The effects of social capital and organizational innovativeness in different institutional contexts
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The effects of social capital and organizational innovativeness in different institutional contexts Chung-Leung Luk1, Oliver HM Yau1, Leo YM Sin2, Alan CB Tse2, Raymond PM Chow3 and Jenny SY Lee4 1 Department of Marketing, City University of Hong Kong, Hong Kong, PRC; 2Department of Marketing, Chinese University of Hong Kong, Hong Kong, PRC; 3School of Business & Administration, The Open University of Hong Kong, Hong Kong, PRC; 4Department of Management, City University of Hong Kong, Hong Kong, PRC
Correspondence: C-L Luk, Department of Marketing, City University of Hong Kong, Tat Chee Avenue, Kowloon Tong, Hong Kong, PRC. Tel: þ 852 2784 4430; Fax: þ 852 2788 9146; E-mail: [email protected]
Received: 6 February 2006 Revised: 1 August 2007 Accepted: 4 September 2007 Online Publication date: 3 April 2008
Abstract This paper examines how social capital and organizational innovativeness influence business performance through their separate, indirect, or interactive effects, and how these effects differ across the institutional contexts of a transition economy and a market economy. In line with institutional theory, our findings show that the effects of social capital are more extensive and probably more malignant in a transition economy than in a market economy. Furthermore, different types of organizational innovativeness, as corporate culture, can be cultivated by different forms of social capital in different institutional contexts. The implications for institutional theory and social capital theory, and the managerial implications, are discussed. Journal of International Business Studies (2008) 39, 589–612. doi:10.1057/palgrave.jibs.8400373 Keywords: institutional theory; social capital theory; organizational innovativeness; guanxi; mainland China; Hong Kong
INTRODUCTION The effects of social capital and innovativeness on business performance at the organizational level, and how these effects differ across institutional contexts, are important yet relatively unexplored topics. Social capital is grounded in social theory, which emphasizes friendship and mutual obligation (Field, 2003). Organizational innovativeness is grounded in the literature of the marketing concept, which emphasizes market competition and a corporate culture that gives priority to customer satisfaction over the interests of other players (Deshpande, Farley, & Webster, 1993; Hurley & Hult, 1998). Strategies based on innovativeness assume economic rationality, rather than soft, ‘‘irrational’’ assumptions concerning friendship and mutual obligation. The different business philosophies underlying social capital and organizational innovativeness appear to be associated with different institutional contexts, the former being more frequently adopted in transition economies, and the latter in market economies (Peng, 2002, 2003). However, to date there is little research that goes beyond this general assertion. But such a general assertion may be an oversimp
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