Assessing the Intermediary Role of Relationship Ending Capability and Dark Side Between Network Embeddedness and SMEs’ Innovation Performance

Abstract

A key driver of firm competitive advantage is the firm’s ability to develop along with the everchanging business environment and associated market demands by being innovative. Small and medium-sized enterprises (SMEs), however, often lack adequate resources to develop innovation, so they search for external resources to augment the deficiency of their internal resources. Network embeddedness has many advantages for the firm, but it also has a dark side which has a negative effect on the network relationship. In order to take advantage of a network, firms should cultivate the capability to deal with the dark side of inter-firm relationships. Firstly, this study assesses the effect of network embeddedness on the innovation performance of SMEs. Secondly, the authors investigated the moderating role of this dark side in the relationship between network embeddedness and the innovation performance of SMEs. Finally, the role of relationship ending capability in neutralizing the negative effect of dark side we presented. Empirical analysis was based on 388 SMEs. Various validity and reliability checks were conducted before the presentation of the analysis itself, which was conducted using the ordinary least squares approach in SPSS (v.23). The findings showed the dark side negatively moderated the relationship between network embeddedness and the innovation performance of SMEs. This negative effect is, however, reduced by SMEs with a high relationship ending capability by freeing up firm’s limited resources for more fruitful business relationships.