Abstract
This research investigates the impact of social capital which results from social interaction within a horizontal industrial district on the attitude-related aspects of internal and external strategic adaptability. Such foreseen effects are studied from interaction of three dimensions of social capital which occurs indirectly through entrepreneurial behavior and social knowledge exchange. Research data were taken from 450 metal craftsmen in the Tegal municipality and Tegal regency, Central Java, Indonesia. This study reveals that entrepreneurial behavior and social knowledge exchange, which conflicting in nature, have the effects on the internal strategic adaptability, but only entrepreneurial behavior effect the external strategic adaptabilty. The study also reveals that the interaction of two dimensions of social capital have the effects on entrepreneurial behavior and social knowledge exchange due to it was not enough evidence that relational embeddedness act as a social capital which able to strengthen strong ties among entrepreneurs.
Highlights
In a business environment characterized with uncertainty, adaptability helps organizations to survive and increase their competitive advantages (Tuominen et al, 2004; Reeves and Deimler, 2011)
Good fit Good fit Good fit Good fit Good fit Good fit Good fit Marginal fit Measurement model fit meets the standard of reliability and validity, by yielding the score of Standardized Factor Loading (SFL) ≥ 0.50, Construct Reliability (CR) ≥ 0.70 and Variance Extracted (VE) ≥ 0.50 (Table 3)
Relational embeddedness which is characterized by a high degree of trustworthiness is not enough evidence able to enhance the intensity of social knowledge exchange within an industrial district
Summary
In a business environment characterized with uncertainty, adaptability helps organizations to survive and increase their competitive advantages (Tuominen et al, 2004; Reeves and Deimler, 2011). Inter-entrepreneurial social interactions that create social capital within an industrial district can provide a valuable resource for entrepreneurs This resource can be used as a source to gain new insights on unexplored business opportunities (Yamada, 2002; González et al, 2017). Even when there is no new information, this strong tie is more valuable and useful than a weak tie in interpreting opportunities and external threats and in formulating the potential responses This can facilitate the development of entrepreneurial behavior (Simsek et al, 2003; Villanueva et al, 2018). Cognitive embeddedness is evidenced by the homogeneity in identifying opportunities and environmental threats, in interpreting organizational capabilities and limitations, and in formulating and implementing strategies (Hambrick and Mason, 1984; Simsek et al, 2003) This homogeneity, as the result of cognitive embeddedness, weakens entrepreneurial behavior because it lacks new ideas that are significant for the development of business. Hypothesis 15: “Internal Strategic Adaptability (ISA) has a positive effect on External Strategic Adaptability (ESA) ”
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