Abstract
The Small and Medium Enterprise (SME) sector has been identified as an important strategic sector in Sri Lankan economy and it is seen as a driver of change for inclusive economic growth, regional development, employment generation and poverty reduction. Therefore, it is important to enrich the performance of SME sector in Sri Lanka. Among the SMEs in Sri Lanka, Manufacturing sector of SMEs are playing a critical role in creating wealth as it is the sector which employ large number of workforce, but the gradual decline of the annual growth rate of the Sri Lankan manufacturing sector is serious matter of concern raised by policy makers. Although there are many studies relating to entrepreneurial networks and the performance of SMEs, in Sri Lankan context there is an empirical gap. Therefore, the purpose of this study was to test a research model for investigating the impact of entrepreneurial networks on the performance of SMEs in Kurunegala district in Sri Lanka. Hence, this research focuses on critical elements such as Social networks, Professional networks and Inter-organizational networks as independent variables. The survey questionnaire was distributed to a sample of 383 SMEs in Kurunegala district. The stratified random sampling technique was used for the selection of the respondents to the sample and data analysis were done by using regression analysis. The findings proved that all the three variables positively and significantly affect the performance of SMEs. The results of this study guide the SMEs to build more entrepreneurial networks to continue to sustain and grow. It is also suggested to future researchers in the area to conduct more studies expanding the knowledge in entrepreneurial networks.
Highlights
In many researchers it has been proved that the small and medium enterprises find it difficult to achieve their goals by themselves alone
The major purpose of this study is to investigate the impact of entrepreneurial networks on the performance of manufacturing small and medium enterprises in Kurunegala district
Inter-organizational networks need to be maintained with the government institutions, NGOs, banks, and other small business supporting institutes as those networks have the ability to help the Small and Medium Enterprise (SME) in different ways such as providing financial assistance, providing information about new markets and products, and to provide the necessary workshops for small entrepreneurs about the different strategies that can be adopted when running their businesses
Summary
In many researchers it has been proved that the small and medium enterprises find it difficult to achieve their goals by themselves alone. In order to achieve their goals, they need support and resources from other firms Meller and Marfan (1981), Visser (1997), supporting institutions Allesch (1993), Gibb (1993), Gibb and Zoltan (1996), Lim (1994), Sarder et al (1997), and relatives and friends Bridge et al (1998), Birley (1985), Johannisson (1988,). Networks are defined as personal relationships between an entrepreneur and his ‘external parties’ Aldrich and Zimmer (1985), Birley (1985), Johannisson (1986, 1988). These term “external parties” can include individuals or organizations who are not directly hired by the entrepreneur. In that point of view, entrepreneurial networks comprise with four major elements such as parties, resources, tasks and contacts
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