While specialized stock exchanges for small and medium enterprises (SMEs) have proliferated globally, scholarly understanding of the firm-level drivers for listing on these platforms remains nascent, particularly in emerging economies. Drawing on pecking order theory, signaling theory, and the resource-based view, we develop an institutional entrepreneurial finance model explaining SME public listing decisions. Our theoretical framework addresses a critical puzzle: under what conditions do financially constrained SMEs overcome information asymmetries and adverse selection to successfully access public equity markets through specialized exchanges? We propose that specialized exchanges create institutional arbitrage opportunities that alter traditional IPO theory predictions. Specifically, we theorize that (1) the interaction between financial constraints and firm quality signals determines listing likelihood, with the effect strongest for high-quality constrained firms; (2) pre-listing governance structures serve as credible signals that reduce information asymmetries and improve listing outcomes; and (3) SMEs with valuable growth options requiring irreversible investments pursue public listings to secure financial flexibility for option exercise. Our framework extends pecking order theory by showing how institutional innovations reshape the financing hierarchy for SMEs, integrates signaling theory with the resource-based view in the SME context, and moves beyond a finance-centric view of IPOs to a strategic resource acquisition perspective. The model provides actionable guidance for entrepreneurs navigating listing decisions, policymakers designing SME exchange regulations, and investors evaluating emerging market opportunities.