The Effects of Customer Relationships and Social Capital on Firm Performance: A Chinese Business Illustration

Abstract

The authors use the resource-based view of the firm to frame the direct, relative, and synergistic effects of three firm relational resources (i.e., customer relationships, business-partner social capital, and governing-agency social capital) on firm performance (strategic and financial) in a sample of 262 businesses that operate in metropolitan Chinese cities. Although the findings indicate that all three relational resources enhance performance, they also indicate that customer relationships are the primary drivers of strategic and financial performance and that business partnerships and governing-agency social capital have a synergistic influence. In addition, the results indicate that the influences of these resources are moderated by domestic or international firm ownership. The authors discuss the implications for academics and practitioners.In today's business environment, relational resources, such as customer relationships (Bendapudi and Berry 1997; Srivastava, Fahey, and Christensen 2001) and social capital (i.e., an intangible asset that is created through social relations that can be leveraged to facilitate action and achieve and sustain a competitive advantage) with business partners and governing agencies (Gulati and Gargiulo 1999;Oliver 1990;Peng and Luo 2000), are viewed as strategic resources. However, despite the growing empirical and theoretical research on customer relationships and social capital, significant gaps appear in the literature. First, whereas researchers have identified customer relationships and social capital as important firm relational resources, scholars have not explored their influences relative to one another, most notably because of their development in divergent research streams. The lack of a relative perspective is a noteworthy limitation, given that differences in performance effects could have substantial theoretical and managerial implications. Because the developments of customer relationships and social capital are costly strategic initiatives, understanding the relative influence of each provides firms with greater strategic direction. Second, researchers have yet to explore the synergistic effects of social capital resources. As such, it is unclear whether the effects of business-partner and governingagency social capital are most effective when developed individually or jointly. Third, little is known about the moderating influence of firm-ownership structure (i.e., domestic

Managerial Ties, Market Orientation, and Export Performance: Chinese Firms Experience

“…Additionally, while many note the positive effect of MT, scholars also suggest that, contingent on conditions, the effect of these ties may not be readily straightforward (e.g., Luo, Griffith, Liu, & Shi, 2004;Park & Luo, 2001;Peng & Luo, 2000).…”

The moderating effect of supply chain role on the relationship between social capital and performance

“…The relational dimension was measured by commitment (Heide and Miner, 1992;Krause et al, 2007;Koufteros et al, 2007;Avery, 2010), socialisation (Gupta and Govindarajan, 2000;Cousins et al, 2006;Avery, 2010), trust (Coleman, 1988;Nahapiet and Ghoshal, 1998;Tsai and Ghoshal, 1998;Putnam, 2000;Inkpen and Tsang, 2005;McEvily and Marcus, 2005;Liu et al, 2009;Avery, 2010), and reciprocity (Nahapiet and Ghoshal, 1998;Coleman, 1988;Krause et al, 2007;Lawson et al, 2008;Avery, 2010). The structural dimension was measured from Chief Executive Officer's (CEOs) network of firms in the supply chain (Nahapiet and Ghosal, 1998;Inkpen and Tsang, 2005;Luo et al, 2004;Avery, 2010). Further, the cognitive dimension was measured by shared values (Hofstede and Bond, 1988;Tsai and Ghoshal, 1998;Krause et al, 2007;Hult et al, 2004;Nahapiet and Ghoshal, 1998;Simatupang and Sridharan, 2005) and common fate between firms (Perrone, Zaheer et al, 2003;McEvily and Marcus, 2005;Avery, 2010).…”

International Channel Choice of Industrial Exporting Firms

“…Fang, Palmatier, & Grewal, 2011, international marketing (e.g. Kaleka, 2011, Luo, Griffith, Liu, & Shi, 2004, and marketing innovation (Atuahene-Gima, 2005, Harmancioglu, Droge, & Calantone, 2009. RBT provides knowledge about the impacts of market-based resources on firm performance across the three domains of marketing mentioned above (Kozlenkova, Samaha, & Palmatier, 2014).…”

“…Market orientation (MO) -there exist two main perspectives on MO in the literature (Prahalad & Hamel, 1990); a behavioural perspective (Luo, Griffith, Liu, & Shi, 2004) and a cultural perspective (Prahalad & Hamel, 1990). This study adopts the behavioural perspective of MO that emphasises the generation and use of market information.…”

“…Long & Freese, 2006, Luo, Griffith, Liu, & Shi, 2004, Malhotra, 2008. To determine the factor structure, I firstly assessed individual EFA and CFA for each construct.…”