The role of storytelling in the branding of SMEs

Abstract

Storytelling presents a promising approach to building a strong brand. While the impact of storytelling on brand perception has been well researched from a consumer perspective, few studies have examined how SME entrepreneurs apply this concept. This study contributes to closing this research gap by exploring the role that brand storytelling plays in small businesses and how it mediates the relationship between brand identity and brand performance. A unique dataset of 217 German SMEs, including 107 effective responses from German start-ups, provided the basis for this study. For data analysis, this study used linear and multiple regressions for hypothesis testing and applied t-tests and one-way ANOVA to explore differences between start-ups and SMEs, as well as other factors like firm age and size. The results showed strong relations between brand storytelling and brand positioning which serves as the bridge between a brand's identity and its perception by customers. This is the first study to explore brand storytelling by distinguishing and empirically validating two dimensions: strategic storytelling (i.e. the brand as a story) and tactical storytelling (i.e. stories about the brand). Additionally, it provides practical implications for SME entrepreneurs on utilizing brand storytelling to enhance SME branding efforts.