Does Social Capital Increase Innovation Speed? Empirical Evidence from China

Abstract

Past studies have suggested that social capital is a sustainable competitive advantage that leads to sustainable organizational growth and performance. However, few studies have explored how innovation speed moderates the relationship between social capital and sustainable organizational performance in China where the government plays key roles in promoting sustainable development goals. This paper develops a “social capital-innovation speed-performance” framework to investigate the mechanism of social capital influencing innovation speed, which in turn affects sustainable organizational growth and performance. Based on data collected from 125 Chinese firms, hierarchical moderated regression analyses indicate that structural social capital positively affects sustainable organizational performance but has no significant impact on sustainable innovation speed; relational social capital has no significant impact on sustainable organizational performance and is negatively correlated with innovation speed; cognitive social capital positively correlates with sustainable organizational performance and affects innovation speed, and government ties affect sustainable organizational performance and positively impact innovation speed. The study findings suggest that in China, increasing government ties is the most important social capital in creating sustainable organizational growth and performance. Both cognitive social capital and government ties are conducive to accelerating innovation speed, which gives firms a sustainable competitive advantage to achieve sustainable organizational performance.

Does knowledge management enhance or impede innovation speed?

“…As some research has shown (Langerak and Hultink, 2006;Shan et al, 2016;Zhang et al, 2019), there are both benefits and costs of accelerating innovation speed (Kessler and Bierly, 2002;Zhang et al, 2019). Firms that are the fastest innovators have first-mover benefits that far outweigh the costs of high innovation speeds, which in turn leads to high performance, providing support for the prior studies (Shan et al, 2016;Zhang et al, 2019). But the slowest innovators can reap follower benefits and do not bear the cost of rapid innovation, which also leads to higher performance outcomes.…”

“…For example, Chen et al (2012) found that accelerating the pace of innovation can continuously improve the novelty of products, meet the changing needs of consumers more quickly, improve consumer perception, and gain more consumer favor and loyalty. Zhang et al (2019) indicated that faster innovation speed leads to stronger core capabilities, more opportunities, and better consumer satisfaction. Some research has suggested that rapid innovation also increases the likelihood of establishing industry standards, building brand image, and enhancing the firms' profile and reputation (Song et al, 1999;Lee et al, 2000;Langerak and Hultink, 2006).…”

“…The process can slow down the innovation speed (Voss and Voss, 2013;Acar and Ende, 2016). Chinese innovation teams take significant more time than the American teams to make decisions on what new knowledge are to be used in the current projects (Zhang et al, 2019).…”

“…Empirical research on innovation speed is still relatively limited. Responding to the calls of Chen et al (2010Chen et al ( , 2012, Shan et al (2016), Qin et al (2017), Zhang et al (2019) and Pereira et al (2020), our component-based approach to KM demonstrates that knowledge generation, knowledge dissemination, and knowledge application influence innovation speed and affect firm performance. Our findings add to prior research on the direct effect of KM on firm performance and provide new insights into the KM-performance relationship.…”

“…Innovation speed refers to shortening the time between idea creation and completion of the innovation project (Kessler and Chakrabarti, 1996;Zhang et al, 2019). Many researchers have touted innovation speed as an important factor affecting organizational performance (Kessler and Chakrabarti, 1996;Mansfield, 1988;Chen et al, 2012;Wang and Wang, 2012;Taherparvar et al, 2014;Shan et al, 2016;Swink and Song, 2007;Zhang et al, 2019 Innovation speed affects the quality and cost of products (Shan et al, 2016) and has become a key factor for survival (Brown and Eisenhardt, 1995;Zhang et al, 2019), not just growth, in the face of fierce market competition, rapid changes in customer demand, and shortened technical life cycles (Qin et al, 2017). Prior research also suggests that innovation speed mediates the relationship between social capital and firm performance (Zhang et al, 2019).…”