Influence of strategic partnership between small and large businesses on performance: the case of Equity bank agency banking

Abstract

Strategic partnerships between large businesses is a common practice in business and has been for many years, but in recent years large businesses have identified the benefits of forming strategic partnerships with small businesses due to their unique operating set up and consistent innovative nature. In previous years large firms acquired small businesses or bought off rights to their ideas but recently more and more large businesses are opting to partner with small businesses so as to maintain their innovative customs through the lack of bureaucracy in small business’s innovative processes and passionate employees who genuinely want to grow with the business. This study was conducted to identify the influences that this type of partnership might have on the small business. Because small businesses operate differently from large as they have small budgets to operate within, few employees and limited management ability where most time the owner is the manger. Equity Bank Agency Banking which is a successful partnership between a large business and many small businesses where Equity bank has entered into contract with many small businesses to offer selected banking services as its agents was chosen for data collection. The study sampled 344 Equity bank agents from Nairobi county and 10 agency banking officials from Equity bank. The primary data collected was analyzed using multiple regression and descriptive data analysis with aid from the Statistical Package for Social Sciences. It was found that the perceived quality of the strategic partnership influences the performance of a small business in a partnership between large and small businesses unlike the level of investment, level of interaction and management ability which were not as significant. These results varied for small businesses in various sectors as businesses in finance, technology and manufacturing showed that none of these factors influenced their performance and those in retailing and services identified perceived quality of the strategic partnership as an influencing factor to their performance when analyzed individually. Finally it was found that the type of business that the small business engages in does not have any relationship with the business it has partnered with the large business, therefore it is important for the small business to carry the two businesses differently and give each the attention it needs so as to benefit from the relationship. The study recommended further studies to be carried out on the impact of this type of partnership as it is still a new concept and a lot of small businesses are joining partnership with large businesses.