Exploring Determining Factors for SMEs’ Access to Alternative Financing Through the Technology-Organization-Environment (TOE) Framework

Small and medium-sized enterprises (SMEs) are vital for a country’s economic growth. However, they often struggle with a persistent issue, namely, a funding gap. Alternative finance presents a solution to this problem but remains underutilized due to limited SME understanding and access. This research paper aims to explore the factors that influence small and medium-sized enterprises (SMEs) to access innovative alternative financing models. Through a literature review and conceptual framework, this study identifies the influential factors affecting SMEs’ access to alternative financing options. The research adopts the Technology-Organization-Environment (TOE) model as a theoretical framework to understand the factors that influence SMEs’ access to alternative financing. The TOE framework explains the process of adopting and implementing technological innovations in organizations and describes how it is influenced by technological, organizational, and environmental contexts. This study not only tests the TOE framework for SMEs but also extends it by adding the individual context, specifically the financial literacy of SME owners/managers, as a determining factor. The comprehensive conceptual model presented in this study offers a holistic perspective on the factors influencing SMEs’ access to alternative financing and delineates the dimensions of these factors. The model also provides avenues for future research to test and enhance it. This study makes substantial contributions to theory and practice by exploring emerging business models empowered by disruptive technology. This highlights the crucial role of alternative finance in fostering SME growth and underscores the significance of harnessing disruptive technology in creating innovative business models. The findings of this research are relevant to policymakers, regulators, and SME leaders as they provide valuable insights into fostering SME development and ultimately promoting economic prosperity.