The effects of social capital, mentoring and innovation practices on small business performance : the moderating role of environmental turbulence

This research studies the relationship between social capital, innovative practice, mentoring, and SME performance of manufacturing firms in Punjab, Pakistan. The primary objective is to identify the moderating role of environmental turbulence on the relationship between social capital, innovative practice, mentoring, and SME performance. A theoretical model based on Contingency theory and Resource Based View (RBV) approach to the business performance of SMEs is developed. A survey method is employed, and questionnaires were used to obtain information from the owner/managers of SME in Punjab, Pakistan and cluster sampling is used for sample selection. Therefore, 500 questionnaires are distributed to the owner/managers of a small enterprise and only 340 of them are returned, giving a response rate of 68% percent. However, only 313 useable questionnaires are used for further analysis using the PLS-SEM. The high response rate is achieved due to the survey instrument being personally distributed by the researcher to the owner/managers of SME. The findings revealed that innovative practices and mentoring are positive and significant predictors of SME performance. While study fails to find the relationship between social capital and SME performance. Meanwhile mixed results are found upon investigating the moderating effect of environmental turbulence on the relationships between social capital, innovative practices, mentoring and SME performance. The findings of this study provided significant insights for both managers and researchers to further understand the effects of these variables on SME performance. The study concluded with a discussion of practical, theoretical and methodological contributions, the study limitations and suggestions for future research.