In a study published in the Journal of Operations Management, Fox School’s Subodha Kumar and his coauthors examine how investor messaging can strengthen small businesses’ operational resilience, or their ability to maintain essential functions during disruptions. The research focuses on revenue-based lending, where loan repayments are tied to business revenue. Through an eight-week randomized field experiment with a major Asian lending platform, the researchers tested four messaging strategies against neutral-message and no-message comparison groups. Messages emphasizing the ease and convenience of investing increased investment activity, reduced borrower delinquency and shortened repayment periods. Messages encouraging commitment to long-term financial goals produced smaller, statistically weaker improvements, while competitive and cooperative messages showed no significant benefits. Follow-up experiments and borrower interviews suggest that timely, predictable funding creates financial slack, giving businesses readily available cash to cover payroll, supplier payments and inventory replenishment. The findings position investor communication as more than a marketing tactic: messages that reduce perceived complexity can help stabilize the working capital businesses need to absorb short-term financial shocks and continue operating.
From Investor Nudges to SME Operational Resilience: Evidence on Financial Slack in Revenue-Based Lending
