Social capital and firm performance nexus: The role of new product development capability and environmental dynamism in an emerging economy

ABSTRACT This paper seeks to examine the argument that the social capital and market performance link is more pronounced when it is channelled through the new product development capability of the firm. The study further argues that the indirect effect of social capital on market performance, via new product development capability, is conditional upon levels of environmental dynamism. We tested the hypotheses using data from 313 managers and owners of small and medium-sized enterprises (SMEs) in Ghana. We analyzed the data using the conditional PROCESS analysis software, in SPSS 23.0, and structural equation modelling (SEM). We found that new product development capability partially mediates the relationship between social capital and market performance. The study further discovered that the indirect relationship between social capital and market performance is significantly enhanced at higher levels of environmental dynamism. This study's finding will help managers of SMEs understand the need to invest in building their social capital resource and the complementary new product development skills needed to improve firm performance.