The Mediating Role of Innovation in the Relationship between Business Networking and Small Firms’ Performance in Nigeria

Abstract

This study examined the mediating role of innovation in the relationship between business networking and the performance of small firms in the Niger Delta region of Nigeria. Four dimensions of business networking (network competence, network capability, volume of networks and strength and content of ties) were explored, while performance was measured with financial (profitability and sales growth) and non–financial (customer retention, and corporate reputation) indicators. A descriptive research design was used for the study, with data collected from a sample of respondents drawn from 389 firms. The regression analysis results showed that network competence, volume of network and strength and content of ties each had significant positive effects on performance, while network capability had a negative impact. The Sobel test indicated that innovation fully mediated the relationship between business networking and small firm performance. The findings reinforce the need for small firms to increase the scope of their networks, while also investing in developing the knowledge and capacity of their managers in soft skills, as these are important for building and managing relationships