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In order to stay competitive in business and upgrade performance, SMEs need to work in collaboration with others. To do this in today's the so-called a "one village" world it is necessary to create chain that gives value for business through networking. The purpose of this study was to test the impact of networking on the business performance of medium sized enterprises in Addis Ababa The data was collected from 128 samples of respondents identified through stratified random sampling technique and the collected data was analyzed using ordered probit model: which is one of nonlinear models used for analyzing data measured on ordinal scale. The result of this study suggests that networking relationship with different types of supporting institutions and business associations significantly improves the business performance of medium sized enterprises in Addis Ababa.