A longitudinal analysis of the moderated effects of networking relationships on organizational performance in a sub-Saharan African economy

Abstract

The conventional wisdom from studies in both advanced Western economies and emerging economies indicate that managerial networking relationships matter. This article examines the circumstances under which managerial networking relationships matter by focusing on how the effect of managerial networking relationships on organizational performance is contingent upon certain organizational and environmental characteristics. The development and utilization of managerial networking relationships with external entities is broadened to include those with top managers of other firms, political leaders, government bureaucratic officials, and community leaders. Using data from 106 organizations in Ghana over two time periods, the findings show that only managerial social networking relationships with top managers of other firms, government bureaucratic officials, and community leaders enhance organizational performance. Moreover, the effect of networking relationships on performance is contingent on organizational as well as environmental characteristics. The findings of the moderating analyses clearly indicate that firms in Ghana should not establish networking relationships with external entities without considering the characteristics of their organizations and the environment.

Bringing Africa In: Promising Directions for Management Research

“…Social capital and the extent to which managerial networking relationships with external entities such as government bureaucrats and community leaders matter to organizational performance have been given significant attention in African scholarship (Acquaah & Eshun, 2010). Diffusion of management practices across cultures is also a dominant subtheme.…”

Risk-taking Propensity, Managerial Network Ties and Firm Performance in an Emerging Economy

“…Additionally, although it has been suggested that the value of social capital is contingent on the risk-taking (as part of entrepreneurial orientation literature)-performance relationship (Boso et al, 2013), there is no comprehensive investigation into how social capital is contingent on individuals' risk-taking propensity-firm performance linkage. Social networking and ties are important in developing country settings because of the presence of strong collectivistic cultures (Acquaah, 2007;Acquaah and Eshun, 2010). Yet, there have been few scholarly studies testing the effects of social capital developed from entrepreneurial networking and social ties on the value of social network ties on the association between individual's risk-taking propensity and firm performance in less developed market settings.…”

“…Political ties, often portrays personal links with government agencies and officials (Acquaah, 2007) and are seen as an important social resources for firms operating in less developed market environment where formal institutional constraints remain relatively weak and business people often rely on connections with those in power to achieve their business objectives (Luo, 2003;Acquaah and Eshun, 2010). Entrepreneurs in less developed market economies benefits from preferential access to valuable market information controlled by governments, fewer bureaucratic delays, both monetary and non-monetary incentives such as getting tax reductions and obtaining land, and licenses when they associate themselves with political authorities and agencies (Child and Tse, 2001;Park and Luo, 2001).…”

“…Indeed, Acquaah and Eshun (2010) contended that it is not what entrepreneurs know alone that affect a firm's performance, but also who entrepreneurs know play a critical role in firm performance.…”

“…In a less developed market economy such as Ghana, government officials and agencies play a significant role in regulating business activities and providing resources and opportunities for firms. Firms therefore depend heavily on governments for valuable resources and favourable regulations (Acquaah and Eshun, 2010). In Ghana, politicians and government officials still have considerable power and control over the allocation of resources and politicians have control over most financial institutions and the awarding of major contracts, while bureaucratic officials control the regulatory and licensing procedures.…”