Understanding SME suppliers' response to supply chain finance: a transaction cost economics perspective

Purpose Reverse factoring (RF) is one of the most prevalent supply chain finance (SCF) solutions. This study challenges view that suppliers accept financially attractive reverse offers (RFOs) and reject unattractive ones. Specifically, it focuses on small medium enterprise (SME) how transaction cost economics (TCE) factors affect their decision. Design/methodology/approach The authors eight cases RFOs, interviewing suppliers, buyers financial service providers (FSPs) using several sources private publicly available secondary data. Findings In five out either accepted or rejected Bounded rationality opportunism seem to explain such misalignment, while asset specificity frequency play a minor role in decisions. Research limitations/implications shows need for further investigation linking analytical assessment SCF benefits with qualitative factors. Practical implications SME cannot assume an RFO will benefit them. They must critically evaluate buyers' offers, ideally self-awareness towards abovementioned might For banks, this gives clear insights approach avoid rejection RFOs. Originality/value contribution analyses attractiveness RFOs conjunction factors, including without assuming are suppliers. original relevant both research practice, since extends understanding supplier response thanks consideration TCE