The relationship between social capital and SME business performance -assessing resources as a moderating variable

Abstract

The purpose of this research was to assess the effect of resources gained through networking on the relationship between social capital and small business performance. The research further investigated the various forms of social capital resources that SME businesses tend to have access to due to their social capital and the critical areas of success that influence business performance. Previous research on social network theory underpinned the research; a quantitative study was conducted to test the three hypotheses formulated from the literature review. The hypotheses were focused on testing for correlation between the two constructs and the moderating variable. An online survey was distributed to business owners operating businesses within South Africa using a cross-sectional research method. The survey was not limited to company size, age, or sector. Spearmen's correlation test was conducted on the variables to test the survey results for a statistical relationship. The statistical results indicate a significant and positive correlation between construct one, social capital, and construct two, SME business performance. Similarly, a moderately significant and positive statistical relationship existed between network diversity and size and SME business performance. This study intends to the body of knowledge on academic studies on social capital and improving SME business performance to reduce business failure. Implications for business are detailed in the research report.