The Effect of Network Structure on Performance in South Korea SMEs: The Moderating Effects of Absorptive Capacity

Choonghyun Kim and Jaekang Lee
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Choonghyun Kim: Entrepreneurship Center, Yeungnam University, Gyeongsan 38541, Korea
Jaekang Lee: School of Business, Yeungnam University, Gyeongsan 38541, Korea

Sustainability, 2018, vol. 10, issue 9, 1-14

Abstract: This study has analyzed how the network structure (density, centrality) affects the performance (convergence, overall) in Small and Medium-Sized Enterprises (SMEs) with the different business exchange activities. In addition, we conducted a moderating effect of absorptive capacity (ability, motivation). Based on previous literature about the network and absorptive capacity, research hypotheses were developed and tested using a sample of 226 SMEs in South Korea. The results show that network density and centrality have a positive effect on perceived convergence and overall performance. These results are consistent with previous network studies relating to structural characteristics. To raise total performances in firms with different business exchange activities, they need to enhance density and centrality. For example, firms with different business exchange activities and high levels of density and centrality are able to easily obtain various types of information from other members of 7000 firms in Korea. Through this, they can improve performance. We also conducted the moderated regression analysis. The results show that employee ability has a positive moderating effect on the relationship between centrality and the overall performance while employee motivation has a negative moderating effect. The implications and directions for future study along with limitations are presented.

Keywords: network structure; absorptive capacity; convergence and overall performance (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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