Exploring the Mutual Nexus of Social Capital, Social Innovations and Organizational Performance

Abstract

The ability of self-reconstruction is essential to the survival of social organizations. To meet the social challenges, these organizations must enhance their creative and innovative processes. Although an extensive literature describes the impact of social capital on innovations, research on how social and organizational innovations affect organizational performance and social capital is very slim. This paper makes an addition to the literature by investigating the impact of organizational and social innovations in explaining the relationship of social capital and organizational performance. Confirmatory factor analysis, exploratory factor analysis, and structural equation modelling are used on the data gained from social organizations in China. It is found that social and organizational innovations affect the organizational performance in positive way while social capital has a vital role in this relationship by improving mutual cooperation, interaction and trust. The mediating role of social and organizational innovations in the relationship of social capital and organizational performance is formalized through structural equation modeling. The empirical findings reveal that organizational and social innovations have mediating role in relationship of organizational performance and social capital. The empirical results do not support the direct relationship between organizational performance and social capital or between innovations and organizational performance. It is also found that social and organizational innovations are necessary to improve the relationship of organizational performance and social capital.