Generation or adoption? The role of social capital

Abstract

Purpose Innovation is critical for the firms to gain competitive advantage and improve performance. Such innovation stems from process innovation generation (PIG) and/or process innovation adoption (PIA). PIG vs PIA motivates firms for cutting development cost, reducing development time, improving product quality, saving energy, preventing or mitigating pollution and recycling waste. Various factors have been identified as the determinants of PIG and PIA. One of them is social capital. Therefore, the purpose of this paper is twofold: first, to analyze the effects of social capital on PIG and/or PIA, and second, to analyze whether the moderation of human capital strengthens/weakens this relationship. Design/methodology/approach A sample of 318 Pakistani chemical companies was collected for examining the hypotheses. Using hierarchical multiple regression, it relates to the effects of social capital and PIG and PIA; and moderation of human capital. The paper also discusses the theoretical and managerial implications. Findings The results confirm the hypotheses. The paper finds that social capital ambidextrously impacts on both PIG and PIA. However, this relationship strengthens when there is an interaction of human capital. Practical implications Social capital appears to be a powerful driver for generation and adoption of process innovation. Such innovation is a collaborative effort, with social capital assuming a central role. It follows that management would be well served by encouraging communication, flexible dissemination of information integration and sharing of knowledge. Originality/value The main value of this paper is in its analysis and testing of the relation of social capital and PIG and PIA. The majority of the literature underlines the paper’s seeking after social capital for product innovation. However, this topic has not been studied in depth and requires more attention, as processes are different and have different antecedents and outcomes.