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Customers hold small businesses to a higher standard than their bigger counterparts when it comes to being friendly and helpful, a University of Toronto study has found.

The research, , looked at how a company’s size not only affects consumer expectations, but how customers react differently to bad behaviour by small and large businesses.

“It feels very wrong when a small business mistreats us because we expect them to be warmer and friendlier,” says co-author Pankaj Aggarwal, a marketing professor in ����TV Scarborough’s department of management and at the Rotman School of Management.

“On the other hand, we don’t expect larger companies to be particularly warm or friendly, so when they fail to be nice it doesn’t come as a big surprise.” 

Across five studies, Aggarwal and co-author Linyun Yang, an assistant professor at the Darla School of Business at the University of South Carolina, found perceptions of size affect consumer expectations for behaviours that are described as communal – meaning more friendly, caring, honest and helpful. By contrast, perceived size did not determine whether customers expect a company to be efficient, effective or organized.

Pankaj Aggarwal is a marketing professor in ����TV Scarborough’s department of management and at the Rotman School of Management (photo by Ken Jones)

Aggarwal says customers’ differing perceptions likely stem from our expectations about power. For instance, we expect a CEO to behave in a certain way compared to someone in an entry-level position. In the same way that power based on employee status, socio-economic standing and gender shapes people’s expectations, Aggarwal says power based on size can shape expectations for small and large companies.  

“We often romanticize small businesses,” says Aggarwal, whose past research looked at brand anthropomorphism, the idea that we often give human traits to companies and products.

“We are drawn to them because they are unique, offer locally made items or create an authentic experience. But because they lack relative power in the marketplace, they have to be nicer to their suppliers, their vendors and, most importantly, their customers.”

Aggarwal and Yang stressed that it is the perception of size, and not absolute size, that really drives customer expectations.

For example, in one study they compared Yelp data from Peet’s Coffee in Boston, where there are only six locations, and in San Francisco, where there are 26 stores. If the reviews mentioned behaviour that was low on warmth and friendliness, the researchers found that average Yelp ratings dropped nearly one star in Boston, where the retailer was perceived as a smaller brand. 

“This means companies may have more control over customer expectations than previously thought,” says Aggarwal.

“If a company is perceived as lacking warmth or friendliness, for example, it could pre-empt the criticism by positioning itself as a larger company.”

Meanwhile, many large companies intentionally brand themselves as being smaller than they actually are. Aggarwal says that, while this can help with their image as being warm and friendly, it also means they may suffer more when they fail to live up to expectations.

By the same token, large companies who present themselves as such may have a previously unrecognized advantage: the ability to be less warm and friendly without incurring extra punishment relative to their smaller competitors when they disappoint customers.

“Customers may perceive a company like Amazon as less warm and friendly than a smaller competitor,” Aggarwal says, “and they may punish Amazon less when it engages in that behaviour.” 

The research received support from the Social Sciences and Humanities Research Council.