From individual social capital to collective social capital: empirical evidence from inter-firm financing trust network

Abstract

The paper proposes two theoretical hypotheses about how collective social capital is constructed based on the operation of individual social capital in Chinese context: the logic of particularist guanxi operations and the logic of social prestige recognition. The two hypotheses are tested by an empirical study about inter-firm networking for financing supports It is found that the former logic, which is strengthened by guanxi proximity including kinship proximity, geographic proximity, and industrial proximity, would make the focal firm restrain its trust relationship within a particular small group, leading the firm to become part of a sectarian small-group trust network; and the latter logic, which is strengthened by classification homogeneity, would encourage the focal firm to trust unspecified business partners, leading firms to become part of a large-scale open trust network. The trust radius of the focal firm has a mediating effect on the relationship between individual social capital and the collective-level structure of inter-firm financing trust network, thus exerting important influence on the construction of collective social capital.