Nexus between Social Capital and Firm Performance: A Critical Literature Review and Research Agenda
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Date
2019
Authors
Kanini, Kaberia S.
Muathe, Stephen M. A.
Journal Title
Journal ISSN
Volume Title
Publisher
Canadian Center of Science and Education
Abstract
Given the importance of social capital in entrepreneurial success and growth, understanding how it can be
exploited for optimal performance of the venture becomes critical. While the Government of Kenya, in
recognition of the importance of entrepreneurial ventures in driving the economy, has put in both structural and
affirmative measures towards enhancement of social capital and support for entrepreneurs, performance of these
businesses still remains significantly low. The objectives of this study were to discuss the key constructs,
variables and perspectives underlying the conceptualization of social capital and performance, and the arising
controversies. Additionally, the study sought to discuss key methodological issues emerging from existing
empirical studies, highlight critical knowledge gaps emanating from critical review of the literature and suggest a
robust conceptual framework to guide a further study that would address the highlighted knowledge gaps. This
study is anchored on the social capital theory which strongly considers social capital as an essential form of
capital; one that no business can ignore and expect to survive or thrive. Other supporting theories include the
contingency theory, economic theory, anthropological theory and innovation theories. Among the major gaps
identified by this study include methodological gaps; most studies reviewed used descriptive design which is
known to be the weakest in establishing cause and effect relationships. Some of the studies had very small
sample sizes, known to potentially increase errors. Other gaps include contextual gaps; most of the studies
considered established businesses where operations tend to be more standardized and innovation is adequately
funded, unlike the low income areas where resources are often limited. Conceptual gaps were identified among
studies that used direct relationships. For a broader and deeper appreciation of the relationship between social
capital and performance, this study recommends conceptualization of a future study whereby the mediating
effect of innovation and the moderating effect of operating business environment are considered, preferably
within a low income area with less established / informal businesses within the service sector.
Description
Research Article
Keywords
Social Capital, Firm performance, Business operating environment, Innovation, Small and medium enterprises (SMEs)
Citation
International Journal of Business and Management; Vol. 14, No. 8; 2019