STRUCTURAL EQUATION ANALYSIS OF THE INTERACTION BETWEEN INTERNAL CAPABILITIES AND EXTERNAL FACTORS ON THE ACQUISTION OF NETWORK TIES IN START-UP FIRMS IN AUTOMOBILE CLUSTERS IN GHANA

Michael Addai, Bertha Ada Danso, William Gyasi-Mensah

Abstract


Start-up firms promote the technological innovation industry, facilitates the creation of new jobs as well as generating additional wealth in society. Nonetheless, much is not known about these wealth creation business strategies especially the influence of internal capabilities and external factors in acquiring network ties that stimulate value creation. Our study investigated the effects of firm internal capabilities and external environmental factors (political, economic and socio-cultural) on acquisition of strong, medium or weak network ties among start-up firms in automobile clusters. The study mainly used data from 452 automobile start-up firms in automobile clusters in three cities in Ghana. We defined internal capabilities in our study as technological capabilities, entrepreneurial orientation and financial resources invested in the organisation’s innovation drive. We introduced external factors as the influence of the political, economic and socio-cultural factors in the market. Our study confirms the interactive role of internal capabilities and external factors in the acquisition of strong, medium and weak network ties which ultimately influences business performance.

Keywords: entrepreneurial orientation, external factors, technological capabilities, financial capabilities

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