Social capital of managers and firm operational performance of SMEs in Ho Chi Minh City

Abstract

Operational efficiency, a dominant concern for businesses, is always an issue for the researchers to find the solutions for helping the businesses enhance their corporate performance. In previous studies on the performance of enterprises in general and small and medium-sized enterprises in particular, most of the studies focused on financial factors, but did not pay much attention to nonfinancial factors. Operational efficiency depends on financial and non-financial factors, of which, non-financial factors are diverse (human capital, social capital, psychological capital, non-financial risk, management efficiency, etc.). theory, applied science, etc). Social capital is a new area of research in Vietnam, which is closely related to the economic field. In Vietnam, interdisciplinary theoretical applied research is a new research trend (economic theory combined with social theory), which this study follows. The study applies the social capital theory ``The strength of weak ties'' of Granovetter, theory ``The network Structure: of Burt and ``A Network theory of social capital'' of Lin to examine the influence of social capital on firm performance. The research model comprises 5 factions of independent variables representing social capital (Relational (REH), Cognitive (CSC), Social Interaction Ties (SIT), Trust (TRU) and Structural (SSC) and a group of dependent variables (Firn Operational Performance). Structural Equation Modeling was used to analyze data collected from a survey of 378 SME managers in Ho Chi Minh City based on a convenient method. The analysis results demonstrate that all aspects of social capital have positive effects on business operational performance, of which Structural Social Capital (SSC) and trust (TRU) are the two most influential groups. The research results help business administrators better understand social capital's importance, thereby improving business performance through maintaining and developing managers' social capital.