The role of individual dimensions of business relationship quality and business customer value in building loyalty in microfinance

This study examines the efects of individual dimensions of business relationship quality (BRQ), namely trust, respect, and reciprocity, on business customer value (BCV) and customer loyalty (CL) in the microfnance industry. In addition, the study investigates the mediation efects of BCV on the relationship between the individual dimensions of BRQ and CL. A survey of 509 microenterprises that borrow money from microfnance institutions (MFIs) in Tanzania was conducted. Structural equation modeling was used to analyze the data. Based on the fndings, it is concluded that BCV is signifcantly impacted by respect and trust. BCV, however, is not signifcantly related to reciprocity. Respect has a positive and signifcant impact on CL, while trust and reciprocity are not signifcantly related to CL. Furthermore, the study concludes that CL is positively and signifcantly impacted by BCV. Regarding the mediation efects, the study concludes that BCV fully mediates the link between trust and CL and partially mediates the link between respect and CL. There is no mediation between reciprocity and CL. The major recommendation of this study is that practitioners and policymakers should establish strategies and policies, respectively, which combine BRQ initiatives such as trust and respect with interventions that increase BCV in order to improve CL. Providing valuable services is difcult if the microentrepreneur is not respected and trusted. CL, in turn, will ensure MFIs' survival and, hence, foster entrepreneurship development.