The differential effects of government support, inter-firm collaboration and firm resources on SME performance in a developing economy

Abstract

Purpose Notwithstanding that there has been increasing attention on factors that enhance SME performance in developing economies, there is a dearth of studies explicitly investigating the roles of government support systems and inter-firm collaboration. Drawing on the resource-based view (RBV) of the firm and institutional theories, this study aims to model and examine how government support, inter-firm collaboration and managerial ties affect SME performance and further explores how firm specific resources mediate the relationships. Design/methodology/approach A quantitative research design was used. Data were collected using a structured questionnaire from 438 SMEs operating in Zambia, a developing Sub-Saharan African country. Hierarchical linear regression and SPSS PROCESS macro were used to test the hypotheses. Findings Findings indicate that managerial ties have both a direct and indirect effect, through firm resources, on financial performance. Also, the relationship between inter-firm collaboration and financial performance is fully mediated by firm resources. Surprisingly, results reveal that government support does not have a significant effect on SME financial performance. Practical implications The study has important implications for SME managers and policy makers. It demonstrates that inter-firm collaborations and managerial ties enhance a firm’s financial performance. It also highlights the view that SMEs need to have firm specific resources to transform external resources, accessed from inter-firm relationships, into superior performance. SME policy makers are advised to focus more on policies and support mechanisms that promote inter-firm relationships at firm and managerial levels. Originality/value This study is one of the few studies to empirically show that the differential effects of inter-firm collaboration and managerial ties on SME performance are channeled through firm resources, in an under-researched developing Sub-Saharan African economy context. The study is also one of the few studies to reveal that government support is not significantly related to SME performance. Therefore, it provides valuable insights which could be applied to other developing countries with characteristics similar to Zambia.

Context-specific micro-foundations and successful SME internationalisation in emerging markets: A mixed-method analysis of managerial resources and dynamic capabilities

“…(Mokhtarzadeh, et al, 2020;Jafari-Sadeghi, Dutta, Ferraris, & Del Giudice, 2020;Jafari-Sadeghi, Kimiagari, & Biancone, 2020;Jafari-Sadeghi, Nkongolo-Bakenda, Dana, Anderson, & Biancone, 2020;Sukumar et al, 2020). Managerial resources are precious, difficult to duplicate or be transferred and are seen as an asset for SMEs (Neher & Miles, 2020;Zulu-Chisanga et al, 2020). In this vein, for small enterprises' successful internationalisation, dynamic capabilities build on the wealth of manager's individual abilities to respond to the need for change that can involve the allocation of resources and operations (Easterby-Smith et al, 2009).…”

Collaboration among Small and Medium-Sized Enterprises as Part of Internationalization: A Systematic Review

“…Research shows that the main network resources are access to information and personal references, which can trigger new business opportunities. Furthermore, networks can promote access to a wide variety of resources, from political influence, equipment, reputation (Antoldi et al 2013), capabilities, mutual trust, and emotional support Zulu-Chisanga et al 2020).…”

“…Small and medium-sized enterprises (SMEs) are the backbone of many national economies, since they are part of a very important economic sector on the development agendas of most governments in developed or developing countries (Costa et al 2015;Ale Ebrahim et al 2010;OECD 2019;Thomas et al 2012;Zulu-Chisanga et al 2020). In OECD countries, SMEs account for around 60% of employment and are, in many cities and regions, the main drivers of productivity (OECD 2019).…”

“…In OECD countries, SMEs account for around 60% of employment and are, in many cities and regions, the main drivers of productivity (OECD 2019). SMEs are responsible for creating jobs Waite and Williams 2009), providing consumers with a diversity of innovative products and services, increasing business competitiveness and collaborating for economic growth in developed and developing areas (Havierniková and Mynarzová 2018;Kottaridi and Lioukas 2017;Zulu-Chisanga et al 2020).…”

“…The manager's personal networks and the company's internal network influence its internationalization. The manager's social network relationships ensure important information and knowledge about the new market they wish to explore (Zulu-Chisanga et al 2020;Manolova et al 2010). Besides that, they showed that the performance of networks between companies for internationalization changes over time and that partnerships and connections with other companies formed at the launch of the new company are more successful for their internationalization (Manolova et al 2010).…”