Relational Capital: Strategic Advantage for Small and Medium-Size Enterprises (SMEs) Through Negotiation and Collaboration

Abstract

Collaborative entrepreneurship research suggests that organizations will soon pursue more collaborative relationships throughout a worldwide network of firms, driving a strategy of continuous innovation, specially small-and medium-size firms (SMEs). Tapping into a body of literature that focuses on the importance of human capital in driving long-term success, we merge ideas of collaborative research with a growing body of work on human capital or human resource management in SMEs. Our paper states that it is not the human, per se, that is the real asset but the relationships those humans have that are the most inimitable and important capital. We will discuss how companies use relational capital as the basis for collaborative entrepreneurship. Consistent with our hypotheses, our exploratory study suggests that smaller firms place more value on relational capital than do larger firms. We also have some indication that the key capital that differentiates low vs. high performance, regardless of firm size, is the relational capital aspect. To sum up, relational capital is a fundamental asset for firms, but especially for SMEs, and high performing companies are those that are able to negotiate with others and develop collaborative agreements, thus placing a high value in relational capital.

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