Corporate Social Capital, Life Cycle And Performance

Since the 21 st century, especially since the 2008 financial crisis, Chinese enterprises are facing many difficulties. The global economic recession and Chinese economic transformation both bring tremendous pressure, risk and great uncertainty to Chinese enterprises. In this case, the information’s firstly-got and accuracy is very important. Social capital was originally a concept in sociology, which effectively explains many behavior and performance of enterprises since being introduced into management, economics and other fields. Many scholars believe that social capital can effectively reduce information asymmetry and facilitate the transmission of information. Therefore, based on our current business situation and background, the research about corporate social capital is of great practical significance.In practice, most scholars focused on measuring corporate social capital from entrepreneurs, ignoring the relationship owned by the organization which is a corporate entity. The measurement of corporate social capital is not comprehensive and complete. Enterprise is a living body, also experiencing the birth to death, from prosperity to decline. As a kind of enterprise’s resources, the social capital’s impacts on businesses vary with the stage of the enterprise. But currently the relevant studies are very few.Therefore, taking the organizational social capital as one part of corporate social capital to measure and studying the impacts of corporate social capital on corporate performance in the different life cycle stages.are of a profound theoretical and practical significance.Based on the different actors of the enterprise, this paper will deconstruct the corporate social capital into entrepreneurial social capital and organizational social capital. We will measure entrepreneurial social capital and organizational social capital according to social capital theory, and then study the relationships between corporate social capital and its constitutional parts and enterprise performance. Based on the data from 2010 to 2012 of A-share listed companies in Shanghai and Shenzhen stock markets, through empirical tests we have found: corporate social capital has a significantly positive influence on enterprise performance; And as the constitutional parts of corporate social capital, the impacts of the entrepreneurial social capital and organizational social capital on enterprise performance are not the same: organizational social capital has a significantly positive effect on enterprise performance, and the influence of entrepreneurial social capital on enterprise performance is not significant. On this basis, this paper introduces the life cycle of companies. Combining the advantages of scoring method and industrial economic approach, the article chooses sales growth, retained earnings ratio, corporate capital expenditure ratio and age to measure the development stages of enterprise. Taking into account the access system of listed companies in China, the life cycle in this paper only includes stages of growth, maturity, and decline. The empirical results show that the impacts of entrepreneurial social capital and organizational capital on the companies in different stages are different: as enterprise goes through growth, maturity and decline, entrepreneurial social capital’s impact on the effectiveness of enterprise gets weaker, while organizational social capital’s impacts gets stronger; organizational social capital has a greater impact on the companies under the same life cycle stages than entrepreneurial social capital. Finally, based on the conclusions of the study, the paper proposes some advice for companies.