The risk of overvaluing networking on small and medium enterprises performance in Gauteng province, South Africa

Abstract

Background: Several studies have been conducted to investigate the relationship between networking and performance, but unfortunately findings have been inconclusive. Nevertheless, networking has been recognised as a vital element for enhancing competitiveness amongst small and medium enterprises (SMEs).

Aim: The objective of this study was to investigate the influence of different forms of networking, networking activities and the perceived importance of networking on SME performance.

Setting: The study was conducted in South Africa, more specifically on entrepreneurs who have SMEs operating in the Gauteng province.

Methods: This was a quantitative study with a cross-sectional research design on a sample size of 304. Multiple linear regression was employed as the core statistical technique to analyse the primary data.

Results: It was evident that the more value entrepreneurs put on networking, the lesser their businesses performed, as the relationship became negative. However, the more they got involved in networking activities and maintained the relationships, the better their businesses performed. It was interesting to note that social, business and managerial network forms emerged as one form of networking, which we have named business networking. However, the importance and maintenance of networks were very distinct as networks were valued higher than what we saw from the maintenance and participation in networking.

Conclusion: The study does not suggest that networking is irrelevant. However, it argues that this might be reflecting the risk of overvaluing networks. It is evident that networking influences performance of SMEs irrespective of whether it is social, business or managerial.