Investigating the Role of Social Capital in the Factoring Financing Process

Document Type : Research/Original/Regular

Authors

Department of Finance, Islamic Azad University, Tehran, Iran

Abstract

Purpose: Factoring is one of the modern financing instruments that plays a significant role in improving liquidity, reducing risk, and enhancing the financial sustainability of small and medium-sized enterprises. However, the development of this instrument in Iran faces various institutional, informational, and behavioral challenges. This study aims to identify and prioritize the critical dimensions influencing factoring and to propose a new conceptual model called the Factoring Diamond. Method: This research employs an exploratory mixed-methods design, and it was conducted in two qualitative and quantitative phases. In the qualitative phase, data were collected through semi-structured interviews with 15 experts in finance, banking, and entrepreneurship, and 15 critical factors were subsequently identified through thematic analysis. In the quantitative phase, these factors were weighted and prioritized using the Best–Worst Method (BWM). The final analysis led to the development of a five-dimensional model encompassing social, institutional–legal, technological, behavioral–organizational, and economic dimensions. Findings: The results indicated that social capital holds the highest weight among the factors influencing factoring, acting as a central component in financial interactions and information flows. Following social capital, the credit rating system, seller/creditor characteristics, and factor characteristics ranked next in importance. Moreover, legal and technological infrastructure, debtor characteristics, and socio-cultural factors play complementary and intermediary roles. The relatively low weights of jurisprudential and industrial factors suggest that the main obstacles to the development of factoring in Iran are rooted in institutional, informational, and trust-related issues rather than structural or jurisprudential constraints. Conclusion: By introducing the Factoring Diamond model, this study provides a new perspective for analyzing the key dimensions influencing factoring in Iran. In this model, social capital serves as the central pillar linking all other dimensions. Given the lack of comprehensive conceptual models in the field of accounts receivable purchasing, this research fills an important gap in the literature, offering a foundation for enhancing policymaking, trust-building, fintech development, as well as the practical application of financing tools for small and medium-sized enterprises.

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References

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Zarei Matin, H., Mohammadian, B., & Modarresi, S. (2016). Social capital management.
Social Capital Management
Volume 13, Issue 2
July 2026
Pages 117-131

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