The role of political connection in access to finance, technology and new ventures success in emerging markets

Abstract

This research examines how top managers/owners of new ventures utilize the political connection to boost their performance and survival in the competitive market. We conceptualized the model having access to finance and technology as mediators between political connection and small and medium enterprises' (SMEs) success. We conducted a survey and gathered empirical evidence from 242 Pakistani SMEs which have started their operation for the last 10 years. The results of the structural equation modeling indicate that political connection significantly contributes to the success of SMEs. The political connection has a significant influence on access to finance while an insignificant influence on access to technology. Access to finance has a significant influence while access to technology has an insignificant influence on the success of SMEs. Moreover, access to finance partially mediates while access to technology does not play the mediating role between the political tie and SMEs' success. Our research recommends top managers/owners of new enterprises to build an auspicious tie with the government and public officials to access valuable resources that are necessary for growth and survival. The government and policymakers need to interact with entrepreneurs and provide necessary resources to ensure their success, growth and performance.