Network cooperation and economic performance of SMEs: Direct and mediating impacts of innovation and internationalisation

TLDR: In this article , the authors examined the mediating roles of innovation and internationalisation between network cooperation and firm performance and found that indirect effects produced by customers and Research and Development (R&D) organisations via innovation performance explain a higher proportion of their total effect on the economic performance of SMEs.

Abstract: Small firms’ performance has been recognised as an important topic for researchers dealing with the topics of internationalisation and innovation. Literature has examined the individual influence of network cooperation, innovation and internationalisation on firm performance. However, there is an absence of research to explore the coherent relationship between network linkages, innovation performance, internationalisation performance and its cumulative influence on economic performance. That is, this research examines the mediating roles of innovation and internationalisation between network cooperation and firm performance. Based on the sample of 117 exporting Indian SMEs and using structural equation modelling, the results note that indirect effects produced by customers and Research and Development (R&D) organisations via innovation performance explain a higher proportion of their total effect on the economic performance of SMEs. Conversely, the relationship between three network stakeholders, viz. customers, government agencies and R&D organisations, and economic performance are mediated by the internationalisation performance of SMEs.