Abstract
This paper deals with two questions: Does social capital determine
innovation in manufacturing firms? If it is the case, to what extent?
To deal with these questions, we review the literature on innovation
in order to see how social capital came to be added to the other
forms of capital as an explanatory variable of innovation. In doing
so, we have been led to follow the dominating view of the literature
on social capital and innovation which claims that social capital
cannot be captured through a single indicator, but that it actually
takes many different forms that must be accounted for. Therefore,
to the traditional explanatory variables of innovation, we have added
five forms of structural social capital (business network assets,
information network assets, research network assets, participation
assets, and relational assets) and one form of cognitive social capital
(reciprocal trust). Based on the survey data administered from April
to June 2000 to 440 manufacturing firms of diverse industries in
a region in the southwest of Montréal, we have found that 68.5% of
the firms have developed product or process innovations during the
3 years preceding the survey. Assuming that innovation is not a discrete
event but a complex process, we have modeled the decision to innovate
as a two-stage decision-making process: in the first stage, the firms
deal with the decision about whether to innovate or not whereas,
at the second stage, the firms that have decided to innovate must
make a decision about the degree of radicalness of the innovation
to undertake. In a context where empirical investigations regarding
the relations between social capital and innovation are still scanty,
this paper makes contributions to the advancement of knowledge in
providing new evidence regarding the impact and the extent of social
capital on innovation at the two decision-making stages considered
in this study. Regarding the decision to innovate or not that firms
must initially make, we have provided strong evidence that diverse
forms of social capital influence this decision and, more importantly,
that marginal increases in social capital, especially in social capital
taking the forms of participation assets and relational assets, contribute
more than any other explanatory variable to increase the likelihood
of innovation of firms. As for the decision to be made at the second
stage concerning the magnitude of radicalness to bring in the development
of new product or process innovations, this paper contributes to
the advancement of knowledge by supplying the strongest evidence
that diverse forms of social capital determine the radicalness of
innovation, and more importantly, that social capital taking the
form of research network assets contributes more than any other explanatory
variable to explain the radicalness of innovation. The second variable
that exerts the strongest impact on the radicalness of innovation
is the number of different advanced technologies employed by firms
for production.
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