Social capital, portfolio management capability and exploratory innovation: evidence from China

Purpose - Social capital is critical for firms to conduct business activities; however, whether it is always beneficial for exploratory innovation and the specific and contingent effects of each dimension remain unknown. This paper aims to examine the role of three dimensions of social capital in determining exploratory innovation and investigate how firms' portfolio management capabilities shape these links. Design/methodology/approach - Survey data from 276 firms in high-tech industries in China are used to test the hypotheses. Findings - The authors find that cognitive social capital negatively affects exploratory innovation, whereas relational and structural social capital both demonstrate inverted U-shaped relationships with exploratory innovation. In addition, portfolio management capability positively moderates the relationships between the three dimensions of social capital and exploratory innovation. Practical implications - Given the advantages and disadvantages, managers should be prudent in the establishment of social capital; moreover, firms should develop and improve their portfolio management capabilities to effectively manage their relationships in the pursuit of exploratory innovation. Originality/value - This research contributes to the social capital theory and innovation literature in two ways. First, it provides a multi-dimensional examination of the effects of social capital on exploratory innovation and the empirical evidence of the negative side of social capital. Second, it extends the extant literature by introducing a more holistic perspective and proposing that portfolio management capability helps firms to overcome the negative effects and strengthen the positive effects of social capital on exploratory innovation.