Networking Capability As A Mediating Mechanism of Entrepreneurial Orientation on Msme Business Performance

Abstract

This study aims to examine the effect of entrepreneurial orientation on business performance and to investigate the mediating role of networking capability in the relationship between entrepreneurial orientation and business performance among micro and small enterprises in South Manokwari Regency, West Papua Province. The study employed a quantitative research approach using a survey method. Data were collected from 168 micro and small enterprise owners through structured questionnaires and analyzed using Partial Least Squares Structural Equation Modeling. The findings reveal that entrepreneurial orientation has a positive and significant effect on networking capability and business performance. Networking capability also has a positive and significant effect on business performance. Furthermore, networking capability significantly mediates the relationship between entrepreneurial orientation and business performance. The results indicate that enterprises characterized by higher levels of innovativeness, proactiveness, and risk-taking are more capable of developing strategic business networks, which subsequently enhance business performance. The study demonstrates that entrepreneurial orientation serves as a strategic resource that directly improves business performance while simultaneously strengthening networking capability as an important mechanism for accessing external resources and opportunities. The findings contribute to the entrepreneurship and small business literature by providing empirical evidence on the complementary role of networking capability in explaining how entrepreneurial orientation translates into superior business performance. The study also offers practical implications for enterprise owners and policymakers seeking to strengthen the competitiveness and sustainability of micro and small enterprises in emerging regional economies.