Title: How relational embeddedness affects business performance through trust: empirical research on emerging SMEs

Authors: Fatemeh S. Shahmehr; Seyed Mohammad Sadegh Khaksar; Reza Zaefarian; Kambiz Talebi

Addresses: Faculty of Entrepreneurship, University of Tehran, Tehran, Iran ' Department of Management, La Trobe University, Bundoora, Victoria, 3083, Australia ' Faculty of Entrepreneurship, University of Tehran, Tehran, Iran ' Faculty of Entrepreneurship, University of Tehran, Tehran, Iran

Abstract: In developing countries, emerging small and medium enterprises (SMEs) have been pursuing new opportunities to capture social ties. This kind of business development helps them to maintain their position in the market. By analysing data from 120 emerging Iranian SMEs, this research indicates that relational embeddedness in the form of personal relations, dyadic economic interactions and dyadic social capital, has a significantly positive impact on business performance. This study specifically considers the ways in which trust in both inter-personal and inter-organisational levels, mediates these relationships. Structural equation modelling was used to examine the proposed model. The model was tested for validity and demonstrated a high degree of validity. Surprisingly, dyadic economic interactions are shown to have the weakest impact on emerging SMEs.

Keywords: relational embeddedness; small and medium-sized enterprises; emerging SMEs; dyadic ties; structural equation modelling; SEM; business performance trust; social ties; Iran; personal relations; dyadic economic interactions; dyadic social capital.

DOI: 10.1504/IJESB.2015.071320

International Journal of Entrepreneurship and Small Business, 2015 Vol.26 No.1, pp.61 - 77

Received: 24 Sep 2014
Accepted: 11 Jan 2015
Published online: 20 Aug 2015 *

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