Networking and Business Performance of Medium Sized Enterprises in Addis Ababa

Abstract

In order to stay competitive in business and upgrade performance, SMEs need to work in collaboration with others. To do this in today's so-called a "one village" world it is necessary to create a chain that gives value for business through networking. The purpose of this study was to test the impact of networking on the business performance of medium sized enterprises in Addis Ababa. The questionnaire survey method was used in this study to collect data from respondents. The data was collected from 128 samples of respondents identified through the stratified random sampling technique and the data was analyzed by using the ordered probit model. In this study, it the result shows that networking with financial institutions, business associates, and the quality of the relationship in the network positively and significantly related with business performance of medium sized enterprises. In addition to this, the resource acquisition capability of the network was negatively and significantly related with business performance of medium sized enterprises. The result of this study suggests that networking relationship with different types of supporting institutions and business associations significantly improves the business performance of medium sized enterprises in Addis Ababa.