The Research On The Mechanism Of Corporate Social Capital’s Influence On Working Capital Management

Social capital has become a cross-disciplinary analytical framework with strongexplanatory power. Scholars of various disciplines use social capital theory to explainvairous social and economic phenomena. At the same time, the social capital theoryoirginated rfom new economic sociology gradually becomes the new importantperspective to understand business management. As an important businessmanagement activity, working capital management draws more and more attentionfrom the managers. However, scholars of management don’t have a consensus on themechanism of corporate social capital’s influence on working capital management. Soit is a new way deserved to explore the mechanism of working capital managementresearch based on corporate social capital, by using information shairng and resourceintegration as mediators.According to the investigation of social capital, information sharing, resourceintegration, working capital management and other relative literature reviews，theauthor conifrms some theoretical issues unresolved: What is the construct of corporatesocial capital and what kinds of relationship exist between its dimensions? How doescorporate social capital inlfuence working capital management by information sharingand resource integration? Following the ways of “corporate social capital——information sharing——working capital management” and "corporate social capital——resource integration——working capital management”，the author conductnormative research. The conclusions are summed up as follow.1. Through the literatures review and according to Nahapiet&Ghoshal’s research,the paper defines corporate social capital as a construct characteirzed by threedimensions based on its component, which includes structural dimension, relationaldimension and cognitive dimension. At the same time, the research ifnds that threedimensions of corporate social capital influence working capital management fromdifferent aspects. The structural dimension on behalf of corporate social capital’simpersonal aspects, uses network size, network strength and network stabilization toinfluence working capital management. The relational dimension is social capital’spersonal aspects, including trust and norm，provides concern support for workingcapital management. The cognitive dimension of social capital is able to birng oncommon language and shared values which are very influential in working capital management.2‘The mechanism of corporate social capital’s influence on working capitalmanagement is explored. This study shows that corporate social capital has a directimpact on working capital management concentrating mainly on the raising ofworking capital. However, as relationship resource, social capital also influencesworking capital management indirectly. This research takes information sharing andresource integration as the mediators to explore the intirnsic mechanism of corporatesocial capital on working capital management and the results show that informationshairng and resource integration are effective bridges.Compared with other things，information has the characteristics of shairng, whichnot only won’t tend to exhaust because of shairng, but also will be used by differentcorporations in different ways to realize the value of information. In fact, ifinformation can be shared by each node enterpirse, the management of workingcapital will eliminate uncertainty and distorted information effectively. Resourceintegration is a process of resource distirbution and forming resource integrationcapability. In other words, through the flow and sharing of resources，each nodeenterprise will be able to perform resource selection, absorption and reconstruction,ultimately to increase effectiveness in the use of the corporations’ resources. Becauseof limitation of resources, it is diiffcult to meet production needs, that is to say, ifdoing so，it will consume a large amount of working capital. At the same time, theworking capital financing also need to get needed capital for its manufacturing&managing activities through different channels and in different methods. Respondingto the issues, the research suggests resource integration is reasonable responsivemeasures. This paper demonstrates that that the three dimensions of corporate socialcapital have an impact on the range, extent and passage of information sharing andresources integration from different aspects, through which the corporations canreduce the amount of working capital occupation, optimize business processes, speedup cash lfow and expand working capital financing channels.3, Corporate Social Capital influences working capital managemen’ts two aspects,namely the capital allocation and the financing strategies. First, social capitalenhances capital allocation management, because it can reduce the amount of capitaloccupation and accelerate the working capital turnover without interrupting normalproduction. Secondly, corporate social capital makes full use of various channelsresources to carry out fund-raising.These above conclusions not only reveal some development in theory, but also have significant meaning to management practice. The results of this study enrichtheoires of social capital and working capital management and enlighten workingcapital management practice. Finally, the theoretical progresses and practicalimplications were discussed, as well as the limitations of this study and the directionsof future research.