Study On The Relationship Among External Social Capital, Dynamic Capability And Subcontracting Enterprise’s Growth

Chinese subcontracting business have occupied a place in the global manufacturing network and global value chains by cheap labor costs and other resource endowments. By embedding into the global value chains, subcontracting business obtained enterprises growth. However, recent years developed countries renewed emphasis on the importance manufacturing at the same time the cost of labor in china has skyrocketed, thus a lot of manufacturing business have given back to domestic, and some subcontracting business have been transferred to Southeast Asian countries because of lower manufacturing costs. Changes of the world economic situation propose a higher challenge to the Chinese manufacturing enterprises. It is time for them to change their traditional development model and cultivate their own competitive advantages. Social capital theory suggests that corporate social capital can promote enterprise access to resources from external social networks, thus promote the upgrading of enterprises. From this perspective, this study wants to answer a question that how foundry business promote business growth through external social capital. To solve this problem, this study takes external social capital as the entry point, and local foundry business as research objectives, in order to discover the impact of external social capital on subcontracting enterprise’s growth.Under the research framework of resource-ability-growth, this paper reviews papers on OEM, external social capital, dynamic capability and enterprise growth. The basic question is that how external social capital affect on subcontracting enterprise’s growth, and this study takes dynamic capability as a mediate variable so as to set up the theoretical models of relationships between external social capital and business growth. Besides, this paper focus on four sub-issues:first, whether different dimensions of external social capital have an effect on subcontracting enterprise’s growth; second, whether different dimensions of dynamic capabilities have an effect on subcontracting enterprise’s growth; third, whether different dimensions of external social capital have an effect on different dimensions of dynamic capabilities; fourth, how dynamic capability of OEM work in the process of external social capital and enterprises growth. In this study, I did a small sample test, then based on the small sample test, I investigated206manufacturing enterprises whose main business in foundry, and acquire data by questionnaire. After that, I used SPSS19.0to test model assumptions which based on the research. In all, I obtained the following conclusions:(a) Based on previous researches, this paper divide external social capital into three dimensions:structural social capital, relational social capital and cognitive social capital. The empirical analysis shows that these three dimensions of external social capital have significantly positive impact on the growth of foundry business. Besides, relational social capital is most significant variable, followed by structural social capital and cognitive social capital.(b) In order to have a future study on the relationship between dynamic capability and subcontracting enterprise’s growth, dynamic capability has been divided into three dimensions:organizational conscious capability, flexible decision-making capability and dynamic executive capability. The empirical analysis indicates that in the process of promoting enterprise’s growth, all dimensions of dynamic capability effects significantly and positively. Especially, organizational conscious capability play the most significant role in this process, second one is flexible decision-making capability and third one is dynamic executive capability.(c) This paper explores the relationship between external social capital and foundries dynamic capability. The results show a significant positive correlation between external social capital and three dimensions of dynamic capability. In terms of fractal dimension of external social capital, relational social capital and cognitive social capital play a significant role to organizational conscious capability and flexible decision-making capability, but structural social capital shows no significance to both, and relational social capital has no effect on dynamic executive capability.(d) This article also discussed the mediating effect of dynamic capability in the relationship between external social capital and subcontracting enterprise’s growth. The empirical results show that dynamic capability plays a significant intermediary effect of external social capital on subcontracting enterprise’s growth. Furthermore, there are significant direct effects of dynamic capability on different dimensions of external social capital, and different dimensions of dynamic capability play a significant intermediary effect when external social capital have an influence on the subcontracting enterprise’s growth.