| Since their formal conceptualization in 2011, small and micro enterprises(hereinafter referred to as SMEs1) have been growing rapidly in recent years given the highly paid attention by government as well as series of tax exemption polices aiming to support their development. In fact, limited by their intrinsic constrains like scale and capital, SMEs have to exploit blood, occupational, geographical and other informal social relations to benefit their business operations. Consequently, under the high context and Chinese featured perspective, SMEs should be measured under a multiple social relation environment if they are to grow sustainably and to make full use of available resources. However, as indicated by research, the financial relationships tied by social circle are subject to problems of instability, impermanency and poor quality, which if not corrected timely, would seriously impede the survival and development of SMEs. Previous literatures mainly discuss the financing issues of SMEs without taking the interactive relationship between financial relations and financial performance into consideration. In that case, it is of significant value to study the impact of financial relations on financial performance.This paper first summaries and reviews previous literatures on financial relations and financial performance from home and abroad, and then conduct the empirical research under a clear idea and framework on the basis of SEM theory, social network theory and characteristics of SMEs. The author collects relevant data through questionnaires from 128 SMEs due to the absence of sound financial regulations, accounts and difficulty in procuring financial data. To start with, the paper quantizes the financial relations of SMEs into three dimensions of relation duration, strength and quality; whereas the index of financial performance is categorizes as those ‘enjoying relatively good response among the peers’, those ‘witnessing relatively greater sales growth among the peers’, those ‘expanding at a relatively higher pace among the peers’, and those ‘with relatively convenient business process’. All of the above indicators are evaluated according to Likert Scoring Method. Secondly, in order to measure the stability of the data, the paper conducts the reliability analysis targeting to eliminate variables with small loading values, thus ensuring all the variables meet empirical requirements. Thirdly, the paper reaches its conclusion by the construction of SEM model. Empirical result suggests that maintaining sound financial relations has a significant positive influence on SMEs’ financial performance. In the end, the author puts forward recommendations on enhancing financial relations of SMEs in the hope of improving their financial performance from the aspects of establishing new relations and maintaining current relations. |
