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This study investigates the effects of the choice of financing on Small and Medium Enterprises (SMEs) in the context of Bahrain. SMEs play a major role in the private sector especially in emerging markets. However, information asymmetries between lenders and entrepreneurs raise the issue of the different financing implications on Small and Medium Enterprises’ post-entry performance. Scholars have argued that findings resulting from studies conducted on markets in the Western context are challenged by non-Western contexts. While numerous works have studied the implication of financing structures on firm performance in developed markets, little work has been done on the effects of the choice of financing on firms in contexts outside the Western world. This investigation is tackled by conducting one-on-one in depth semi-structured interviews with entrepreneurs in the Kingdom of Bahrain. The findings identify three main methods of financing namely debt, subsidy and personal, friends and family financing, and highlight a flexible and adaptive approach to startup financing that is linked to better post-entry performance. © 2019 IEEE.
