SME brand identity: its components, and performance effects

Purpose The purpose of this paper is to examine the performance effects of brand identity in small- and medium-sized enterprises (SMEs). Design/methodology/approach The authors examine whether brand identity mediates the relationship between brand orientation and brand performance, and further, whether brand performance leads to better financial performance. The authors also study whether these performance effects are moderated by customer type and industry type. Differing from earlier research, this study analyzes brand identity through its constituent components: brand values, brand vision and brand positioning. The data include altogether 721 effective responses from Finnish SMEs. Structural equation modeling is used for testing the research hypotheses. Findings Brand positioning and brand vision have a direct positive effect on brand performance, which in turn, positively affects financial performance. Brand orientation drives the components of brand identity. Importantly, there is variation in some of the relationships between brand orientation, brand values, brand vision and brand positioning across business-to-business firms and business-to-customer firms, and across firms in service industries and in production industries. Research limitations/implications The research is based on a single-country sample. Including additional factors for the model with the potential to moderate the described relationships is also called for. Future research could also consider new potential brand identity components currently not addressed in the paper. Originality/value This paper contributes to the literature by increasing the knowledge of SME branding.