The Impact of Social Capital on Market Exploration and Exploitation with Mediating Role of Internal Communication

Abstract

Purpose – Present study aims to test the mediating role of internal communication on the relationship between social capital and market exploration and exploitation, and to link the impact of market exploration and exploitation to the firm performance. Methodology - The hypotheses derived from the literature were tested on a sample of 173 information technology firms in Turkey. Survey data was gathered through questionnaires which were applied to the managers of the firms. Relationships among variables were analyzed through structural equation modeling using Amos 25.0 statistical tool. Findings- Internal communication's full mediating impact on the relationship between social capital and market exploitation and exploration was supported. In return, market exploration was found to have a significant impact on firm performance which was measured by quality, innovation, reputation and customer satisfaction. Conclusion- Social capital is an antecedent for an effective internal communication and should be well established in the firms. Internal communication has an impact on both market exploration and exploitation activities, thus it should be supported and encouraged within the firms. Market exploration activities should not be neglected since they may contribute to firms’ performance especially in the long run.