Founders’ Political Ties and New Venture Performance: The Enabling Role of Absorptive Capacity

Despite a growing body of research on political ties and firm performance, our understanding of the mechanisms through which founders’ political ties affect new venture performance (NVP) in developing markets remains limited. Drawing on resource dependency theory, we examine the mediating role of absorptive capacity (ACAP) in the relationship between founders’ political ties and NVP, and how environmental dynamism moderates this pathway. Using unique survey data from 309 Egyptian new ventures, we find that ACAP mediates the relationship between founders’ political ties and NVP. Moreover, the relationships between founders’ political ties and ACAP are strengthened under higher levels of environmental dynamism. These findings have important implications for research on political ties and entrepreneurship, providing valuable insights into the roles of ACAP and environmental dynamism in the context of new ventures.