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Social networks and online store performance in emerging economies: the mediating effect of legitimacy

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Abstract

Although it is well established in the literature that social networks affect firm performance, few studies have quantified the effects on online store performance, particularly in the context of emerging economies. Building upon the framework proposed by Hoang and Antoncic (2003), we developed a model to explore the effects of family ties, tie strength, and structural holes on online store performance. Informed by the organization science literature, we incorporated legitimacy as a mediator in our model. Using empirical data collected from 243 online stores operating on Taobao (the largest e-marketplace in China), we found that (1) family ties have a negative effect on online store performance and legitimacy partially mediates this negative effect, (2) tie strength has a positive effect on online store performance and legitimacy fully mediates this positive effect, and (3) structural holes have a positive effect on online store performance and legitimacy partially mediates this positive effect. These insights contribute to a more in-depth understanding of the relationship between social networks and online store performance in emerging economies. Further, this research empirically validated legitimacy’s mediating effect. We conclude the paper with a discussion of theoretical contributions, managerial implications, and future research directions.

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Acknowledgments

The research is supported by the Natural Science Foundation of China (71772117, 71472119), Innovation Program of Shanghai Municipal Education Commission, the Pujiang Talent Plan of Shanghai (15PJC053), the Program for Professor of Special Appointment (Young Eastern Scholar) at Shanghai Institutions of Higher Learning (QD2016015), the Key Project of Philosophy and Social Sciences Research supported by Ministry of Education (15JZD017) and the National Social Science Foundation of China (13AZD015).

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  1. School of Management, Shanghai University, Shangda Road, 200444, Shanghai, People’s Republic of China

    Xiaoyu Yu, Yida Tao, Yi Chen & Pinglei Xu

  2. Department of Information Technology and Decision Sciences, Strome College of Business, Old Dominion University, Norfolk, VA, 23529, USA

    Weiyong Zhang

  3. School of Management, Guilin University of Aerospace Technology, 541004, Guilin, People’s Republic of China

    Pinglei Xu

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Yu, X., Tao, Y., Chen, Y. et al. Social networks and online store performance in emerging economies: the mediating effect of legitimacy. Electron Markets 29, 201–218 (2019). https://doi.org/10.1007/s12525-019-00333-2

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