The Role of Entrepreneurial Strategy, Network Ties, Human and Financial Capital in New Venture Performance

Najib Khan,Zia Khan,Shuangjie Li,Muhammad Safdar

doi:10.3390/jrfm12010041

Abstract

In the current era of globalization and competitive edge, the survival of newly established ventures has become a big challenge. Numerous studies have been carried out to discover factors that are essential for newly initiated ventures but the results are still fragmented. This study focuses on measuring the effect of entrepreneurial strategy, network ties, human capital and financial capital on new venture performance. A structured questionnaire was used to collect data from 196 registered firms located in the emerging market Pakistan. The results indicate that entrepreneurial strategy, network ties and financial capital have a significant positive effect, while human capital showed an insignificant effect on new venture performance. This research recommends owners and managers of new firms build effective entrepreneurial strategies, expand their networks with external bodies (other firms, government and financial institutions) to acquire useful resources that in turn can spur their performance. Further implications are discussed. Policy makers and responsible authorities are advised to encourage and support new ventures which in turn can contribute to GDP and economic development. Practical implications and suggestions are also discussed.

Highlights

In today’s turbulent markets, the success of newly established ventures has become a key and challenging question
We used the age of the firms, nature of business and gender of the executive, owners and top managers as control variables to check the impact of financial capital, network ties, human capital and entrepreneurial strategy on new venture performance in Pakistan
Our findings showed that network ties are the most significant factor in the performance of a new venture that must be focused followed by entrepreneurial strategy, financial capital, and human capital

Summary

Introduction

In today’s turbulent markets, the success of newly established ventures has become a key and challenging question. Some of the studies have focused on the factors that may cause the failure of enterprises while others have discussed the success, growth, and performance (e.g., Ahlstrom 2010; Yang et al 2018; Anwar et al 2018a). The growth and success of newly established ventures are relatively low in emerging economies as compared to more developed, often Western ones. Major causes of the failure of new ventures include lack of resources, lack of support, lack of financial capital, environmental uncertainty and weak institutional support (Anwar 2018; Manev et al 2005). The role of certain factors such as entrepreneurial strategy, network ties, human and financial capital in new venture success is rarely debated in emerging economies in South Asia, such as Pakistan

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Results

Discussion

Conclusion