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Environmental uncertainty, prospector strategy, and new venture performance: the moderating role of network capabilities

  • Lin Song
  • Darline Augustine
  • Jing Yu Yang
Article

Abstract

We examine the network capability of new ventures and its relationship to uncertainty management, engagement in the prospector strategy, and performance outcome in a transition economy. Using data from a survey of 302 new ventures based in China, we find that new ventures respond to a high environmental uncertainty by engaging more in prospector strategy, consequently enhancing the ventures’ performance. Moreover, we find that network capabilities significantly moderate these relationships by not only strengthening the relationship between environmental uncertainty and engagement in the prospector strategy (the E–S relationship) but also by enhancing the relationship between engagement in the prospector strategy and new venture performance (the S–P relationship). Our findings extend the environment, strategy, and performance paradigm from large firms to small new ventures, highlighting the importance of network capabilities in a new venture’s engagement in an innovative strategy and of performance outcomes in a transition economy with a generally high level of environmental uncertainty.

Keywords

Environment-strategy-performance (E-S-P) Network capability Environmental uncertainty Prospector strategy New venture performance Transition economy 

Notes

Acknowledgments

We would like to thank the Chinese National Natural Science Foundation for the generous funding of this project (71072023, 71572208) and the program for New Century Excellent Talents in University, NCET. Also, the three authors made equal contributions to the paper.

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Authors and Affiliations

  1. 1.Central University of Finance and EconomicsBeijingChina
  2. 2.University of Stellenbosch Business SchoolCape TownSouth Africa
  3. 3.University of SydneySydneyAustralia

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