The Role of Entrepreneurial Strategy, Network Ties, Human and Financial Capital in New Venture Performance

Abstract

In the current era of globalization and competitive edge, the survival of newly established ventures has become a big challenge. Numerous studies have been carried out to discover factors that are essential for newly initiated ventures but the results are still fragmented. This study focuses on measuring the effect of entrepreneurial strategy, network ties, human capital and financial capital on new venture performance. A structured questionnaire was used to collect data from 196 registered firms located in the emerging market Pakistan. The results indicate that entrepreneurial strategy, network ties and financial capital have a significant positive effect, while human capital showed an insignificant effect on new venture performance. This research recommends owners and managers of new firms build effective entrepreneurial strategies, expand their networks with external bodies (other firms, government and financial institutions) to acquire useful resources that in turn can spur their performance. Further implications are discussed. Policy makers and responsible authorities are advised to encourage and support new ventures which in turn can contribute to GDP and economic development. Practical implications and suggestions are also discussed.

How Does Financial Literacy Promote Sustainability in SMEs? A Developing Country Perspective

“…Accordingly, it is evident that the poor access to finance of SMEs in the emerging markets contributes to poor performance and to their high failure rate. Hence, our findings are consistent with those of Irwin and Scott [43] and Khan et al [44], who concluded that access to finance was a major barrier to the sustainability of SMEs.…”

“…There is a flourishing strand of research dealing with the financial constraints that SMEs encounter [40][41][42]. Access to finance has been identified as one of the major constraints on the sustainability of SMEs [43,44]. Gambetta et al [45] showed that the underdeveloped financial markets and weak financial instruments in emerging economies led to poor allocation of financial sources among business organizations.…”

Entrepreneurial finance and new venture success ‐ the moderating role of government support

“…In developing markets such as Pakistan, sufficient financial capital and resources configure firms to expand their business operations successfully (Degong, Ullah, Khattak, & Anwar, 2018). A recent study conducted by Khan, Li, Safdar, and Khan (2019) demonstrates that entrepreneurial financial capital significantly and positively contributes to new venture performance. They further suggested that the newly established ventures should focus initially to establish relationships with external financial ties and increase their networks to acquire adequate financial capital for their survival and growth.…”

The role of instrumental guanxi in the relation between entrepreneurs’ social competence and firms’ financial performance: A comparative study

“…Khan et al (2019) collected the data from 196 respondents located in different parts of Pakistan and confirmed the positive impact of entrepreneurial strategies and network ties on venture performance (Khan et al, 2019). Khan et al (2019) further recommended that entrepreneurs should develop effective business strategies and inflate their business network to grasp useful and innovative resources and enhance their FFP. Thus, regarding Chinese (C) and Pakistani (P) entrepreneurs, this study proposes the following:…”

“…Shu et al (2019) conducted a study on 230 China-based firms and concluded that entrepreneurial orientation and strategic renewal with the support of state institutions significantly impacts firm financial and non-financial performance (Shu et al, 2019). Khan et al (2019) collected the data from 196 respondents located in different parts of Pakistan and confirmed the positive impact of entrepreneurial strategies and network ties on venture performance (Khan et al, 2019). Khan et al (2019) further recommended that entrepreneurs should develop effective business strategies and inflate their business network to grasp useful and innovative resources and enhance their FFP.…”