The relationship between social capital and market performance of manufacturing companies in Ardabil province

Academic Thesis for Master's Degree

Field: Business Administration, Major: Finance

Abstract:

This research was developed to examine the relationship between social capital and the market performance of manufacturing companies in Ardabil province. The current research is descriptive in terms of research method and applied in terms of the purpose of the research. The method of field data collection and its collection tool is a questionnaire. The statistical population of this research is made up of 1074 manufacturing companies in Ardabil province, and the sample size is estimated at 94 companies. Data analysis was done through SPSS19 software using correlation test, in two descriptive and inferential methods. The results of the research hypotheses test show that the first hypothesis, that is, the existence of a relationship between social capital and the market performance of manufacturing companies, has been confirmed. Regarding the second hypothesis, the results indicate the confirmation of this hypothesis, that is, there is a relationship between the cognitive dimension of social capital and the market performance of manufacturing companies. Examining the third hypothesis shows that this hypothesis is rejected, that is, there is no relationship between the structural dimension of social capital and the market performance of manufacturing companies. In relation to the fourth hypothesis, the results indicate that there is a relationship between the communication dimension of social capital and the market performance of manufacturing companies.

Key words: social capital, market performance, structural dimension, cognitive dimension, subjective dimension

Chapter 1

Generalities of the research

1) Introduction

In the last two decades, the concept of social capital in its various forms and definitions as one From the most central concepts, it has emerged and updated, although it created a lot of enthusiasm among experts and researchers, similar to the conceptual framework and analytical tools. But it has fueled various attitudes, views and expectations.

The importance of social capital is revealed from the fact that social capital is examined as a valuable capital along with human and financial capital in the organization and the effectiveness of other capitals takes place in the shadow of social capital. By recognizing and identifying the dimensions of their social capital, organizations can have a better understanding of the pattern of interpersonal and group interactions, and by using social capital, they can direct their organizational systems better (Alwani, 2015, p. 3).

Companies have resources that are vital for strong market performance and competitive advantage. The first type of these resources are tangible assets such as property, machinery, and physical technologies that have substitutes that can be easily bought and sold in free markets. The second type are intangible, valuable, rare, non-substitutable and strategic assets that are capable of creating competitive advantage and superior market performance. (Namazi and Ebrahimi, 2013, p. 45) In the current knowledge-based economy, social capital is the main factor for the superiority and improvement of companies' performance. (Rahimian, 2013, 45) Social capital includes all resources of the organization that increase the value of the organization as well as the competence of the organization. So this shows that managing social capital effectively and efficiently will increase the value and financial performance of the organization. (Ahmad khan et al., 2012). Therefore, identifying and correctly valuing the social capital of companies is essential for both managers and users of financial statements, and its importance is increasing day by day. Considering the importance and role and various effects that organizations have, today, increasing attention is paid to their various dimensions, including processes, systems, and especially what the organization achieves (performance). On the other hand, no organization can be effective unless it has a plan for what it wants to do (Lesser, E.L., 2001). Therefore, in this thesis, we aim to discuss and examine the relationship between social capital and market performance in manufacturing companies. 1-2) Definition and statement of the problem Today, companies are facing stronger competition than in the past, and market performance is the main goal of any institution. So every organization wants to increase its market performance with different methods. (Ahmad Khan et al., 2012) In recent years, competitive advantage has become the focus of competitive strategies.In order to improve performance and face competitors, companies must have competitive advantages so that they can have superior performance in complex conditions and maintain themselves in the markets. According to the resource-based view, the superior performance of companies can come from their unique resources, resource integration, or the ability to respond to the environment. According to this view, the difference in the performance of companies is due to the fact that successful organizations have strategic resources (physical, human and organizational) that their competitors lack. According to the perspective based on company resources, social capital are strategic resources that enable companies to create competitive advantage and superior financial performance. Despite accepting the undeniable role of social capital and intangible assets in the performance of companies, most of the traditional systems are not able to measure the social capital of companies and reflect it in financial statements, while their importance in increasing the wealth of shareholders, obtaining sustainable profitability, increasing the share of companies in global markets, evaluating the current performance of the business unit, as well as future forecasts, has always been considered. Since companies identify opportunities and threats around them in carrying out strategic planning, they are bound to obtain comprehensive information about the capacities, adequacy and efficiency of their internal resources. Marr, 2004, p. 20) The knowledge-based business environment requires an approach that includes new intangible organizational assets such as knowledge and competencies of human resources, innovation, customer relations, organizational culture, organizational systems and structure, etc. (Kelich Lee, 2007, p. 28) Intangible factors and social capital, as the main element of development in a knowledge-based economy, provide companies with the necessary ability to carry out strategic plans. (Marr, 2004, p. 14) In fact, social capital provides a complete new model to observe the real value of organizations and by using it, the future value of the company can also be calculated, so the approach of social capital is more comprehensive for organizations that want to be well aware of the value of their performance (Madhhoshi and Asgharanjad, 1388, pp. 110-116)

On the other hand, following the development of information technology in the decade 1990, the pattern of economic growth underwent fundamental changes and the factor of knowledge replaced financial and physical capital as the most important capital in the global economy. (Chen, 2004, pp. 195-212) In the knowledge-based economy, products and organizations live and die based on knowledge, and the most successful organizations are those that use this intangible asset in a better and faster way (Kelich Lee et al., 2017, 22). Based on this, the present and future success in the competition between organizations will be partially based on the strategic allocation of physical and financial resources and largely based on the strategic knowledge. (Malekian and Zare, 1389, pp. 135-177)

The emergence of the new economy, which is basically driven by information and knowledge, has led to an increasing interest in social capital. (Tan et.al, 2007, pp. 76-95) Social capital is a capital beyond physical assets and tangible assets. Nowadays, the contribution of social capital due to the production of knowledge and information and as a result of the production of wealth in the knowledge-based economy can play an important role in creating added value and gross domestic product. For this reason, at the level of economic enterprises, the financial performance of companies can be affected by social assets and human capital. (Abbasi and Goldi Sedki, 2019, pp. 57-74) In general, in today's knowledge-based societies, the return on social capital used has become much more important than the return on financial capital. (Bontis, 1999, pp. 62-433) Social capital is manifested in customers, processes, information, trademarks, human resources, and organizational systems, and plays an increasing role in creating sustainable competitive advantages. (Shams and Khalili, 1390, pp. 51-65). Social capital in this research consists of three dimensions: cognitive, communication and structural. Janosevich [1] et al. (2013), Ahmad Khan [2] et al. (2012), Basuki [3] et al. (2012), Libo [4] et al. (2011), Plowman [5] et al.