This PhD thesis investigates the intention of Omani small and medium enterprise (SME) owner-managers to adopt Islamic financing instruments (IFIs). Traditionally, when deciding how to finance their businesses, owner-managers of SMEs in the Sultanate of Oman have had to rely on the conventional financing instruments offered by the Omani banking industry. However, the recent emergence of Islamic banking and finance as a new offering within Oman’s financial services industry has altered that situation. SME owner-managers in Oman can now choose between Islamic and non-Islamic finance options when making their financing decisions. Thus, gaining insight into which option they intend to choose is important, since the choice they make will change their enterprise’s financial structure.The research undertaken in this thesis is, therefore, significant, because it investigates the part that Islamic financing instruments can play in both stimulating economic growth in Oman’s SME sector and in encouraging a more equitable sharing of that growth. Although capital structure theories grounded within the finance paradigm have enhanced our understanding of the capital structure puzzle, as Brealey, Myers, and Allen (2010) reveal, “how financial decisions are made” (p. 10) is a question that still needs to be answered. Finance researchers still need to be encouraged to continue their efforts to identify the missing pieces of the puzzle. To illustrate, such things as diverse nonfinancial and behavioural factors that influence capital structure decisions could be the missing elements of this puzzle. Theoretical and empirical studies of capital structure have focused primarily on large listed firms; only a few studies have focused on the capital structure of SMEs. In addition, little is known about why financial choices vary among small businesses, especially how and why SME owner-managers make financial decisions. This gap in the literature is particularly evident when investigating the factors that influence the funding decision around Islamic financing in a country where Islamic finance represents a new banking sector offering. Furthermore, the focus of the extant small business finance literature has centred primarily on the developed world. An assumption that its findings can be transferred to emerging economies is implicit, despite the fact that there are significant institutional differences between small businesses in the developing and developed worlds. These differences warrant scholarly attention. In responding to that need, this thesis produces three research papers that examine three interrelated phenomena. Through the lens of Omani SME owner-managers, these papers provide additional insights into how SME owner-managers evaluate and select the Islamic financing options for their firms that have recently been introduced in the Omani context. The first paper, entitled “Islamic financial decision-making among SMEs in the Sultanate of Oman: An adaption of the theory of planned behaviour (TPB)”, investigates SMEs’ Islamic financial decision-making by adopting the theory of planned behaviour (TPB). As such, it is one of the few global studies that seeks to propose and apply a theoretically modified model of Ajzen’s (1991) theory of planned behaviour to investigate SME owner-managers’ financial behaviour. As is already known, small firms are financed differently from large firms (Moritz, Block, & Heinz, 2016), because their financial reasoning is influenced by both economic and noneconomic motives (Gallo, Tàpies, & Cappuyns, 2004). Moreover, it is argued that small businesses not only behave and act differently from larger firms, but that they also utilise different financing mechanisms (Berger & Udell, 1995). In order to better understand the financing behaviour of SME owner-managers, particularly SME owner-managers’ Islamic financial decision-making, a conceptual model which borrowed from behavioural psychology was developed. The paper argues that nonfinancial factors such as SME owner-managers’ attitudes, subjective norms, perceived behavioural control, and behavioural intentions largely affect the financial decisions of SMEs. While this study found that religiosity showed a significant negative relation, and is not a predictor of SME owner-managers’ intention to adopt Islamic financial instruments, awareness did show a significant positive relation and was an important factor in predicting Islamic finance instrument adoption intention. The second paper, entitled “Determinants of the decision to adopt Islamic finance: Evidence from Oman”, explores whether Omani SME owner-managers’ intention to adopt Islamic finance is influenced by their knowledge of Islamic finance, their own characteristics, and/or their firm’s characteristics. Here the literature indicates that a complex array of factors influences SME owner-managers’ financing decisions (Romano, Tanewski, & Smyrnios, 2001). For example, entrepreneurial characteristics (Abdulsaleh & Worthington, 2013); business life cycle issues (La Rocca, La Rocca,

This PhD thesis investigates the intention of Omani small and medium enterprise (SME) owner-managers to adopt Islamic financing instruments (IFIs). Traditionally, when deciding how to finance their businesses, owner-managers of SMEs in the Sultanate of Oman have had to rely on the conventional finan...