The Impact of Social Capital on SME’s Performance with Mediating Role of Entrepreneurial Orientation

Abstract

Purpose: This study is aimed to study the effect of social capital on Small and Medium Enterprises' performance with mediating role of entrepreneurial orientation. Study Design/Methodology/Approach: The data were collected from the owner and manager of SMEs of Rawalpindi and Islamabad regions of Pakistan through a structured questionnaire using a sample size of 320. Hypotheses were checked via Structural Equation modeling. Findings: The result of the current study shows that the three dimensions of social capital i.e., cognitive, relational, and structural capital have a positive effect on entrepreneurial orientation and SME Performance. The results of this study also indicate that entrepreneurial orientation partially mediates the nexus between all the dimensions of social capital and SMEs performance. Originality/Value: The current study is the first to focus on links between social capital and the performance of SMEs operating in the emerging market of Pakistan. This article enhanced the understanding of the role that social capital plays in the entrepreneurial orientation and performance of SMEs.  Implications: The empirical results of this study allow us to suggest a lot of implications for managers of the firms. Firstly, the development of social capital is mandatory for the generation of an entrepreneurial orientation. The instant study suggests that the firm should practice social capital to enhance SMEs performance with the help of entrepreneurial orientation.