The Moderation Effect of Strategic Intent in the Relationship Between Business Respect, Reciprocity, and Loan Repayment in Microfinance

Abstract

This research investigates the moderation effect of strategic intent in the relationship between business respect, reciprocity, and loan repayment (LR) in microfinance. This study uses social exchange theory to relate business respect, reciprocity, strategic intent, and LR, improving our understanding of the theory in the context of microfinance and its scope of applicability in the business-to-business (B2B) context. Data was collected using a cross-sectional design and structured questionnaires from 603 respondents, and analyzed using the multiple regression analysis technique. Findings reveal that LR is influenced by the business relationship quality dimensions of respect and reciprocity. Strategic intent moderates the relationships between business respect, reciprocity, and LR. The research was conducted in developing nation, Tanzania. Hence, it opens an opportunity for cross-cultural validation in different countries to foster generalizability. By considering reciprocity norms when deciding loan factors such as interest rates and repayment schedules, microfinance institutions (MFIs) could achieve their social goal of improving societal well-being through the financial inclusion of trusted microenterprises that can obtain loans at reasonable rates and on a consistent basis. This study offers MFIs and policymakers helpful guidance on how to boost business respect, reciprocity, strategic intent, and consequently, LR, which is essential for MFI sustainability, poverty reduction, and socio-economic development in general.