Social Capital and Small and Medium-Sized Enterprises Performance in Ghana: The Moderating Role of Emotional Intelligence

Abstract

Major problems faced by Small and medium sized enterprises (SMEs) all over the world is limited access to business funds, accounting records, human resource management and managing their SMEs productively. Part of the solution to address the aforementioned challenges is inherent in social capital. Social capital provides opportunities for entrepreneurs to use mutual relationships to access financial and other forms of capital without having to provide collateral securities. Despite the numerous benefits associated with mobilising social ties, studies at the firm level and its effect on small business outcomes have not increased as would have been desired. Previous researches have delved into the usage of social relationships in organizations, but less attention has been paid to its effect on SMEs. Limited extant studies on the moderating role of emotional intelligence on the relationship between social capital and firm performance necessitated this study. The main purpose of this research was to examine the extent to which Emotional Intelligence (EI) moderates the relationship between social capital and SMEs performance. More specifically, the research draws on the resource-based view, emotional intelligence and the social capital theory, to examine the social network relationships that can be harnessed to improve SMEs performance. Through extensive literature review, a conceptual framework and empirical results from 717 SMEs, the study employs a confirmatory factor analyses along with hierarchical linear regression to evaluate a proposed model for understanding the relationships among the constructs, as well as examining the moderating effects. The results revealed that social capital has a positive and significant relationship with emotional intelligence. Moreover, the study also showed that emotional intelligence has a positive and significant relationship with SME performance. Lastly, the study found that emotional intelligence enhances the relationship between social capital and SME performance. SME owner/managers are advised to enact policies that encourage the establishment of meaningful social networks and also help employees understand their emotions while creating social capital, as both would help improve the performance of their firms. The theoretical and practical implications of the results are also discussed in the thesis.