Social capital, innovativeness and performance of micro and small family businesses in Ghana

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August, 2016
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Notwithstanding the significance of the role of micro and small family businesses (MSFBs) in several economies, they are fragile and highly unstable and could barely survive beyond three years. The failure of MSFBs is therefore very high. The current study therefore seeks to investigate the mediating effect of firm innovativeness in the relationship between the social capital of family businesses and performances of the firms. The quantitative research was therefore carried out through the administration of a structured questionnaire to 278 micro and small family businesses selected through multistage sampling procedure. Confirmatory and exploratory factor analyses were carried out to ensure higher validity and reliability of the study constructs using LISREL (8.5). The causal relationships were between the constructs were also carried out through a hierarchical multiple regression method. The result of the study revealed that both the structural and relational social capital dimensions positively influences the performances of MSFMs. The innovativeness of the small family businesses was also found to positively influence the performances of the MSFBs. The relational and cognitive dimensions of social capital were found to positively influence the innovativeness of the MSFBs. Furthermore, firm innovativeness mediates the relationship between the relational social capital dimension of small family businesses and both their operational and financial performances. Innovativeness was also found to mediate the relationship between the cognitive dimension of social capital and both the operational and financial performances of the firms. Based on these findings, the study recommends the training of managers or CEOs of MSFBs on innovativeness and further creates awareness about social capital asset to MSFBs in Ghana.
A Thesis submitted to the School of Business, Kwame Nkrumah University of Science and Technology, Kumasi in partial fulfillment of the requirements for the award of Master of Business Administration in Strategic Management and Consulting.