Firm Performance and Entrepreneurial Network: The Moderating Effect of Resources Factor in a Multiracial Country

The purpose of this study is to examine the relationship between entrepreneurial network and firm performance in the services sector of the Small and Medium Enterprises (SMEs)
in Malaysia. Entrepreneurial network is classified into two components; network structure and networking activities. Firm performance is measured from the perspectives of sales, profitability and overall performance. The main focus of this study is to test the moderating effect of the various types of resources (finance, information, moral support and infrastructure facilities) on the relationship between the entrepreneurial network and firm performance. In addition, the unique multiracial scenario in Malaysia enabled the researcher to further investigate the homogeneity and heterogeneity of network characteristics between the Malay and the Chinese owner-managers. The findings from the study indicated that entrepreneurial network has significantly influenced the firm performance. However, it is limited to certain dimensions of the entrepreneurial networks. On the other hand, the findings also revealed that the moral support resource has significantly moderated the relationship between entrepreneurial network and firm performance. From the analysis on the two ethnic groups that there was a significant difference on entrepreneurial network characteristic (network size of family members, network size of relatives, network size of friends, network size of government agencies and total network size) between Malay and Chinese owner-managers. Besides, the findings of the study also indicated that there was a significant relationship between entrepreneurial network and firm performance among the Chinese owner-managers but it was not significant for the Malay owner-managers. One of the major contributions of this study is that the moral support resource has significantly moderated the relationship between entrepreneurial network and firm performance. Besides, it provides new insights on the unique characteristics of entrepreneurial network among the Malay and Chinese owner-managers in Malaysia.