Role of Relational Capital and Firm Performance: Analysis of a Cluster of Bell-metal Enterprises in a Rural Region in West Bengal, India

This paper has tried to assess the impact of relational capital components on the performance of bell-metal clustered firms in Dharmada region of Nadia district in the State of West Bengal in India. The issue of relational capital has been considered in relation to the notion of intangible asset. Eight components of relational capital indicators were considered and they were combined into a single overall index by using principal component method. A study was conducted on a sample of sixty firms in the cluster. Cronbach’s alpha has been used to assess the reliability or internal consistency of the set of individual relational capital indicators. The overall index of relational capital is found strongly associated with profitability performance. The overall regression of profitability figures on individual relational capital indicators has been observed to be significant and some of the indicators are also found to significantly influence firm performance level. The analysis identifies and provides suggestion regarding upgrading and maintaining relational capital components in which the firms may have some advantage. This can make substantial contribution to the performance of firms.