Market Competition, Social Network and Firm Performance: An Emerging Economy Test

Abstract

Prior literature shows that social networks from outside have great impact on the firm performance. This study focuses on the impact of social network on firm performance especially from the depth of the social network created by key shareholders. In addition, firms in emerging markets face intensive competition. Therefore, this study also examines the different impacts of key shareholders’ social network on firm performance under different levels of market competition in an emerging market. The empirical results show that the depth of shareholder network has significant positive impact on firm performance. In addition, the results also show that key shareholder network has more positive effect on firm performance under high market competition than that of low market competition.

Keywords: Social capital, Shareholder network, Market competition, Firm performance