Abstract
AbstractIn this study, we investigate the mediating effect of institutional networking on the relationship between perceived corruption and the growth of small and medium-sized enterprises (SMEs). We also examine the moderating impact of financial slack on the relationship between perceived corruption and institutional networking. We test our moderated mediation model using data from 212 SMEs operating in Ghana. The findings from the study show that perceived corruption is positively related to institutional networking and this relationship is amplified when levels of financial slack are greater. The findings also show that institutional networking positively mediates the relationship between perceived corruption and SME growth. Theoretical and practical implications are discussed.
Highlights
Developing nations are often fraught with corruption, which affects both business and society (Barkemeyer et al, 2018; Bryant and Javalgi, 2016; Olken and Pande, 2012)
Drawing on institutional theory and corruption literature, this paper argues that perceived corruption affects firm growth through institutional networking
We put forward a moderated mediation model that examined the relationship between perceived corruption and firm growth
Summary
Developing nations are often fraught with corruption, which affects both business and society (Barkemeyer et al, 2018; Bryant and Javalgi, 2016; Olken and Pande, 2012). The dominant focus of entrepreneurial networking literature has been on personal (e.g. family and friends) and business ties (suppliers and advisors), a small number of studies have examined institutional networks that entrepreneurs develop with government officials to attain critical resources and special privileges (Adomako et al, 2020; Ge et al, 2019; Wang et al, 2018; Zhang et al, 2016; Zhou, 2013) Utilising insights from this literature, we argue that entrepreneurs who perceive the prevalence of corruption in the environments in which they operate will develop ties with government officials (e.g. ministers and regulators) who can help them protect their investments and attain success. Entrepreneurs who perceive corruption in the environments in which they operate, actively engage in actions to protect their investments Such entrepreneurs develop relationships with officials in government, regulatory and financial institutions to mitigate the uncertainties, including opportunistic behaviours by bribee, which enhances firm growth. The final section outlines both the theoretical and practical implications of this study
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