Moderating effects of political ties on the SMEs firm performance in Malaysia

To be sustained in the new knowledge-based economy, it is essential for the small and medium enterprises (SMEs) entrepreneurs in Malaysia to enhance their network ties, which is one of the aspects that can be improved through formal or informal course. Since the network ties implies an improvement in SME entrepreneurs’ firms’ performances and previous studies also concerning on network ties in the developed countries, it is of both theoretical and contextual importance to conduct further research on these issues in the context of Malaysia, which is identified as a developing economic country. Thus, this study examines the factors that influence the firms’ performances. The study's primary focus assesses the moderatoring effects of political ties in the relationships between business ties, enforcement inefficiency, the government supports towards the SMEs firms’ performances in Malaysia. A quantitative approach in research methodology is employed in this study. The hypothesis testing results gained from 120 questionnaires completed by the SME contractors in Kapit, Sarawak. The study's results present that the business ties and the government supports have positive relationships towards the firms’ performances. This study determines both theoretical and empirical evidence for the crucial roles of these factors in determining the firms’ performances in Malaysia, as well as matches to the earlier research efforts to emphasize on the network ties in the business relationships among the SMEs. This study also contributes to the literature by presenting additional empirical evidence with regard to the impact of political ties on firms’ performance in Malaysia. Furthermore, as the instrument for measuring the firms’ performances employed in this study is established and has already been empirically tested with the SME entrepreneurs in Asian countries such as China, it could be used as a tool to measure the SME firms’ performances in Malaysia. Other than that, the practical contribution of this study may be use as a guideline for entrepreneurs to improve as well as exploit the networking in order to improve firm performance. For government and government agencies, the finding can be used to developing better programmes in the future endeavours of the SMEs entrepreneurial training activities in Malaysia. Besides that, government and policy makers may also utilise this study’s results as a basis to constraint government officials and politicians from developing close ties with business organizations.