Innovation support and small‐firm performance in India: A social capital perspective

Abstract

This article empirically examines the role of network derived innovation support in translating effects of social capital dimensions on firm performance. Comparison is drawn between small firms engaged in strategic (e.g., professional associations) and social (e.g., family, informal relationships) alliances. The study uses multiple regression analysis on a representative sample of 100 small firms in West Bengal, India. Analysis largely supports the hypothesis that social capital provides innovation support to small firms, which consequently translates into improved firm performance. For firms embedded in strategic alliances, results were more pronounced, thus substantiating the advantage for small firms in India to join and activate social capital within strategic networks to overcome the constraints in generating and developing innovativeness. Implications for small firms and professional associations are discussed.

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