In developing countries, emerging small and medium enterprises
(SMEs) have been pursuing new opportunities to capture social ties. This kind
of business development helps them to maintain their position in the market.
By analysing data from 120 emerging Iranian SMEs, this research indicates that
relational embeddedness in the form of personal relations, dyadic economic
interactions and dyadic social capital, has a significantly positive impact on
business performance. This study specifically considers the ways in which trust
in both inter-personal and inter-organisational levels, mediates these
relationships. Structural Equation Modelling was used to examine the proposed
model. The model was tested for validity and demonstrated a high degree of
validity. Surprisingly, dyadic economic interactions are shown to have the
weakest impact on emerging SMEs.
