Negative and positive effects of social capital on co‐located firms' withholding efforts

Abstract

Purpose -This study aims to demonstrate that the investments in social capital do not always pay off. Although an important function of social capital is its potential for influencing co-located companies' opportunistic behavior, social capital also has a negative side. This study seeks to examine the negative and positive effects of the social capital dimensions on a company's profitability and on the perception that co-located firms free ride and shirk. Design/methodology/approach -By including data from 224 firms in 112 true-paired dyadic relationships, this study provides a unique and valid basis for empirical study within SEM analysis. The ability to link different information sources in the analysis creates a unique data set that controls for the confounding effects of common method biases in the analysis. Findings -Markets with a low degree of collective activity gain less advantage from cognitive social capital, because its primary effect lies in its transparency and ability to detect opportunistic behavior. The effect of relational social capital is more stable because of the positive direct effect on profitability. Structural social capital indicates markets that would benefit from creating private incentives with the intention to transfer collective activities into private payoffs. This reduces the need to follow up the co-localized businesses. Originality/value -This study shows that the dimensions of social capital vary regarding whether they reduce or facilitate the perceived withholding efforts by co-located firms.

Technological catch-up by component suppliers in the Pakistani automotive industry: A four-dimensional analysis

“…Yang et al (2013) discuss ambidexterity by technologically advanced firms in managing the simultaneous tension between knowledge protection and transfer. While free-riding by recipient firms has been noted (for instance Silkoset, 2013), the advantages gained by an LEE firm in terms of catch-up is not guaranteed by passive geographic co-location alone. Hence we perceive a need to examine the orientation of AE investor firms to their LEE suppliers when explaining supplier catch-up.…”

Impact of Information Accessed Through Social Capital on Rational Ability of Owner Manager Small Enterprises in Sri Lanka

“…RSC: The study considers the RSC as assets embedded with strength and quality of relationships. It refers to the kinds of relationships that the actor has developed with each other through a history of interactions [54], [55]. Considering the SEs, the RSC refers to the strength of relationships that SEs have developed with each other and quality of relationship including inter-personal trust and relational norms embedded with the relationships.…”

Effect of Social Capital on Mitigating Transaction Uncertainty of Small Enterprises in Sri Lanka

“…Under flexibility, there is no much need to cover for every possible circumstance in advance since exchange partners adapt to changing circumstances as they occur. Dwyer and Gassenheimer (1992) [53] revealed that flexibility leads channel partners to make more attempts at satisfying each other. This essentially implies that they would behave without opportunism so as to satisfy the trading partner.…”