The Mediating Role of Resource Acquisition in the Managerial Ties–Firm Performance Link in the Ethiopian manufacturing sector

Endris Ebrahim Muhamed, Zhou Xiaoyan

Abstract


 

Abstract

Social capital has become a valuable asset for multinational corporations as a result of the need for appropriate resources to compete effectively in global markets. Previous studies have shown the importance of managerial ties in emerging economies, but not in developing economies. The purpose of this study is to investigate the impact of political ties and business ties on MNCs' performance in Ethiopia using a resource dependency approach. Integrating resource dependency theory and the social capital view, we examine the mediating effect of resource acquisition on managerial ties (political and business ties) and firm performance. In this regard, the survey data was gathered using a purposive sampling method based on a list of foreign direct investment projects recognized by the Ethiopian Investment Commission from 1992 to 2019. The hypotheses were also tested using hierarchical regression analysis, and the results were further validated using process macro models. An examination of survey data from 232 multinational corporations in Ethiopia's manufacturing industry, both business and political ties have a positive and significant impact on firm performance. Furthermore, resource acquisition has a positive and significant effect on firm performance. Second, our study found that political and business ties are important determinants of firms' resource acquisition activities. This research implies that top managers' political and business ties have a significant influence on firm performance by facilitating the acquisition of external resources. This means that resource acquisition mediates the relationship between managerial ties and firm performance.

Key words: Social capital, political ties, business ties, resource acquisition, MNC, firm performance


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This work is licensed under a Creative Commons Attribution 4.0 International License.