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Social capital and firm performance in transition economies

Author

Listed:
  • Hung Quang Doan

    (Foreign Trade University
    LUISS University)

  • Francesca Masciarelli

    (LUISS University)

  • Andrea Prencipe

    (University G.d’Annunzio)

  • Nam Hoang Vu

    (Foreign Trade University)

Abstract

The study explores how social capital affects the performance of small- and medium-sized enterprises (SMEs) in a transition economy. Social capital is referred to as firm’s social interactions with formal and informal creditors, which is financial social capital, and social interactions with politicians and civil servants, which is political social capital. Using a control function estimation method with longitudinal data from repeated surveys of small- and medium-sized enterprises (SMEs) in Vietnam, we find an inverted U-shaped relationship between social capital and SMEs’ performance, which is measured by gross profit and labor productivity. We further show that there is a positive complementary effect between innovation and social capital in affecting performance of SMEs.

Suggested Citation

  • Hung Quang Doan & Francesca Masciarelli & Andrea Prencipe & Nam Hoang Vu, 2023. "Social capital and firm performance in transition economies," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 13(4), pages 751-780, December.
    • Handle: RePEc:spr:eurasi:v:13:y:2023:i:4:d:10.1007_s40821-022-00227-y
    DOI: 10.1007/s40821-022-00227-y
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    More about this item

    Keywords

    Social capital; Small and medium enterprises; Performance; Innovation; Transition economies; Vietnam;
    All these keywords.

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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