a Entreprenuership and innovation, luleå university of technology, luleå, sweden; b Department of management, university of vaasa, vaasa, Finland; c accounting and Control, luleå university of technology, luleå, sweden; d Entrepreneurship and management, hanken school of Economics, helsinki, Finland ABSTRACT Small-and start-up firms in the high-tech industry usually engage in networking to overcome resource, knowledge, and competence constraints in creative, innovation-based competition. Quite often, however, network relationships fail due to lack of network capability (NC), defined as the ability to manage and gain benefits from external relationships. In the present study, we propose and examine an updated five-dimension NC construct and test its effect on innovativeness and performance. Two independent hightech samples of small firms and start-ups support measurement properties of the proposed NC construct and suggest that the oftenoverlooked dimension in NC research of network relationship building is important to include in a complete NC construct. Doing so can help explain organizational innovativeness and effects on the customer, sales, and innovation performance more effectively. As a result, we find support for the proposed NC scale and the importance of network capabilities for small companies and start-ups to remain competitive. Walter, Auer, and Ritter 2006) and as a potent strategy to handle multiple relationships by coordinating, maintaining, complementing, and facilitating internal communication through partner knowledge to secure high performance (Baum, Calabrese, and Silverman 2000;Oliver 2001;Tolstoy and Agndal 2010;Wincent 2008). For more than 20 years, the