Relational capital and performance of tea manufacturing firms

Abstract

The focus of this article is to examine the impact of relational capital components on the performance of tea manufacturing firms in Uganda. It aims at disclosing the composition of relational capital components that associate with performance. A study was carried out on 59 managers representing 17 tea manufacturing firms in Uganda. A correlation matrix and multiple regression models were used to test the hypotheses advanced. It was established that the correlations between relational capital components are associated with firm performance. Furthermore, relational capital as a whole accounts for 28.3% of the variation in performance of Uganda`s tea manufacturing sector. Only a single research methodological approach was employed in this study, as such, interviews could be undertaken in future researches. Multiple respondents in a firm were studied, neglecting other key stakeholders outside. Finally, a single element of intellectual capital was studied (RC), though more studies on other elements are necessary. In order to boost the performance, managers should intensify initiatives to encourage greater understanding and acceptance of relational capital and its components, employ a viable relational capital strategy that includes building strong social relational ties with the community and competitors, pay attention to customers and employees in order to identify their needs and provide optimal value for them. This is the first study that focuses on relational capital components effect on firm performance in Uganda tea manufacturing sector. Key words: Relational capital, business relational capital, social relational capital, firm performance. INTRODUCTION In many organizations, it remains a fact that managerial awareness for the importance of relational capital has remained low, although a number of researchers and practitioners have emphasized the benefits arising from the unaccounted for relational capital (Klaus, 2009). Accordingly, Cuganesan (2006) observed that increased sophisticated customers and the importance of innovation have shifted the bases of competition for many busines-ses away from traditional physical and financial resources towards managing relationships. More so, there is a wide spread recognition that relational capital represents a portion of the company`s market value that is attributable