Social capital and firm performance: A study on manufacturing and services firms in Vietnam

Abstract

This article investigates the causal connection between social capital (SC), knowledge transfer, innovation and firm performance. Based on existing literature on social capital, we develop a research model showing that three dimensions of social capital, including network ties, trust and shared visions, have positive relationships with company performance via two mediators, namely knowledge transfer and innovation. Using a sample of 153 Vietnamese firms, including one to two respondents from each firm, our study applied structural equation modeling to confirm the hypotheses. The results show that all three dimensions of social capital were positively related to firm performance with knowledge transfer and innovation acting as mediators. Knowledge transfer and the company's innovation were found to have a strong association with each other. Academically, this paper offers an opportunity to investigate social capital in terms of other factors in one specific industry. Practically, our findings motivate firms to focus on improving knowledge transfer on both quantity and quality prospects to boost firm performance.