Managerial social capital,strategic orientation,and organizational performance in an emerging economy

This study replicates and extends previous research focusing on China, to a sub‐Saharan African emerging economy environment. Specifically, the study directly replicates the impact of social capital derived from the micro‐managerial networking relationships and ties with top managers at other firms and government officials on macro‐organizational performance using data from Ghana. This study further extends previous work by examining the impact of social capital derived from managerial social networking relationships and ties with community leaders on organizational performance. It examines how the relationship between social capital and organizational performance is contingent on an organization's competitive strategic orientation. The findings suggest that social capital developed from managerial networking and social relationships with top managers at other firms, government officials (political leaders and bureaucratic officials), and community leadership enhance organizational performance. The findings from the contingency analyses reveal some interesting trends. The impact of social capital on organizational performance differs between firms that pursue the different competitive strategies (low‐cost, differentiation, and combination of low‐cost and differentiation) and those who do not pursue those strategies. Copyright © 2007 John Wiley & Sons, Ltd.     

Dynamic capabilities,social capital,and rent appropriation: ties that split pies

Who reaps the fruits of a dynamic capability? We argue that while social capital is essential for the acquisition, integration, and release of resources at the core of a dynamic capability, actors can also use social capital for personal gain. Thus, social capital may be a key to understanding both rent generation and rent appropriation. Even when causal ambiguity obscures individual contributions, they may use their social capital to establish credible claims on the rent. Specifically, employees who occupy structural holes, span organizational boundaries, or who are highly central may be most able to appropriate rent because their social capital grants credibility to their claims. Rent that is appropriated in this way may be unobservable in performance measures that fail to distinguish normal compensation from rent. We contribute by identifying the specific role of social capital in a dynamic capability and linking social capital to rent appropriation patterns. Copyright © 2003 John Wiley & Sons, Ltd.     

Managerial ties,absorptive capacity,and innovation

Managerial ties—the boundary-spanning ties and interpersonal connections of top managers—contribute to a corporation’s innovativeness in emerging economies because of the absence of market supporting institutions, transparent laws, and clear regulations. Moreover, managerial ties are apt to interact with absorptive capacity to facilitate knowledge sharing and innovation. This paper examines the joint influence of managerial ties and absorptive capacity in two communities in China, one characterized by a high level of foreign direct investment (FDI) and the other consisting mainly of local corporations. We find that absorptive capacity moderates the effect of managerial ties on a corporation’s innovativeness. Furthermore, when examining the two communities separately, we find that business ties and university ties have opposite effects.

Building social capital and human capital for internationalization: The role of network ties and knowledge resources

This study examines the inter-relationships between network ties as social capital and knowledge resources as human capital, in the internationalization of law firms. Using a qualitative case study methodology, this study is based on primary data collected from Australian law firms and corporate client organizations, and compares and contrasts the views of lawyers and clients on building social and human capital. Our study finds that the relative importance of strong ties diminishes as professional services globalize and weak ties become viewed as more prominent for successful internationalization. The main findings indicate three different sets of inter-relationships between social and human capital: complementary, supplementary and compensatory. We discuss the complementary and supplementary effects of strong and weak ties and three different types of knowledge resources (technical, market and client-specific knowledge). We also argue that knowledge resources of technical and market knowledge can compensate network ties in the internationalization of firms. Examining social and human capital between law firms and clients provides important theoretical and practical insights into understanding the internationalization of professional service firms.     

A resource‐based perspective on human capital losses,HRM investments,and organizational performance

Reversing the focus on human capital accumulations in the resource‐based literature, the authors examine the issue of human capital losses and organizational performance. They theorize that human capital losses markedly diminish the inimitability of human capital stores initially, but that the negative effects are attenuated as human capital losses increase. They argue further that these effects are more dramatic when human resource management (HRM) investments are substantial. As predicted, Study 1 shows that the human capital losses (voluntary turnover rates)‐workforce performance relationship takes the form of an attenuated negative relationship when HRM investments are high. Study 2 shows stronger curvilinear effects of voluntary turnover rates on financial performance via workforce productivity under these conditions. Implications for resource‐based theory and strategic HRM are addressed.     

Managerial ties,firm resources,and performance of cluster firms

Previous research has documented the relationship among managerial ties, firm resources, and performance in emerging economies such as China. While managerial ties may be embedded in a particular location, some of these ties may be non-location-bound. Therefore, for firms located within one geographically concentrated cluster, how do managerial ties and firm resources affect performance? Using data from 163 firms in two Chinese clusters, we demonstrate that managerial ties and firm resources—independently and in combination—help firms improve market performance. Results support the view that both network-centered strategies (utilizing managerial ties) and market-centered strategies (leveraging firm resources) are critical determinants of firm performance.     

A relationship value perspective of social capital in networks of software SMEs

Utilizing theories on social capital, business networks, social networks and relationship value, we explore the aspects that provide specific value in relationships with different actors in the software industry. The motive for the study is the assumption that some relationships are regarded as more important than others, and companies strive to focus on fewer relationships with greater outcomes. The study is guided by the premise that social capital is a foundation for relationship value, and its identified elements differ among relationships. We take the perspective of software companies and classify their relationships with business partners into three distinctive types according to their function in the value creation process. The findings of our empirical analysis, based on a qualitative case study of eight software SMEs indicate that the aspects of social capital, like the sources of relationship value, vary systematically by the types of relationships. Thus, we are able to provide some theoretical and managerial implications on the management of small- and medium-sized companies.     

Managerial ties, strategic initiatives, and firm performance in Central Asia and the Caucasus

Managerial ties are an area commanding managers’ attention in emerging economies. However, no previous study has drawn on cross-country data to address a crucial question: Are more developed market-supporting institutions associated with less use of managerial ties in emerging economies? Further, to strive for better performance, firms also need to develop market-based strategic initiatives. How do these initiatives impact performance? What role do managerial ties play in the relationship? Addressing these questions, this article extends research on managerial ties in emerging economies to an underexplored region—Central Asia and the Caucasus.     

The direct and indirect effects of core and peripheral social capital on organizational performance

Research summary : In this paper we adopt a core‐periphery approach to specify the direct and indirect effects of social capital on organizational performance. We suggest that social capital deriving from stable task relationships between organizational members has a direct positive effect on organizational performance. Said effect depends, in both strength and functional form, on whether actors involved in stable dyads are located at the core or at the periphery of the organization. We also argue that core and peripheral social capital affect performance indirectly by moderating the organization's ability to leverage its human capital to improve performance. Results from a 48‐year study of the National Basketball Association support our arguments and bear important implications for strategic human resource practices and organizational performance in competitive settings. Managerial summary : Stable work relationships among employees generate trust, more efficient work routines, common understanding and thus higher organizational performance. These benefits depend on the location of such stable relationships in the organization. Relational stability among core organizational members has an immediate, strong impact on performance, an effect that plateaus as stability grows. Stable relationships between core and peripheral members have instead a weaker, yet linear effect on performance. The location of stable relationships is also critical to leverage the talent of core employees, whose contribution to performance is stronger when relational stability is high in the organizational core, yet hindered by stable relations between core and periphery. Such findings provide relevant implications for strategic human resource management, in particular for choices regarding team composition and managing stars. Copyright © 2015 John Wiley & Sons, Ltd.     

The strategic impetus for social network ties: reconstituting broken ceo friendship ties

Research on organization–environment relations has focused primarily on formal linkages between organizations such as board interlock ties as a strategy for managing resource dependence. This study examines whether top corporate executives may maintain more informal ties to executives of other firms in order to manage uncertainty arising from resource dependence. Our point of departure is prior research on boards of directors that has examined whether so‐called ‘broken board ties’ (i.e., ties that are disrupted due to executive turnover) tend to be reconstituted, and whether resource dependence explains the likelihood of reconstitution. These studies have generally provided little evidence that corporate board ties are used to manage resource dependence. We draw from theory and research on social embeddedness and friendship to suggest that, as a strategy for managing dependence, the maintenance of friendship ties between top executives provides benefits that are comparable to the supposed benefits of board cooptation, while imposing fewer constraints on the organization. Our theory leads to the contention that, despite limited prior evidence that resource dependence determines the formation of formal board ties, corporate leaders may nevertheless reconstitute informal (i.e., friendship) ties to leaders of other firms that have the power to constrain their firms' access to needed resources when those ties have been disrupted (e.g., due to turnover of the CEO's friend). We test our hypotheses with a unique dataset that includes survey data from U.S. corporate leaders collected at two points in time, thus permitting an assessment of whether top executives reconstitute broken social ties to leaders of other firms, and whether various sources of resource dependence predict the likelihood of reconstitution. We discuss implications for strategic perspectives on inter‐organizational relations and the sociological literature on embeddedness. Copyright © 2006 John Wiley & Sons, Ltd.     

Social and organizational capital: Building the context for innovation

In the light of the key role intellectual capital has for firms' innovation capability, this paper analyzes the influence of two of their dimensions, organizational capital and social capital, on firms' product innovation, and the moderating role of radicalness. Unlike previous studies, the unit of analysis will not be the firm, but the R&D department. Thus, our research, conducted with a sample of Spanish industrial companies, provides a new insight with interesting results. First, our findings show that social capital favours firms' product innovation, especially under radical innovations. Second, organizational capital has an indirect effect on product innovation through positive influence on social capital. This implies that firms can stimulate communication and interaction among people, and therefore innovative activity, by means of explicit and codified knowledge (organizational capital).     

Managerial ties, control and deregulation: An investigation of business groups entering the deregulated banking industry in Taiwan

This study investigates the determinants of business groups’ entry to the deregulated banking industry in Taiwan, from the perspectives of social capital and agency theory. The principal objective of deregulation is to increase the efficiency of resource utilization by introducing competition. However, the opportunities inherent in deregulation may induce a battle of strengths among interested business groups. Based on secondary data analysis, this study reveals that the managerial ties possessed by key individuals in a business group, and the degree of overlapping investment between the owner-managers, influences the likelihood of whether or not a business group will decide to enter the deregulated banking industry. The results of this study provide a valuable starting point from which to discuss the influence of internal and external personal networks on business strategy during a time of deregulation.

Diversification and diffusion: A social networks and institutional perspective

We examine the diffusion of a major firm strategy, unrelated diversification, among a population of Chinese listed firms during the 1991 to 2002 period. We propose that a firm??s social network can serve as both an information disseminator and a channel of influence in the diffusion of the diversification decision. Further, we investigate how the institutional environment alters the role of a network over time. We find that firms are more likely to diversify into conglomerates if (1) they occupy a central position in the network; (2) they have higher levels of government shareholding; and (3) the firms with which they have network ties diversify. Moreover, as the institutional environment strengthens over time, the influence of a firm??s network partners decreases. Consistent with these results, we contend that diversification is not only a response to economic and agency concerns, but also a function of the social and institutional context in which a firm is embedded.     

Social tie, social capital, and social behavior: Toward an integrative model of informal exchange

What is the unique nature of social capital that differentiates itself from other forms of capital? How should we conceptualize and operationalize social capital? What are the major drivers and outcomes of social capital? To address the three questions, I apply the duality lens—the perspective of regarding each entity as a paradox consisting of two contrasting yet interdependent components—to social capital for an integrative model of informal exchange. The focus of this paper is on the duality relationship between the content variables (social tie, social capital, social behavior along two basic dimensions: trust for tie strength and option for network structure) and the process variables (antecedent, content, process, and consequence) toward a geocentric framework of formal–informal exchange. I intend to make two contributions. First, the conceptualization and operationalization of social capital is developed from the duality lens of formal–informal exchange so as to identify the unique nature of social capital as an informal entity. Second, a holistic, dynamic, and dialectic model of social capital is provided to explore the causal links between various elements related to social capital.     

Promoting innovation through the accumulation of intellectual capital, social capital, and entrepreneurial orientation

This study attempts to explore how a firm's operational mode can reinforce the advantages of intellectual capital on innovation. Specifically, the main purpose of this study is to develop a comprehensive research model to integrate the interrelationships among social capital, entrepreneurial orientation, intellectual capital, and innovation. In addition to identifying the influences of intellectual capital on innovation, this study focuses in particular on the mediating effect of intellectual capital and the moderating effects of social capital and entrepreneurial orientation on innovation, which have largely been neglected in previous literature. The results support the mediating role of intellectual capital and the moderating roles of entrepreneurial orientation and social capital on innovation. Specifically, firms that have higher levels of social capital and entrepreneurial orientation tend to amplify the effects of intellectual capital on innovation.     

How capital structure influences diversification performance: A transaction cost perspective

Extant theories agree that debt should inhibit diversification but predict opposing performance consequences. While agency theory predicts that debt should lead to higher performance for diversifying firms, transaction cost economics (TCE) predicts that more debt will lead to lower performance for firms expanding into new markets. Our empirical tests on a large sample of Japanese firms support TCE by showing that firms accrue higher returns from leveraging their resources and capabilities into new markets when managers are shielded from the rigors of the market governance of debt, particularly bond debt. Furthermore, we find that the detrimental effects of debt are exacerbated for R&D intensive firms and that debt is not necessarily harmful to firms that are either contracting or managing a stable portfolio of markets. Copyright © 2013 John Wiley & Sons, Ltd.     

Understanding salespeople's learning experiences through blogging: A social learning approach

Social media has changed the way many salespeople work and interact with their customers and coworkers. We examined 200 salespeople's blogs using netnography method. Drawing on social learning theory and real salespeople's blogs, we illustrate how and why salespeople can learn by reading and writing blogs. Our findings show that writing and reading blogs can be a helpful learning tool for many salespeople and the findings also suggest that companies should consider using blogging as a sales training tool. Our research contributes to marketing and sales literature two ways. First, our study provides a theoretical foundation for future work on social learning theory and online learning in areas of marketing, sales, and business education. Second, our study confirms the importance and usefulness of netnography method beyond its current usage in marketing and sales management. We conclude our paper with avenues for future research.     

Managerial ties and firm performance in an emerging economy: Tests of the mediating and moderating effects

Although the literature documents the direct effects of managerial ties on firm performance, the empirical results are divergent and inconclusive. To explain these disparities, this study (1) develops and tests a model that establishes the role of external resource acquisition as a salient mediating mechanism through which managers’ business and political ties influence firm performance; and (2) examines the moderating role of environmental turbulence that further explains the impact of managerial ties on resource acquisition (the mediator). Results from a survey of 253 firms in China indicate that resource acquisition plays a partial mediating role in the relationships between the two sub-dimensions of managerial ties and firm performance. Environmental turbulence shows a curvilinear (i.e., inverted U-shaped) moderating effect on the business ties–resource acquisition relationship, whereas it dampens the positive effect of political ties on resource acquisition. Theoretical and managerial implications are discussed.     

Portfolio diversification into the Asia-Pacific capital markets: A currency perspective

This paper examines the potential benefits of international investment in the Asia-Pacific capital markets. Using the viewpoints of U.S., Hong Kong and Japanese investors, the study shows that the returns from international investment within the region are more dependent upon the state of exchange rate changes. For the Hong Kong investors, despite the adopted pegged-rate between the Hong Kong dollar and U.S. dollar, the pattern of exchange returns from investing in the region resembles that of Japan rather than that of the U.S.     

Corporate capital allocation: a behavioral perspective

Previous research on capital investment has identified a tendency in multibusiness firms toward cross‐subsidization from well‐performing to poorly performing divisions, a phenomenon that has previously been attributed to principal‐agent conflicts between headquarters and divisions (Stein, 2003 ). In this paper, we argue that cross‐subsidization reflects a more general tendency toward even allocation over all divisions in multibusiness firms that is driven, at least in part, by the cognitive tendency to naïvely diversify when making investment decisions (Benartzi and Thaler, 2001 ). We observe that this tendency also leads to partition dependence in which capital allocations vary systematically with the divisions and subdivisions into which the firm is organized or over which capital is allocated. Our first study uses archival data to show that firms' internal capital allocations are biased toward equality over the number of business units into which the firm is partitioned. Two further experimental studies of experienced managers examine whether this bias persists when participants are asked to allocate capital to various divisions of a hypothetical firm. This methodology eliminates the possibility of agency conflicts. Nevertheless, allocations varied systematically with the divisional and subdivisional structure of the firm and with a centralized or decentralized capital allocation manner. Copyright © 2011 John Wiley & Sons, Ltd.