Social Capital and Firm Performance: The Tourism Market Case

Abstract

There has been a shift in the management of organizations from separation to networking among market participants. Social capital has a significant role among the enforcing mechanisms in specific markets. The study assesses the impact of the level of social capital on the effectiveness of a network-based organization. The methodological framework of the research includes a set of neoinstitutional theories and strategic management, among which the key ones are the theories of networks, social capital, and transaction costs. Research methods in the theoretical part of the paper are synthesis, typology, and content analysis. The information base of the study is a survey and statistical reporting of 101 tourist organizations of the Russian Sverdlovsk region for 2017–2020. We identify structural, relational, and cognitive components of an organization's social capital and establish the impact of the components of social capital on the growth rate of revenue and the growth rate of profitability of sales in Russian tourism for two (2017–2019) and three (2017–2020) years. There are positive and negative effects of the social capital impact in the organization. The social structure (structural component of social capital) and behavioral practices (relational and cognitive components) ensure the sustainability and growth of the business. However, neglecting market-based transaction management mechanisms risks reducing the growth of network «embeddedness» and the organization's performance.