Social Capital as Supply Chain Risk Mediator

Social capital theorists such as Baker (1990), Coleman (1990), and Burt (1992), and Putnam (2000) claim that social capital, like physical and human capital, is a resource-generating force that can facilitate a firm’s business activities. Furthermore, Yang and Wang (2011) and Wang et al (2014) claim guanxi is the Chinese cultural equivalent of social capital. Nahapiet and Ghoshal (1998) identified three dimensions of social capital: structural, (information and resources) relational, (trust, relationships, and contracts), and cognitive (shared modes of behaviour that encourage cooperation). My research revealed some modest insights into the structural and relational dimensions of social capital, but only alluded to, so did not deeply explore, the cognitive dimension.

My PhD research exposed the importance of the “key China person” in reducing China supply risk for SMEs, but could not expand on the social capital significance of the key individuals, their specific activities, and the nature of their interaction with counterparts. Future studies would examine the issues of guanxi, trust, and face (all of which feature strongly in the literature on Chinese business) and relate these to SC risk management).

If the findings of my PhD study are indicative, as a method of managing China supply risk, social capital is likely of more value to SMEs and of less value to MNEs.