NETWORKING CAPABILITY AND THE FINANCIAL PERFORMANCE OF TECHNOLOGY-BASED FIRMS

Abstract

ABSTRACT Grounding on existing research, this paper provides insights on the interaction effects between networking capability, financial performance and environmental factors in the area of new technology-based business. According to the resource-based view, a firm's organizational resources are focused on its external networking capability, which determines the extent to which a firm sustains its competitive advantage. For firms to be competitive, accumulated resources must be valuable, rare, and difficult to imitate. It is widely known that firms place great emphasis on developing their organizational capabilities. This research investigates the relationships between social capital in networking capaability, and financial performance in Korean's technology-based firm. This study proposed statistical hypotheses and a regression model to study these based on the data sampled from 112 Korean technology-based firm firms, including electronic content and ICT business. By testing three hypotheses, this study finds that environmental dynamism is the negative moderating factor between networking capability and financial performance. It also shows that networking capability has a positive effect on financial performance. Finally, managerial implications are discussed and a brief conclusion is presented. Keywords networking capability; financial performance; environmental dynamism