Role of Managerial Social Ties in Firm Performance: Lessons from Grain-Milling Firms in Tanzania

Abstract

ABSTRACT This article explores the role of managerial social ties in the performance of grain-milling firms in Tanzania. Specifically, it explores the composition of managerial social ties, investigates the resources embedded in the explored ties, and examines their influence on firm performance. A qualitative study was done based on 22 case studies of grain-milling firms operating in selected commercial cities in Tanzania. The findings reveal the major types of managerial social ties associated with the families, friends and ethnic groups. Interestingly, business ties (competitors, customers and suppliers) were embedded in the top managers’ connections rather than in their firms’ routines and processes. It is also evident that firm performance was greatly influenced by managers’ social ties, particularly with family members, which were beneficial in terms of market expansion, and access to micro-credits and new business ideas. Unlike previous studies, this study amplifies the role of social embeddedness in the development of inter-firm networks. This is because of the dominance of owner-managers in of the business operations hence hard to distinguish between the owner and the firm. The article adds knowledge on the sources of social capital and the kind of resources generated by social ties.