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.
Publisher
University of Nairobi