The Effect of Social Capital on a Firm’s Performance in Supply Chain Networks
Authors:   Asia-Europe Perspective Association, Leem Byung-Hak 
Published: June 2018

In general, social capital is defined as new intellectual capital created by combination and exchange among firms in structural, relational, and cognitive dimensions. The structural dimension means characteristics and topology of relationships among firms, the relational dimension consists of the quality of network components like trust, norms, and reciprocal obligations, and the cognitive dimension is the sharing of vision, value, and common fate among firms. Understanding social capital as an emerging technological component of Supply Chain Networks (SCN) will be increasingly important in order to enable continued SCN improvement. With the social capital concept, we investigate how these dimensions of supply chain social capital have an effect on firm performance and how the relation between firms moderates the effect using Structural Equation Model (SEM). The result demonstrates that the relational dimension indirectly affects innovation and executive-oriented performance, the structural dimension directly affects both innovation and executive oriented performance, and cognition also affects only innovation-oriented performance. Supply chain social capital provides an opportunity and challenge to supply chain managers in order to improve firm performance. We provide several implications for supply chain managers. First, we relate three dimensions of social capital to three firm performances and highlight the importance of raising and utilizing social capital to improve supply chain performance. In order to improve innovation-oriented performance, such as the business process, new technology adoption, and capability, supply chain managers should pay close attention to the cognitive dimension of social capital. Managers should build up cognitive capital based on relational capital among supply chain partners. It may be made by common events for sharing value and vision together and also by firms’ interacting with supply chain information systems.
Managers also should develop different supply chain social capital according to the supply chain strategy and characteristics with regards to the products within the supply chain network. If a supply chain deals with functional products and takes an efficient supply chain strategy (Fisher, 1997), managers should attempt to make structural capital to improve executive performance.
Second, managers need to separate and manage supply chain performance metrics because the performances are different depending on social capital and the relation. In other words, managers should separate and control performance metrics into innovation-oriented and executive-oriented performance measures through a strong and weak supply chain network in order to improve management performance..
In general, social capital is defined as new intellectual capital created by combination and exchange among firms in structural, relational, and cognitive dimensions. The structural dimension means characteristics and topology of relationships among firms, the relational dimension consists of the quality of network components like trust, norms, and reciprocal obligations, and the cognitive dimension is the sharing of vision, value, and common fate among firms. Understanding social capital as an emerging technological component of Supply Chain Networks (SCN) will be increasingly important in order to enable continued SCN improvement. With the social capital concept, we investigate how these dimensions of supply chain social capital have an effect on firm performance and how the relation between firms moderates the effect using Structural Equation Model (SEM). The result demonstrates that the relational dimension indirectly affects innovation and executive-oriented performance, the structural dimension directly affects both innovation and executive oriented performance, and cognition also affects only innovation-oriented performance.