Examining the Influence of Network Ties on Self-Efficacy and Entrepreneurial Performance in the Informal Sector in Sri Lanka

This study examines how weak and strong network ties of micro-entrepreneurs influence their entrepreneurial self-efficacy, and thereby micro-enterprise performance, in the informal sector of Sri Lanka. Using matched data from 635 micro-entrepreneurs and case officers employed by the government, structural equation modeling is employed to test the hypothesized relationships. In line with social cognitive theory, findings confirm that, whereas weak ties lead to enhanced entrepreneurial self-efficacy, strong ties do not. Furthermore, weak ties predicted micro-enterprise performance through enhancing entrepreneurial self-efficacy. These findings provide new insights into an emerging yet under-researched area.