Association between entrepreneurial orientation and the performance of small and medium enterprises in Ghana : the role of network ties

Small and medium enterprises (SMEs) in the informal sector are key in determining economic growth, particularly in low- and middle-income countries. However, data on the moderating effect of network ties on the association between SMEs' entrepreneurial orientation (EO) and performance are limited, particularly in Ghana. Guided by resource-based and network theories, this study examines the moderating role of network ties in the association between EO and firm performance among SMEs in Ghana. Data were obtained from 201 SME owner-managers through face-to-face questionnaire administration. Regressions showed that EO components (proactiveness, innovativeness, risk-taking propensity, and competitive aggressiveness) were significantly associated with the performance of SMEs. Interactions revealed that network ties significantly influenced entrepreneurial orientation and SMEs' performance associations. The network ties of SME owner-managers appeared to be a significant and positive moderator of the EO and SME performance link. Therefore, entrepreneurial orientation and network ties are important managerial resource capabilities needed for business survival in the informal sector. The study used a sample of 201 small and medium enterprises (SMEs) owners and managers to understand the contribution of network relations to the relationship between entrepreneurial orientation (being innovative, taking risk, engaging in competition, being autonomous, and proactive) and the performance of SMEs. We found that being innovative, taking risks, being competitive, and proactive improved SME performance. Social and business relationships established by SME owners and managers are also important in understanding the effect of entrepreneurial orientation on performance of SMEs.