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Dimensional Impact of Social Capital on Financial Performance of SMEs

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  • Ishaq Ahmad Dar
  • Mridula Mishra

Abstract

In emerging economies, small and medium enterprises (SMEs) contribute a sizeable proportion of exports and manufacturing output, and millions of people are provided employment. Entrepreneurs and these small firms are influenced by many contextual factors in their operations. Social capital factors, both formal and informal social networks, are considered influential to their performance. This study uses regression analysis to study the impact of social capital dimensions on financial performance of SMEs. Primary data were collected through survey of SMEs of India. It was found that out of five social capital dimensions only four dimensions, such as complicity, status, social relations and personal relations, positively impact the financial performance of SMEs, whereas one dimension ‘Interlinking and family support’ had no significant impact on financial performance of SMEs. The implications of these findings are discussed.

Suggested Citation

  • Ishaq Ahmad Dar & Mridula Mishra, 2020. "Dimensional Impact of Social Capital on Financial Performance of SMEs," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 29(1), pages 38-52, March.
    • Handle: RePEc:sae:jouent:v:29:y:2020:i:1:p:38-52
    DOI: 10.1177/0971355719893499
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    2. Abedalqader Rababah & Sarfaraz Javed & Azam Malik, 2022. "Is Social Capital a Key Factor to enhance Firm’s Performance via Manager’s Intangible Capabilities?," IIM Kozhikode Society & Management Review, , vol. 11(2), pages 207-221, July.
    3. Amoa-Gyarteng, Karikari & Dhliwayo, Shepherd, 2023. "Capital structure, profitability, and short-term solvency of nascent SMEs in Ghana: An empirical study," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 19(4), pages 83-110.
    4. Abiot Animaw Semegn & Narendra Kumar Bishnoi, 2021. "Analysis of Effect of Microfinance on the Performance of MSEs in Amhara National Regional State, Ethiopia," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 30(1), pages 153-178, March.
    5. Zouhair Boumlik & Badia Oulhadj & Khaddouj Karim, 2021. "The role of social capital in the financial accompaniment of SMEs: A literature review," Post-Print hal-03423083, HAL.
    6. Karikari Amoa-Gyarteng & Shepherd Dhliwayo, 2023. "Capital structure, profitability, and short-term solvency of nascent SMEs in Ghana: An empirical study," Journal of Entrepreneurship, Management and Innovation, Fundacja Upowszechniająca Wiedzę i Naukę "Cognitione", vol. 19(4), pages 83-110.
    7. Rajapakshe, PSK & Gamage, SKN & Prasanna, RPIR & Jayasundara, JMSB & Ekanayake, EMS & Upulwehera, JMHM & Wijerathna, WAID & Abeyrathne, GAKNJ, 2020. "Social Capital, Performance of SMEs, and COVID-19 Pandemic," MPRA Paper 109530, University Library of Munich, Germany, revised 30 Aug 2020.

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