Perceived price and service quality as mediators between price fairness and perceived value in business banking relationships

Abstract

PurposeThe purpose of this paper is to test perceived price and service quality as mediators between price fairness and perceived value in service encounters between micro-enterprises and their banks.Design/methodology/approachThe study is based on a self-administered and internet-based questionnaire conducted in the banking industry. The sample consists of 381 micro-enterprises in South Africa that employ one or two staff members.FindingsThe findings of this paper provide evidence for both theory and practice that perceived price and service quality influence the relationship between business banking customers’ perception of price fairness and the value of the service offered.Research limitations/implicationsThe measurement and structural properties reported are satisfactory. This paper confirms the hypothesized relationships in the tested research model, and rejects a tested rival model. Limitations are reported, and suggestions for further research are provided.Practical implicationsThis paper offers banking executives guidance in managing the pricing structure of their services, and highlights the value of offering greater transparency with regards to service charges and interest rates.Originality/valueThis paper contributes to insights into the mediating effects of perceived price and service quality between price fairness and perceived value in business relationships between micro-enterprises and their banks.