research hypotheses emerged from the literature reviewed.
Ten case studies, five Pakistani businesses and five indigenous businesses, confirmed the
hypotheses which formed the basis of a survey of a large sample of sixty businesses,
thirty in each group. The case study data is considered invaluable since it provided the
real evidence of the sensitive nature of financial information in these businesses. The
methodology adopted was a combination of qualitative and quantitative approaches.
The findings of the study show that there are more similarities than differences among the
capital structures of both groups of businesses. The nuclear family plays a crucial role
throughout the life-cycle of the business in both groups. The role of family labour is not
as prominent as among other industries such as Confectionery, Tobacconists, and
Newsagents (CTN's). Informal sources of finance are preferred over formal sources by
both groups of businesses due to their availability and lower cost. The Pecking Order
Hypothesis theory applies to both groups of businesses. The main sources of formal
finance were high street banks, bank overdrafts and loans. Pakistani businesses were not
disadvantaged in any way by the formal providers of finance.
This research is the first to report on the comparative capital structures among both
groups of businesses. However, although considerable contribution has been made by
this research to the small business finance literature further research should be conducted
into the area