Motivations of small firms to develop relationships with banks

This paper aims to investigate what drives the decision of small non-food store retailers to develop a relationship with the bank financing them. The analysis addresses the banking industry and quantifies the extent to which a decision to develop a relationship is influenced by satisfaction, trust and by two different kinds of values, namely, monadic and dyadic.

The analysis is based on data collected from more than 400 small business by means of a questionnaire, and develops a structural equation model to estimate the impact of satisfaction, trust and value constructs on the intention to develop the relationship.

The results show that satisfaction and trust do not exert a direct effect on the decision to develop the relationship that is directly determined by dyadic value (i.e. the comparison between the cumulated value given through time and the cumulated efforts sustained by the partner). In turn, dyadic value stems from monadic value (i.e. the self-centred comparison of the costs and benefits experienced within the relationship). In a nutshell, considering value perceptions by the business partner and the relational dimension of value provides a better understanding of the intention of small firms to develop their relationship with a financing bank.

This study contributes to shaping a picture of the motivations that lead small firms to develop a relationship with their financing bank. Drawing from a heterogeneous literature and considering individual-level variables, a theoretical model is developed to include the relational dimension of value and value perceptions by the business partner in the relationship. The empirical analysis provides useful indications to practitioners to understand and effectively manage the partner’s decision to develop the relationship, suggesting where to intervene.