Extending credit to small and medium size companies : relationships and conflict management

Alfred WONG, Lu WEI, Dean TJOSVOLD, Jie YANG

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

3 Citations (Scopus)

Abstract

Purpose: Funding small and medium-sized enterprises (SMEs) may be especially valuable in China to stimulate innovation and its emerging market economy. These firms have been advised to build on the Chinese value of guanxi to manage conflicts and develop relationships with banks. This study aims to explore the nature of relationships that help SMEs inform banks and convince them to provide credit. Design/methodology/approach: As this study’s theorizing is about whether banks and firms that manage their conflicts for mutual benefit set the foundation for bank’s confidence in extending credit, therefore, both the bank officers and the company managers were asked to provide information for the study. One hundred and six pairs of bank officers in the loan department of four banks and SME managers in Shanghai, China completed a questionnaire survey for this study. Findings: Results support the argument that marketing research on customer orientation and organization behavior research on conflict management identify how to develop effective marketing relationships between SMEs and banks in China. Banks that were customer oriented laid the groundwork for managing conflict cooperatively and not competitively with borrowing firms. Cooperative conflict management in turn was found to convince banks that they could confidently provide credit and borrowers that their transaction costs will be reasonable. Originality/value: This study identifies that developing guanxi and the capacity to manage conflict cooperatively are an important foundation for providing credit to SMEs in China.
Original languageEnglish
Pages (from-to)331-352
Number of pages22
JournalInternational Journal of Conflict Management
Volume27
Issue number3
DOIs
Publication statusPublished - 1 Jan 2016

Fingerprint

conflict management
credit
bank
small and medium-sized enterprise
Industry
Marketing
Managers
China
firm
marketing
Credit
Conflict management
Company size
Relationship management
customer ties
manager
Innovation
transaction costs
market economy
loan

Keywords

  • Conflict management
  • Credit worthiness
  • Customer orientation
  • Transaction costs

Cite this

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title = "Extending credit to small and medium size companies : relationships and conflict management",
abstract = "Purpose: Funding small and medium-sized enterprises (SMEs) may be especially valuable in China to stimulate innovation and its emerging market economy. These firms have been advised to build on the Chinese value of guanxi to manage conflicts and develop relationships with banks. This study aims to explore the nature of relationships that help SMEs inform banks and convince them to provide credit. Design/methodology/approach: As this study’s theorizing is about whether banks and firms that manage their conflicts for mutual benefit set the foundation for bank’s confidence in extending credit, therefore, both the bank officers and the company managers were asked to provide information for the study. One hundred and six pairs of bank officers in the loan department of four banks and SME managers in Shanghai, China completed a questionnaire survey for this study. Findings: Results support the argument that marketing research on customer orientation and organization behavior research on conflict management identify how to develop effective marketing relationships between SMEs and banks in China. Banks that were customer oriented laid the groundwork for managing conflict cooperatively and not competitively with borrowing firms. Cooperative conflict management in turn was found to convince banks that they could confidently provide credit and borrowers that their transaction costs will be reasonable. Originality/value: This study identifies that developing guanxi and the capacity to manage conflict cooperatively are an important foundation for providing credit to SMEs in China.",
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Extending credit to small and medium size companies : relationships and conflict management. / WONG, Alfred; WEI, Lu; TJOSVOLD, Dean; YANG, Jie.

In: International Journal of Conflict Management, Vol. 27, No. 3, 01.01.2016, p. 331-352.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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AU - WEI, Lu

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AU - YANG, Jie

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N2 - Purpose: Funding small and medium-sized enterprises (SMEs) may be especially valuable in China to stimulate innovation and its emerging market economy. These firms have been advised to build on the Chinese value of guanxi to manage conflicts and develop relationships with banks. This study aims to explore the nature of relationships that help SMEs inform banks and convince them to provide credit. Design/methodology/approach: As this study’s theorizing is about whether banks and firms that manage their conflicts for mutual benefit set the foundation for bank’s confidence in extending credit, therefore, both the bank officers and the company managers were asked to provide information for the study. One hundred and six pairs of bank officers in the loan department of four banks and SME managers in Shanghai, China completed a questionnaire survey for this study. Findings: Results support the argument that marketing research on customer orientation and organization behavior research on conflict management identify how to develop effective marketing relationships between SMEs and banks in China. Banks that were customer oriented laid the groundwork for managing conflict cooperatively and not competitively with borrowing firms. Cooperative conflict management in turn was found to convince banks that they could confidently provide credit and borrowers that their transaction costs will be reasonable. Originality/value: This study identifies that developing guanxi and the capacity to manage conflict cooperatively are an important foundation for providing credit to SMEs in China.

AB - Purpose: Funding small and medium-sized enterprises (SMEs) may be especially valuable in China to stimulate innovation and its emerging market economy. These firms have been advised to build on the Chinese value of guanxi to manage conflicts and develop relationships with banks. This study aims to explore the nature of relationships that help SMEs inform banks and convince them to provide credit. Design/methodology/approach: As this study’s theorizing is about whether banks and firms that manage their conflicts for mutual benefit set the foundation for bank’s confidence in extending credit, therefore, both the bank officers and the company managers were asked to provide information for the study. One hundred and six pairs of bank officers in the loan department of four banks and SME managers in Shanghai, China completed a questionnaire survey for this study. Findings: Results support the argument that marketing research on customer orientation and organization behavior research on conflict management identify how to develop effective marketing relationships between SMEs and banks in China. Banks that were customer oriented laid the groundwork for managing conflict cooperatively and not competitively with borrowing firms. Cooperative conflict management in turn was found to convince banks that they could confidently provide credit and borrowers that their transaction costs will be reasonable. Originality/value: This study identifies that developing guanxi and the capacity to manage conflict cooperatively are an important foundation for providing credit to SMEs in China.

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