Financing women entrepreneurship in the developing world: An fsQCA analysis of informal financing schemes

This study adopts a configurational approach to facilitate a better understanding of the informal financing mechanisms inherent in women’s entrepreneurship. It draws on observations involving 200 Nigerian women entrepreneurs to study the antecedents that underpin informal financing in women’s entrepreneurship. Six antecedents, including firm age, size, entrepreneur’s age, marital status, educational level, and industry, alongside Ajo—an informal financing scheme—are studied. Using fuzzy sets, the study deduces six configurations depicting the use of this informal financing scheme in women’s entrepreneurship. FsQCA analysis reveals how these antecedents collectively form six configurations related to Ajo. Contrary to the bank–firm theory of formal financial relationships, this study uncovers how even educated women entrepreneurs also use Ajo for entrepreneurial purposes. We contend that simplistic predictions formed around a single antecedent must make way for a configurational approach, whereby a set of conditions must be in place to account for informal financing in women’s entrepreneurship, especially in the developing world.