Corporate Social Capital and Firm Performance
48 Pages Posted: 30 Jul 2009 Last revised: 31 Jul 2009
Date Written: July 29, 2009
Traditional corporate social capital formulations have been based on a firm’s positioning within its network of market place alliances. This paper extends this model by incorporating additional firm status attributes into an integrated model for corporate social capital. An empirical study of some 155 firms in the global Information Technology sector was conducted, exploring the linkage between elements of corporate social capital and firm performance. A key contribution of this research is the specificity of the linkages identified between particular aspects of corporate social capital and firm performance. The results find that human capital is the most predictive of firm performance. Beyond human capital, a firm’s market network centrality and financial soundness were significant predictors for at least one firm performance measure. Surprisingly investments in internal capital and R&D were found in some circumstances to detract from a firm’s performance. Interestingly these effects were found to be moderated by financial soundness i.e. the negative effects were largely for firms with poor financial performance.
Keywords: Corporate Social Capital, Human Capital, Internal Capital, Centrality, Financial Soundness
JEL Classification: A13, B41, C81, D20, D40, L10, L63, L86, P13, P40
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