Banking support for entrepreneurial new venturers: Toward greater mutual understanding

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Abstract

Purpose – In light of the current global economic turmoil and ongoing recessionary pressures, the purpose of this paper is to examine the relationship between banks and those seeking to launch and develop entrepreneurial small businesses. The authors aim to explore how the quality of that relationship can impact the level of financial support for start-up and early-stage business ventures. Design/methodology/approach – Currently economic confidence is at a generational low, the financial services sector is in turmoil and relationships and understanding between the banks and the small business sector have become increasingly toxic. On top of this, the nature of relationships between banks and entrepreneurial new venturers are seen to be persistently determined by the interests of banks. This research seeks to provide new insights to how these relationships have and might yet evolve. In light of the exploratory nature of the research, a qualitative research methodology was considered appropriate. Findings – A number of issues were identified that indicate that the relationship between small firms and their banks appears to be very damaged. Of concern to banks was the general antipathy with which they were viewed by the entrepreneurs in the study where the pervasive view was one of general hopelessness and lack of trust and confidence. Participants viewed banks as insensitive and lacking in any empathy around their circumstances as small firms in stressful economic conditions. Research limitations/implications – Given the qualitative nature of this research, based on a small sample of participants it is not intended to be generalizable to a wider population. A number of valuable insights emerge from the research around management challenges that exist at the micro relationship level between banker and entrepreneur. The need for meaningful relationship management by banks with small business clients based on a longer-term perspective, empathetic and specialist knowledge and informed advice emerged as issues within this research, as did the relationship benefit of having greater stability in local branch staffing levels. Practical implications – The research suggests that there are consequences where localised decision making has been largely removed from UK banks' retail branch networks and managers appeared to be disempowered from making local judgments on the financing needs of small firm customers. However, such an environment can create an opportunity for bank managers to choose to engage with small firm clients in a more personal way. Limiting this potential however is the recognition that such an engagement would demand significant disaggregation in banking services, with all the targeted resource implications that would imply. Originality/value – Recent studies have highlighted the need for further research into how banks might provide better support to those within the small firm sector in times of tight credit, particularly given the current turmoil in the world's economy and the on-going impact of the ensuing recession. This research provides a number of new insights to the challenges facing local bank managers in developing and maintaining positive relationships between themselves and entrepreneurial new venturers.
LanguageEnglish
Pages420-433
JournalJournal of Small Business and Enterprise Development
Volume20
Issue number2
DOIs
Publication statusPublished - 2013

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Banking
Small firms
Small business
Managers
Bank relationships
Entrepreneurs
Economics
Confidence
Staffing
Disaggregation
Financial support
Service sector
World economy
Credit
Bankers
Relationship management
Financial services
Small sample
Venture
Business sector

Cite this

@article{642369332dad45d28d17b4ee278abb29,
title = "Banking support for entrepreneurial new venturers: Toward greater mutual understanding",
abstract = "Purpose – In light of the current global economic turmoil and ongoing recessionary pressures, the purpose of this paper is to examine the relationship between banks and those seeking to launch and develop entrepreneurial small businesses. The authors aim to explore how the quality of that relationship can impact the level of financial support for start-up and early-stage business ventures. Design/methodology/approach – Currently economic confidence is at a generational low, the financial services sector is in turmoil and relationships and understanding between the banks and the small business sector have become increasingly toxic. On top of this, the nature of relationships between banks and entrepreneurial new venturers are seen to be persistently determined by the interests of banks. This research seeks to provide new insights to how these relationships have and might yet evolve. In light of the exploratory nature of the research, a qualitative research methodology was considered appropriate. Findings – A number of issues were identified that indicate that the relationship between small firms and their banks appears to be very damaged. Of concern to banks was the general antipathy with which they were viewed by the entrepreneurs in the study where the pervasive view was one of general hopelessness and lack of trust and confidence. Participants viewed banks as insensitive and lacking in any empathy around their circumstances as small firms in stressful economic conditions. Research limitations/implications – Given the qualitative nature of this research, based on a small sample of participants it is not intended to be generalizable to a wider population. A number of valuable insights emerge from the research around management challenges that exist at the micro relationship level between banker and entrepreneur. The need for meaningful relationship management by banks with small business clients based on a longer-term perspective, empathetic and specialist knowledge and informed advice emerged as issues within this research, as did the relationship benefit of having greater stability in local branch staffing levels. Practical implications – The research suggests that there are consequences where localised decision making has been largely removed from UK banks' retail branch networks and managers appeared to be disempowered from making local judgments on the financing needs of small firm customers. However, such an environment can create an opportunity for bank managers to choose to engage with small firm clients in a more personal way. Limiting this potential however is the recognition that such an engagement would demand significant disaggregation in banking services, with all the targeted resource implications that would imply. Originality/value – Recent studies have highlighted the need for further research into how banks might provide better support to those within the small firm sector in times of tight credit, particularly given the current turmoil in the world's economy and the on-going impact of the ensuing recession. This research provides a number of new insights to the challenges facing local bank managers in developing and maintaining positive relationships between themselves and entrepreneurial new venturers.",
author = "Mark Durkin and Pauric McGowan and Carla babb",
note = "Reference text: Berger, A.N. and Black, L.K. (2011), “Bank size, lending technology and small business finance”, Journal of Banking and Finance, Vol. 35 No. 3, pp. 724-736. Berger, A.N. and Schaeck, K. (2011), “Small and medium sized enterprises, bank relationship strength and the use of venture capital”, Journal of Money, Credit and Banking, Vol. 43 Nos 2/3, pp. 461-490. Binks, M. (1991), “Small business and their banks in the year 2000”, in Curran, J. and Blackburn, R.A. (Eds), Paths of Enterprise: The Future of Small Business, Routledge, London. Binks, R.M. and Ennew, C.T. (1994), “Growing firms and credit constraint”, Small Business Economics, Vol. 8 No. 1, pp. 17-25. Butler, P. and Durkin, M. (1995), “Managing expectations in the small business-bank relationship”, Irish Marketing Review, Vol. 8 No. 1, pp. 53-60. Butler, P. and Durkin, M. (1998), “Relationship intermediaries: business advisers in the small firm-bank relationship”, International Journal of Bank Marketing, Vol. 16 No. 1, pp. 32-38. JSBED 20,2 430 Chaston, I. (1994), “Rebuilding small business confidence by identifying and closing service gaps in the bank/SME client relationship”, International Small Business Journal, Vol. 13 No. 1, pp. 54-62. Competition Commission (2002), “The supply of banking services to SMEs”, HM Treasury, available at www.hm-treasury.gov.uk. Cruickshank, D. (2000), Competition in UK Banking: A Report to the Chancellor of the Exchequer, The Stationery Office, London. Deakins, D. and Hussain, G. (1994), “Risk assessment with asymmetric information”, International Journal of Bank Marketing, Vol. 12 No. 1, pp. 24-31. Deakins, D., Whittam, G.T. and Wuper, J. (2010), “SMEs’ access to bank finance in Scotland: an analysis of bank manager decision making”, Venture Capital, Vol. 12 No. 3, pp. 193-209. Dibb, S. and Meadows, M. (2001), “An application of a relationship marketing perspective in retail banking”, The Service Industries Journal, Vol. 21 No. 1, pp. 169-194. Durkin, M. (2007), “On the role of bank staff in customer purchasing online”, Marketing Intelligence & Planning, Vol. 25 No. 1, pp. 82-97. Dwyer, F., Schurr, P. and Oh, S. (1987), “Developing buyer-seller relationships”, Journal of Marketing, Vol. 51, April, pp. 11-27. Ernst & Young (2011), “Financial services: bringing the broader perspective”, available at: www. ey.com/UK/en/Industries/Financial-Services (accessed 9 August 2011). European Commission (1994), Growth, Competitiveness, Employment, White Paper, European Commission, Luxembourg. Finalta (2011), “Small business banking in Europe 2011”, available at: www.finalta.eu/recentpublications/ small-business-banking-2011.asp. Hirschman, E.C. (1986), “Humanistic enquiry in marketing research: philosophy, method and criteria”, Journal of Marketing Research, Vol. 23, August, pp. 237-249. Hogg, G., Laing, A.W. and Winkleman, D. (2003), “The professional service encounter in the age of the internet”, Journal of Services Marketing, Vol. 17 No. 5, pp. 476-494. House of Commons Treasury Committee (2011), “Competition and choice in retail banking”, 9th Report 2010-11, available at: www.publications.parliament.uk/pa/cm201011/cmselect/ cmtreasy/612/612i.pdf Howcroft, B., Durkin, M.G., Armstrong, G. and Emerson, E. (2007), “Small business-bank relationships and the role of internet banking”, The Service Industries Journal, Vol. 27 No. 7, pp. 947-961. Hyz, A. (2011), “Small and medium sized enterprises in Greece – barriers in access to banking services: an empirical investigation”, International Journal of Business and Social Science, Vol. 2 No. 2, pp. 161-165. Ibbotson, P. and Moran, L. (2003), “E-banking and the SME/bank relationship in Northern Ireland”, International Journal of Bank Marketing, Vol. 21 No. 2, pp. 94-103. Irwin, D. and Scott, J.M. (2010), “Barriers faced by SMEs in raising finance”, International Journal of Entrepreneurial Behaviour and Research, Vol. 16 No. 3, pp. 245-259. Kon, Y. and Storey, D. (2003), “A theory of discouraged borrowers”, Small Business Economics, Vol. 21 No. 1, pp. 37-49. Lee, J. (2002), “A key to marketing financial services: the right mix of products, services, channels and customers”, Journal of Services Marketing, Vol. 16 No. 3, pp. 238-258. Lindstrand, A. and Lindbergh, J. (2011), “SMEs’ dependency on banks during international expansion”, International Journal of Bank Marketing, Vol. 29 No. 1, pp. 64-83. Banking support for new venturers 431 McGowan, P. and Durkin, M.G. (2002), “Toward an understanding of internet adoption at the marketing/entrepreneurship interface”, Journal of Marketing Management, Vol. 18, pp. 361-377. McKinsey Quarterly (2003), “Big banking profits from small business”, available at: www. mckinseyquarterly.com/Big_banking_profits_from_small_business_1359 Miles, M.B. and Huberman, M. (1994), Qualitative Data Analysis, Sage Publications, London. Mintzberg, H. (1981), “Organisation design: fashion or fit”, Harvard Business Review, January/February, pp. 103-116. Morgan, R.M. and Hunt, S.D. (1994), “The commitment-trust theory of relationship”, Marketing, The Journal of Marketing, Vol. 58, July, pp. 20-38. Moriarty, R.T., Kimball, R.C. and Gay, J.H. (1983), “The management of corporate banking relationships”, Sloan Management Review, Spring, pp. 3-15. Nutt, P.C. (1989), “Uncertainty and culture in bank loan decisions”, Omega: The International Journal of Management Science, Vol. 17 No. 3, pp. 297-308. Office of Fair Trading (2007), “SME Banking Report”, January, available at: www.oft.gov.uk/ shared_oft/reports/financial_products/oft937.pdf Perrien, J., Filiatrault, P. and Ricard, L. (1996), “The implementation of relationship marketing in commercial banking”, Industrial Marketing Management, Vol. 22, pp. 141-148. Project Merlin (2010), “Data for lending to UK businesses, including ’Project Merlin’ data”, Bank of England, London, available at www.bankofengland.co.uk/publications/Pages/other/ monetary/additionaldata.aspx Saunders, M., Lewis, P. and Thornhill, A. (2009), Research Methods for Business Students, 5th ed., Pearson Education, Harlow. Stiglitz, J.E. and Weiss, A. (1981), “Credit rationing in markets with imperfect information”, The American Economic Review, Vol. 71 No. 3, pp. 393-410. Szmigin, I.T.D. (1993), “Managing quality in business to business services”, European Journal of Marketing, Vol. 27 No. 1, pp. 22-35. Turnbull, P. and Gibbs, M.L. (1987), “Marketing bank services to corporate clients: the importance of relationships”, International Journal of Bank Marketing, Vol. 14 No. 4, pp. 7-19. Tyler, K. and Stanley, E. (1999), “Marketing financial services to businesses: a critical review”, International Journal of Bank Marketing, Vol. 17 No. 3, pp. 98-115. Tyler, K. and Stanley, E. (2001), “Corporate banking: the impact of boundary spanner effectiveness”, International Journal of Bank Marketing, Vol. 19 No. 6, pp. 246-261. Tyler, K. and Stanley, E. (2007), “The role of trust in financial services business relationships”, Journal of Services Marketing, Vol. 21 No. 5, pp. 334-344. Tyler, R. (2011), “RBS admits failing small business relationships”, Daily Telegraph, 31 May. Vickers, J. (2011), “Independent Commission on Banking – final report”, available at http:// bankingcommission.s3.amazonaws.com/wp-content/uploads/2010/07/ICB-Final-Report. pdf Webster, F. (1992), “The changing role of marketing in the corporation”, Journal of Marketing, Vol. 56, October, pp. 1-17. JSBED 20,2 432",
year = "2013",
doi = "10.1108/146260001311326806",
language = "English",
volume = "20",
pages = "420--433",
journal = "Journal of Small Business and Enterprise Development",
issn = "1462-6004",
number = "2",

}

TY - JOUR

T1 - Banking support for entrepreneurial new venturers: Toward greater mutual understanding

AU - Durkin, Mark

AU - McGowan, Pauric

AU - babb, Carla

N1 - Reference text: Berger, A.N. and Black, L.K. (2011), “Bank size, lending technology and small business finance”, Journal of Banking and Finance, Vol. 35 No. 3, pp. 724-736. Berger, A.N. and Schaeck, K. (2011), “Small and medium sized enterprises, bank relationship strength and the use of venture capital”, Journal of Money, Credit and Banking, Vol. 43 Nos 2/3, pp. 461-490. Binks, M. (1991), “Small business and their banks in the year 2000”, in Curran, J. and Blackburn, R.A. (Eds), Paths of Enterprise: The Future of Small Business, Routledge, London. Binks, R.M. and Ennew, C.T. (1994), “Growing firms and credit constraint”, Small Business Economics, Vol. 8 No. 1, pp. 17-25. Butler, P. and Durkin, M. (1995), “Managing expectations in the small business-bank relationship”, Irish Marketing Review, Vol. 8 No. 1, pp. 53-60. Butler, P. and Durkin, M. (1998), “Relationship intermediaries: business advisers in the small firm-bank relationship”, International Journal of Bank Marketing, Vol. 16 No. 1, pp. 32-38. JSBED 20,2 430 Chaston, I. (1994), “Rebuilding small business confidence by identifying and closing service gaps in the bank/SME client relationship”, International Small Business Journal, Vol. 13 No. 1, pp. 54-62. Competition Commission (2002), “The supply of banking services to SMEs”, HM Treasury, available at www.hm-treasury.gov.uk. Cruickshank, D. (2000), Competition in UK Banking: A Report to the Chancellor of the Exchequer, The Stationery Office, London. Deakins, D. and Hussain, G. (1994), “Risk assessment with asymmetric information”, International Journal of Bank Marketing, Vol. 12 No. 1, pp. 24-31. Deakins, D., Whittam, G.T. and Wuper, J. (2010), “SMEs’ access to bank finance in Scotland: an analysis of bank manager decision making”, Venture Capital, Vol. 12 No. 3, pp. 193-209. Dibb, S. and Meadows, M. (2001), “An application of a relationship marketing perspective in retail banking”, The Service Industries Journal, Vol. 21 No. 1, pp. 169-194. Durkin, M. (2007), “On the role of bank staff in customer purchasing online”, Marketing Intelligence & Planning, Vol. 25 No. 1, pp. 82-97. Dwyer, F., Schurr, P. and Oh, S. (1987), “Developing buyer-seller relationships”, Journal of Marketing, Vol. 51, April, pp. 11-27. Ernst & Young (2011), “Financial services: bringing the broader perspective”, available at: www. ey.com/UK/en/Industries/Financial-Services (accessed 9 August 2011). European Commission (1994), Growth, Competitiveness, Employment, White Paper, European Commission, Luxembourg. Finalta (2011), “Small business banking in Europe 2011”, available at: www.finalta.eu/recentpublications/ small-business-banking-2011.asp. Hirschman, E.C. (1986), “Humanistic enquiry in marketing research: philosophy, method and criteria”, Journal of Marketing Research, Vol. 23, August, pp. 237-249. Hogg, G., Laing, A.W. and Winkleman, D. (2003), “The professional service encounter in the age of the internet”, Journal of Services Marketing, Vol. 17 No. 5, pp. 476-494. House of Commons Treasury Committee (2011), “Competition and choice in retail banking”, 9th Report 2010-11, available at: www.publications.parliament.uk/pa/cm201011/cmselect/ cmtreasy/612/612i.pdf Howcroft, B., Durkin, M.G., Armstrong, G. and Emerson, E. (2007), “Small business-bank relationships and the role of internet banking”, The Service Industries Journal, Vol. 27 No. 7, pp. 947-961. Hyz, A. (2011), “Small and medium sized enterprises in Greece – barriers in access to banking services: an empirical investigation”, International Journal of Business and Social Science, Vol. 2 No. 2, pp. 161-165. Ibbotson, P. and Moran, L. (2003), “E-banking and the SME/bank relationship in Northern Ireland”, International Journal of Bank Marketing, Vol. 21 No. 2, pp. 94-103. Irwin, D. and Scott, J.M. (2010), “Barriers faced by SMEs in raising finance”, International Journal of Entrepreneurial Behaviour and Research, Vol. 16 No. 3, pp. 245-259. Kon, Y. and Storey, D. (2003), “A theory of discouraged borrowers”, Small Business Economics, Vol. 21 No. 1, pp. 37-49. Lee, J. (2002), “A key to marketing financial services: the right mix of products, services, channels and customers”, Journal of Services Marketing, Vol. 16 No. 3, pp. 238-258. Lindstrand, A. and Lindbergh, J. (2011), “SMEs’ dependency on banks during international expansion”, International Journal of Bank Marketing, Vol. 29 No. 1, pp. 64-83. Banking support for new venturers 431 McGowan, P. and Durkin, M.G. (2002), “Toward an understanding of internet adoption at the marketing/entrepreneurship interface”, Journal of Marketing Management, Vol. 18, pp. 361-377. McKinsey Quarterly (2003), “Big banking profits from small business”, available at: www. mckinseyquarterly.com/Big_banking_profits_from_small_business_1359 Miles, M.B. and Huberman, M. (1994), Qualitative Data Analysis, Sage Publications, London. Mintzberg, H. (1981), “Organisation design: fashion or fit”, Harvard Business Review, January/February, pp. 103-116. Morgan, R.M. and Hunt, S.D. (1994), “The commitment-trust theory of relationship”, Marketing, The Journal of Marketing, Vol. 58, July, pp. 20-38. Moriarty, R.T., Kimball, R.C. and Gay, J.H. (1983), “The management of corporate banking relationships”, Sloan Management Review, Spring, pp. 3-15. Nutt, P.C. (1989), “Uncertainty and culture in bank loan decisions”, Omega: The International Journal of Management Science, Vol. 17 No. 3, pp. 297-308. Office of Fair Trading (2007), “SME Banking Report”, January, available at: www.oft.gov.uk/ shared_oft/reports/financial_products/oft937.pdf Perrien, J., Filiatrault, P. and Ricard, L. (1996), “The implementation of relationship marketing in commercial banking”, Industrial Marketing Management, Vol. 22, pp. 141-148. Project Merlin (2010), “Data for lending to UK businesses, including ’Project Merlin’ data”, Bank of England, London, available at www.bankofengland.co.uk/publications/Pages/other/ monetary/additionaldata.aspx Saunders, M., Lewis, P. and Thornhill, A. (2009), Research Methods for Business Students, 5th ed., Pearson Education, Harlow. Stiglitz, J.E. and Weiss, A. (1981), “Credit rationing in markets with imperfect information”, The American Economic Review, Vol. 71 No. 3, pp. 393-410. Szmigin, I.T.D. (1993), “Managing quality in business to business services”, European Journal of Marketing, Vol. 27 No. 1, pp. 22-35. Turnbull, P. and Gibbs, M.L. (1987), “Marketing bank services to corporate clients: the importance of relationships”, International Journal of Bank Marketing, Vol. 14 No. 4, pp. 7-19. Tyler, K. and Stanley, E. (1999), “Marketing financial services to businesses: a critical review”, International Journal of Bank Marketing, Vol. 17 No. 3, pp. 98-115. Tyler, K. and Stanley, E. (2001), “Corporate banking: the impact of boundary spanner effectiveness”, International Journal of Bank Marketing, Vol. 19 No. 6, pp. 246-261. Tyler, K. and Stanley, E. (2007), “The role of trust in financial services business relationships”, Journal of Services Marketing, Vol. 21 No. 5, pp. 334-344. Tyler, R. (2011), “RBS admits failing small business relationships”, Daily Telegraph, 31 May. Vickers, J. (2011), “Independent Commission on Banking – final report”, available at http:// bankingcommission.s3.amazonaws.com/wp-content/uploads/2010/07/ICB-Final-Report. pdf Webster, F. (1992), “The changing role of marketing in the corporation”, Journal of Marketing, Vol. 56, October, pp. 1-17. JSBED 20,2 432

PY - 2013

Y1 - 2013

N2 - Purpose – In light of the current global economic turmoil and ongoing recessionary pressures, the purpose of this paper is to examine the relationship between banks and those seeking to launch and develop entrepreneurial small businesses. The authors aim to explore how the quality of that relationship can impact the level of financial support for start-up and early-stage business ventures. Design/methodology/approach – Currently economic confidence is at a generational low, the financial services sector is in turmoil and relationships and understanding between the banks and the small business sector have become increasingly toxic. On top of this, the nature of relationships between banks and entrepreneurial new venturers are seen to be persistently determined by the interests of banks. This research seeks to provide new insights to how these relationships have and might yet evolve. In light of the exploratory nature of the research, a qualitative research methodology was considered appropriate. Findings – A number of issues were identified that indicate that the relationship between small firms and their banks appears to be very damaged. Of concern to banks was the general antipathy with which they were viewed by the entrepreneurs in the study where the pervasive view was one of general hopelessness and lack of trust and confidence. Participants viewed banks as insensitive and lacking in any empathy around their circumstances as small firms in stressful economic conditions. Research limitations/implications – Given the qualitative nature of this research, based on a small sample of participants it is not intended to be generalizable to a wider population. A number of valuable insights emerge from the research around management challenges that exist at the micro relationship level between banker and entrepreneur. The need for meaningful relationship management by banks with small business clients based on a longer-term perspective, empathetic and specialist knowledge and informed advice emerged as issues within this research, as did the relationship benefit of having greater stability in local branch staffing levels. Practical implications – The research suggests that there are consequences where localised decision making has been largely removed from UK banks' retail branch networks and managers appeared to be disempowered from making local judgments on the financing needs of small firm customers. However, such an environment can create an opportunity for bank managers to choose to engage with small firm clients in a more personal way. Limiting this potential however is the recognition that such an engagement would demand significant disaggregation in banking services, with all the targeted resource implications that would imply. Originality/value – Recent studies have highlighted the need for further research into how banks might provide better support to those within the small firm sector in times of tight credit, particularly given the current turmoil in the world's economy and the on-going impact of the ensuing recession. This research provides a number of new insights to the challenges facing local bank managers in developing and maintaining positive relationships between themselves and entrepreneurial new venturers.

AB - Purpose – In light of the current global economic turmoil and ongoing recessionary pressures, the purpose of this paper is to examine the relationship between banks and those seeking to launch and develop entrepreneurial small businesses. The authors aim to explore how the quality of that relationship can impact the level of financial support for start-up and early-stage business ventures. Design/methodology/approach – Currently economic confidence is at a generational low, the financial services sector is in turmoil and relationships and understanding between the banks and the small business sector have become increasingly toxic. On top of this, the nature of relationships between banks and entrepreneurial new venturers are seen to be persistently determined by the interests of banks. This research seeks to provide new insights to how these relationships have and might yet evolve. In light of the exploratory nature of the research, a qualitative research methodology was considered appropriate. Findings – A number of issues were identified that indicate that the relationship between small firms and their banks appears to be very damaged. Of concern to banks was the general antipathy with which they were viewed by the entrepreneurs in the study where the pervasive view was one of general hopelessness and lack of trust and confidence. Participants viewed banks as insensitive and lacking in any empathy around their circumstances as small firms in stressful economic conditions. Research limitations/implications – Given the qualitative nature of this research, based on a small sample of participants it is not intended to be generalizable to a wider population. A number of valuable insights emerge from the research around management challenges that exist at the micro relationship level between banker and entrepreneur. The need for meaningful relationship management by banks with small business clients based on a longer-term perspective, empathetic and specialist knowledge and informed advice emerged as issues within this research, as did the relationship benefit of having greater stability in local branch staffing levels. Practical implications – The research suggests that there are consequences where localised decision making has been largely removed from UK banks' retail branch networks and managers appeared to be disempowered from making local judgments on the financing needs of small firm customers. However, such an environment can create an opportunity for bank managers to choose to engage with small firm clients in a more personal way. Limiting this potential however is the recognition that such an engagement would demand significant disaggregation in banking services, with all the targeted resource implications that would imply. Originality/value – Recent studies have highlighted the need for further research into how banks might provide better support to those within the small firm sector in times of tight credit, particularly given the current turmoil in the world's economy and the on-going impact of the ensuing recession. This research provides a number of new insights to the challenges facing local bank managers in developing and maintaining positive relationships between themselves and entrepreneurial new venturers.

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