Social ties as dynamic managerial capabilities and SME performance: unraveling the role of industrial boundary conditions

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Purpose As a contribution to the social ties and dynamic capabilities literature, the purpose of this study is to examine the boundary role of the industrial factors (competitive intensity, dependence on suppliers and demand uncertainty) on the relationship between small and medium-sized enterprises (SMEs) social ties (business ties and political ties) and firm performance. Design/methodology/approach Data were collected from 1,077 SME top-level managers in Turkiye. The proposed model is analyzed using partial least squares (PLS) path modeling in SmartPLS 4.0 software. Findings The results elucidate how demand uncertainty serve to moderate the influence exerted by both business and political ties upon the performance of SMEs. However, the moderating effects of competitive intensity and dependence on suppliers, although initially hypothesized, were not found to have a significant impact on the relationships. Practical implications The relevance of social ties of SMEs may depend on the industrial factor. Although both political and business ties are effective on the customer side, these ties may become irrelevant when it comes to competition and supplier relations. In competitive SME settings, where businesses are vying for similar markets, the effectiveness of ties might be questionable. In such cases, SMEs might invest in building in-house capabilities and competencies, rather than relying on their relational networks. Originality/value This study contributes to the understanding of how relational networks, which are considered as dynamic managerial capabilities, impact SMEs performance. It also fills an important gap by testing the boundary role of industrial factors on this relationship. The empirical data is collected from the Turkish context, which is also an original aspect of the study, considering most of the social ties literature has a limited focus on a few contexts. The results also indicate new areas for discussion and exploration, indicating potential avenues for further research.