Economic Transition, Heterogeneous Social Capital, and Corporate Performance: Empirical Evidence from China

Abstract

A theoretical framework based on information and embeddedness is constructed to analyze the micro structure of the impact of heterogeneous social capital on corporate performance. It is empirically tested based on data collected from a sample of 155 Chinese firms. Results indicate that hierarchical social capital has a positive association with corporate market power but little impact on corporate operational efficiency. Furthermore, social capital can promote operational efficiency but contribute little to corporate market power. There is a complementary structure between the two types of heterogeneous social capital. The embedded inertia of social capital into institutional environment is negatively related with corporate performance. From the perspective of economic transition, firms in developed regions rely far more on hierarchical social capital to acquire market power than firms in developing areas.

Keywords

corporate social capital / economic transition / social capital heterogeneity / embedded strategy

RIGHTS & PERMISSIONS

2014 Higher Education Press and Brill