Academic journal article Journal of Community Positive Practices

Social Capital and Organizational Innovation: The Mediating Effect of Entrepreneurial Orientation

Academic journal article Journal of Community Positive Practices

Social Capital and Organizational Innovation: The Mediating Effect of Entrepreneurial Orientation

Article excerpt

Abstract. The present study aims to investigate the inpact of social capital on organisational innovation by studying the mediating factor of entrepreneurial orientation in auto parts manufacturers. The statistical population of the study includes the executive managers of Iranian auto parts conpanies. The collected data ivas analysed using the partial least squares structural equation modeling (PIS-SEM) method. The Smart PLS 2.0 software was applied for analysing data and path modeling with latent variables. Our findings showed that social capital has a positive, significant inpact on organisational innovation and entrepreneurial orientation among the staff. Entrepreneurial orientation of the staff in turn affects organisational innovation, which confirms the mediating effect of entrepreneurial orientation on the relationship between social capital and organisational innovation. The findings of the study can help managers of auto parts conpanies to improve innovative activities and motivate the staff toward entrepreneurial activities.

Keywords: social capital; organisational innovation; entrepreneurial orientation.

1. Introduction

In today's business environment, organizations need to consider innovation as a key factor in organizational products and processes to survive in highly competitive international markets and changing technologies (Alegre et al., 2006; Baron and Tang, 2011). In addition, numerous scholars believe innovation is the main source for competitive advantage and many have noted that innovation plays an important role in economic development (Agbor, 2008; Chen and Chen, 2009; Gumusluoglu and Ilsev, 2009; Karkalakos, 2013). Different factors can affect innovation; among them social environments (consisting of networks, trust, norms etc.), has attracted the attention of many scholars and is known as social capital altogether (Kaasa, 2009). Social capital as a social phenomenon can lead to creativity, idea generation, facilitation of innovative behaviors, and risk-taking (Coleman, 1998); it is more than a social organization or social value. Social capital improves the output through increasing other efficient resources such as physical and human assets (Chou, 2006). Florida et al. (2002) argue that "in a high social capital society, individuals are more eager to work with each other; their risk-taking capabilities improve and this rich social capital leads to innovative activities among them".

During the past two decades the concept of social capital, beside other concepts such as human capital, physical assets and entrepreneurship, has been used to explain economic development. Beugelsdijk and Schaik (2005) argue that despite widespread use of the terms, some ambiguities and conflicts exist on the concepts related to social capital that could be accounted for by its multivariate, multidimensional characteristics (Doh and Mc Neely, 2011). On the other hand, since the concept of organizational entrepreneurship has been the subject of many management and organization researches, studying mechanisms related to entrepreneurial activities seems essential if we are to improve organizational performance. Entrepreneurial orientation is one of these mechanisms that facilitates the creation or exploration of entrepreneurial opportunities for organizations (Li et al., 2009).

Therefore, social capital is a fundamental concept in understanding creativity, innovation, and creating entrepreneurial behaviors as well as organizational dynamics because it affects and facilitates the processes of creativity, innovation, and team learning (Goyal and Akhilesh, 2007). Reviewing the literature of social capital reveals a lack of studding this concept with regard to organizational factors and entrepreneurial themes, which provides reasons for choosing the present research topic that aims to examine the impact of social capital on organizational innovation by studying the mediating factor of entrepreneurial orientation of organizations. …

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