How social capital affects innovation, marketing and entrepreneurial orientation: the case of SMEs in Ho Chi Minh (Vietnam)

Abstract

Social capital, embedded in the networking relationship, is critical for firm performance. SMEs, especially in emerging economies, should effectively use their limited resource and network relationships to deal with increased uncertainties in the business environment. Accordingly, this paper investigates the effect of social capital on innovation, marketing communication expenditure, and entrepreneurial orientation (EO). The research employs a binary logistic model based on data collected from a survey of 645 small and medium enterprises (SMEs) in Vietnam. The survey focused on SMEs in Ho Chi Minh City, which is the biggest city in Vietnam and accounts for one-third of the country’s gross domestic product. The research found significant evidence of the benefits of social capital on innovation, marketing communication expenditure, and EO. Specifically, we found significant relationships between personal network and marketing communication expenditure, between a business network with innovation and EO, and between network range and marketing communication expenditure. This research has important implications for managers and government agents. SMEs managers should effectively use what they receive from network relationships to improve the performance of firms. The findings clarify the characteristics of networks constituting social capital. Moreover, we respond to the call for more empirical study in the emerging economy.