Academic journal article Journal of International Business Research

The Contribution of Social Capital into the Activities of Real Estate Companies in Vietnam

Academic journal article Journal of International Business Research

The Contribution of Social Capital into the Activities of Real Estate Companies in Vietnam

Article excerpt


According to the General Statistics Office (2010), real estate is one of the industries of high growth in the economy of Vietnam, but the number of small and medium enterprises account for 88%. This implies that real estate companies in Vietnam lack financial capital while tools for its funding are limited. Therefore, it depends very much on the credit markets. In the context of Vietnam's economy facing inflation from 2009 to 2011, the Government has issued many policies tightening funding channels from customers (Anh, 2010). Meanwhile, the capital mobilization channel in the form of links among market participants has not been paid attention by the Government of Vietnam.

On the other hand, the behavior of real estate companies is driven more by personal relationships between their leaders and government officials concerning access to land. Therefore, understanding of those companies about the role of relationship is distorted. As a result, they have not exploited the relationships optimally and efficiently to serve their business operations.

In this context, current theories of social capital cannot solve the practical problems of establishing a policy framework which helps real estate companies and the Government recognize and measure resources existing in the relations of the company, as well as point out the contribution of social capital into activities of the real estate companies. By doing so, it helps companies identify and plan programs to develop social capital to serve the business activities. Therefore, the objective of this research is to develop a theoretical framework and test the relationship between social capital and the operation of real estate companies in Vietnam. The research findings suggest policies to improve their performance through the efficient use of social capital.


Theories about social capital

Social capital is an intangible resource that exists in relationships. Many researchers such as Coleman (1988, 1990), Putnam (1995, 2000), and Nahapiet and Ghosal (1998) defines social capital as a form of resources which exists in the network of quality relationships (such as trust, sharing, support) among participants. Social capital is studied in many different levels such as nations, communities and businesses.

Studies of social capital in the business referred to each individual aspect of social capital, including the quality of external, internal, and the company's leadership networks, which are summarized as follows:

External social capital:

The study by Jansen et al (2011), Landry et al (2000) refers to external social capital as the quality of relationships between enterprises and other entities in horizontal networks (customers, distributors, suppliers, companies in the same group, consultants, researchers, the competitors in the industry) and vertical networks (governments at all levels and parent companies--subsidiary companies in the same group). These studies have not established scale of relationship quality for each entity in the network, but instead refer to the quality of business relationships with external entities in general. With these scale, it is very hard for enterprises to develop and evaluate external social capital.

Internal social capital

Studies about internal social capital considered mutual relationship between individuals and divisions within the company, such as research of Schenkel and Garrison (2009), Nisbet (2007), Cheng et al (2006). These studies view internal social capital in terms of quality relationships among staff and functions. However, these studies have not developed the scale and assessed impacts of internal social capital to the operating results of the business. Therefore, they have not suggested approaches to measure and use social capital to serve business activities.

Social capital from leaders

Recent studies such as McCallum and O'Connell (2009), Truss and Gill (2009), Pare & et al (2008), Wharton and Brunetto (2009), Cialdini & et al (2001), Tushman and O 'Reilly III (1997) mentioned the social capital of leadership as the quality of networks of leaders such as friendship, reciprocity, power, social recognition, commitment. …

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