Investigating the Impact of Entrepreneurial Orientation on the External Financing Method in Iranian start-up Companies

Understanding the preferences of startups for external financing through debt or equity can help entrepreneurs, investors, and policy makers to offer startups the most appropriate financing options. Based on this degree of importance, in previous studies under the title of determining factors of capital structure, various variables affecting the method of external financing (debt or equity) of companies have been widely investigated. There are two major gaps in these studies. Firstly, in these studies, the variable of the company's strategy has not been paid attention to, and secondly, the studies have not paid much attention to start-up companies. In this study, the effect of entrepreneurial orientation of start-up managers as a set of characteristics including innovation, risk acceptance and leadership along with other variables related to the company and founders on the method of external capital financing has been investigated. The data of this research was collected using a questionnaire that was distributed among startups in Tehran and Tabriz in 2023 to 2024, and Tobit method and STATA software were used for data analysis. The findings of the research based on data collected from 110 start-up companies show that startups with entrepreneurial orientation are not more inclined to any of the external financing methods and the relationship of this variable with both debt financing and equity financing variables is negative. Also, the results show that with the increase of industry risk perceived by managers, the negative effect of entrepreneurial orientation on external financing ratios decreases.