Local embeddedness, corporate social capital and Chinese enterprises

Abstract

Purpose The purpose of this study is to examine the impact of corporate social capital and local embeddedness on perceived business performance of Chinese enterprises operating overseas, whose recent growth resulted from the Belt and Road Initiative. Design/methodology/approach This study reports the results of a sample of 83 Shaanxi outward foreign direct investment (FDI) firms operating in Africa, Asia, Australia, Europe and North America. In-depth interviews with a few sampled firms are used to develop the survey questionnaire and help interpret the results of statistical analysis. Findings This study proposes two hypotheses and both are supported by the data. First, corporate social capital is a three-dimensional concept, covering governmental, market and personal sources with each source making an equal, positive effect on perceived overseas performance of the surveyed firms. Second, these firms do better when having developed a higher degree of local embeddedness, a measure on local channels used to obtain information and mobilize resources. While local embeddedness indeed mediates some effect of corporate social capital, both variables have shown direct impact on performance. Research limitations/implications Reported findings are from a small sample of 83 firms in an inland Chinese province, and business performance is measured by subjective evaluation rather than economic output. Practical implications The practical implication is that a Chinese FDI firm is expected to maintain all three relational channels – governmental, market and interpersonal – because the firm can gain different kinds of information and resources from these sources and each channel is necessary and equally important for the firm’s development. Importantly, it needs a different strategy to maintain and best use each channel. For the Belt and Road Initiative to be effective, China must establish platforms through which enterprises can strengthen and reconfigure their corporate social capital, as well as to cultivate and sustain their local networks in foreign destinations.

Case study of sustainable service design in the hospitality industry

“…In summary, the CY-Group integrated local arts and culture into its service concepts, service systems, environmental ambiance and service experiences. Furthermore, the hotel team focused on highlighting the local culture and local embeddedness (Bian et al , 2019). Unique local cultural elements were incorporated throughout the hotel’s service design, shaping customer value constellations using the authentic beauty of the local culture.…”

A Bayesian Network Model of Megaproject Social Responsibility Behavior and Project Performance: From the Perspective of Resource-Based Theory

“…A "horizontal relationship" is a variety of legitimate connections between enterprises and other enterprises, industry associations, research institutes, and so on, such as collaborative relationships, holding relationships, etc. The phrase "social connections" refers to the social interactions and connections of enterprise operators and managers in the non-economic field [65]. According to the degree of the connection's closeness, some scholars also divide social capital into categories based on the perspective of individuals inside and outside the organization or inside and outside the team.…”

Transforming Brand Identity to Hotel Performance: The Moderating Effect of Social Capital

“…Government social capital describes the social ties executives develop with government officials at different levels (Peng & Luo, 2000). As China’s market economy is under the influence of the Communist party-state (Bian et al, 2019), firms also need to cultivate government social capital with government officials to cope with environmental uncertainty and to secure a desirable performance (Luo & Chen, 1997). Among hotels in China through the business lifespan, hotels used a mixture of strong and weak ties in the early start-up stage; applied strong ties in the establishment stage; and only used weak business ties in the final growth stage as strategies for acquiring intangible resources (Hsu et al, 2015).…”