The Impact of Network Ties on SMEs’ Business Model Innovation and Enterprise Growth: Evidence From China

Abstract

In the context of digitalization, business model innovation has become a key way for enterprises to obtain competitive advantages. However, many small and medium-sized enterprises (SMEs) still do not know how to effectively realize business model innovation. Exploring the factors affecting the realization of business model innovation or the effective path to promote business model innovation in SMEs has become a hot topic of research. Exogenous growth theory points out that network ties have become an important way for SMEs to obtain external resources and promote enterprise growth. However, the existing research ignores the impact of network ties on the SMEs’ business model innovation. Focusing on this theoretical gap, this study constructs a “network ties - business model innovation - enterprise growth” model to explore the influence mechanism of five network ties of SMEs: customer ties, supplier ties, competitor ties, political ties, and knowledge ties on business model innovation and enterprise growth. Based on a questionnaire survey of 234 SMEs in Chengdu, China, the research hypothesis was tested using PLS-SEM and fsQCA. The PLS-SME results show that the customers, suppliers, competitors, and knowledge ties of SMEs have a significant positive effect on business model innovation, and business model innovation has a significant positive effect on enterprise growth. In addition, business model innovation plays a mediating role between supplier ties, competitor ties, knowledge ties, and enterprise growth. The fsQCA results show that three paths lead to high-level business model innovation of SMEs, among which customer ties, supplier ties, competition ties, and knowledge ties are the necessary conditions, and three paths lead to high-level growth of SMEs, among which business model innovation is the most core necessary condition. The conclusion of this study not only enriches the relevant research on social network theory and business model innovation but also provides practical insights for SME managers to use network ties to realize business model innovation and promote enterprise growth.

Keywords

• SMEs
• network ties
• business model innovation
• enterprise growth
• PLS-SEM
• fsQCA