Social Capital and Organizational Performance: The Mediating Role of Innovation Activities and Intellectual Capital

Abstract

While the positive influence of intellectual capital on innovation is well-established in the extant literature, research on how innovation activities affect intellectual capital is relatively scarce. Moreover, even though there is ample research showing the positive relationship between social capital and organizational performance, its significance is generally underappreciated by practitioners. This paper aims to contribute to the literature by investigating the influence of innovation activities on the depth of intellectual capital and the role they play in the relationship of social capital and organizational performance, using Turkish public hospitals as an exemplary application case. We argue that the activities carried out in these institutions during the innovation implementation process contribute to intellectual capital internally, with positive impacts on organizational performance. We hypothesize that social capital plays a vital role in this relationship by enhancing social interaction while fostering trust and cooperation. We formalize these ideas in a structural equation modeling framework in which innovation activities and intellectual capital serially mediate the relationship between social capital and performance and show that the implications of our model are supported by data from Turkish public hospitals. We find no evidence of a direct link between social capital and performance or between innovation activities and performance and determine that intellectual capital is the crucial link between social capital and organizational performance.