Corporate social capital: A framework for understanding network-based export development programs

Abstract

Export promotion organisations in a number of countries have initiated programs to broker networks of relationships between small and medium sized enterprises (SMEs). Their goal is to assist firm growth and promote export activity. However, an explicit framework that explains why public facilitation of inter-firm relationships is necessary, and how economic benefits are derived, is generally absent from both the rationales for these programs and the extant academic literature on export promotion. In this paper we argue that the concept of corporate social capital (CSC) recently advanced by Leenders and his colleagues (Leenders & Gabbay, 1999), along with the broader literature on social capital, provide a relevant framework. The essence of our reasoning is that network-brokering programs attempt to correct failures in the market for relationships between SMEs brought about by the public good nature of CSC. Networking enhances external economies, levering the resources available to firms, and improving opportunities for growth and export expansion. This furthers societal interests in productivity, employment growth, and the expansion of export activity. We illustrate this argument using general findings from the literature on SME networking, and our observations of New Zealand's export promotion programs.