The effect of social capital on firm performance within industrial clusters: Mediating role of organizational learning of clustering SMEs

Abstract

Although the success of industrial clusters largely depends on whether clustering firms can achieve economic performance, there has been less attention on investigating factors and conditions contributing to the performance enhancement for clustering small and medium-sized enterprises (SMEs). Along this vein, we adopt the theories of social capital and organizational learning as those success factors for clustering SMEs. This study thus aims at examining what effect social capital accrued in the relationships among actors within clusters has on firm performance of clustering SMEs and what role organizational learning plays in the linkage between social capital and firm performance. For the empirical analysis, we operationalized the variables and their measures to developed questionnaires through the theoretical reviews on literature. As the sample of 227 clustering SMEs, our collected data was analyzed by hierarchical regression analysis. The results confirmed that a high level of social capital, represented by network, trust, and norm, has positive effect on firm performance of clustering SMEs. We also found that clustering firms presenting high organizational learning, represented by absorptive and transformative capability, achieve better performance than those placing less value on organizational learning. Furthermore the significant relationship between social capital and firm performance is mediated partially through organizational learning. These findings imply not only that the territorial agglomeration of industrial cluster does not guarantee the performance creation of clustering SMEs but that they need to develop social capital among various actors within clusters, facilitating their knowledge diffusion. In order to absorb and transfer the shared knowledge and information into strategic resources, the firms should improve their capability associated with organizational learning. These expand our understanding on the importance of social capital and organizational learning for the performance enhancement of clustering firms. Differentiating from major studies addressing benefits and advantages of industrial cluster, this study based on the perspective of businesses contributes to the literature advancement. Strategic and policy implications are discussed in detail.22Nkc