Amplifying success in SMEs: Harnessing the joint power of social capital and new product development capability in developing economies

Abstract

This study examines the ongoing debate in scholarly literature regarding the role of firm-specific resources and capabilities – namely, social capital (SC) and new product development capability (NPDC) – in influencing firm performance. Addressing a critical gap, the research explores how small and medium enterprises (SMEs) operating in resource-constrained environments can strategically integrate these assets to enhance performance, particularly under varying levels of environmental dynamism. Drawing on data from 314 SMEs across diverse industries in Ghana, the study employs conditional PROCESS analysis within SPSS 23.0 to test its hypotheses. The findings reveal that the impact of SC and NPDC on firm performance is not merely additive; rather, their combined effect is amplified in highly dynamic environments. This synergistic relationship underscores the importance of aligning SC and NPDC to optimize firm adaptability and competitiveness in volatile settings. Specifically, SC provides access to external knowledge and complementary capabilities, while NPDC enables firms to innovate and meet market demands effectively. These insights have significant implications for SME managers and policymakers. The study advocates for targeted investments in SC and NPDC and the strategic alignment of these resources to navigate environmental uncertainties and sustain competitive advantage. Furthermore, the research enriches the dynamic capabilities view by highlighting the contingent role of environmental dynamism in shaping the relationship between firm-specific resources, capabilities, and performance. These findings contribute to the broader discourse on resource integration and capability deployment within the context of SMEs in emerging economies.