Networking and new venture’s performance: mediating role of competitive advantage

Abstract

Purpose The purpose of this paper is to investigate the effect of different types of networking, namely, business networking, financial networking and political networking, on the performance of new ventures and the extent to which competitive advantage influences the process. Design/methodology/approach Data were collected through a structured questionnaire using sample size of 319 newly established ventures in Pakistan – an emerging economy. The hypotheses were tested with structural equation modeling by using AMOS 21. Findings Results of the study indicate that business networking, financial networking and political networking significantly and positively contribute to new ventures performance and competitive advantage. Results also show that competitive advantage is a strong mediator between financial networking and new venture performance, as well as between business networking and new venture performance, respectively. However, in case of relationship between political networking and new venture performance, competitive advantage plays only a partial mediating role. Practical implications The study suggests that the owners and managers of new ventures should devote considerable efforts to developing all the three types of networks; in particular these networks are important for newly established ventures operating in emerging markets to access resources and to enhance performance. Originality/value Extensive review of available literature indicates that this is the first paper to assess the impact of networking on new ventures’ performance with a mediating role of competitive advantage. This study contributes to the existing literature through empirical evidence.