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The Effect of Social Capital and Absorptive Capacity through Knowledge Management on Finance Company Performance in Indonesia

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  • Alexander Tan

Abstract

The objective of this research is to present a model that describes the general effect of social capital and absorptive capacity on knowledge management and its implications on company performance.The model proposed in this research is tested by structural equation model. This research processed data from 258 respondents of employees of finance companies in Indonesia that meet certain requirements of 27 samples of the company.This research found that social capital has a positive and significant effect on absorptive capacity and knowledge management. Absorptive capacity has a positive and significant impact on knowledge management and company performance. Knowledge management also has a positive and significant effect on company performance. Social capital and absorptive capacity together have a positive and significant influence on knowledge management. Furthermore social capital, absorptive capacity and knowledge management together have a positive and significant impact on company performance. Absorptive capacity mediates the relationship between social capital and knowledge management. Knowledge management fully mediates the relationship between social capital and absorptive capacity on company performance. Social capital indirectly affects the company performance through knowledge management or absorptive capacity.This research model only limits the factors that affect company performance to three main variables namely social capital, absorptive capacity and knowledge management. Future research is suggested to try with additional other variables such as monetary incentives and/or corporate culture.The practical implication of this research is to improve knowledge management, it is necessary to improve social capital and absorptive capacity together. Furthermore company performance can be improved if social capital, absorptive capacity and knowledge management also improved simultaneously.The model proposed in this research improves the understanding of academics and practitioners about the construct of knowledge management. The mediation function of knowledge management is something new from this research compared to previous researches. This research also provides an additional contradictory list of previous researches on the relationship between social capital and company performance.

Suggested Citation

  • Alexander Tan, 2018. "The Effect of Social Capital and Absorptive Capacity through Knowledge Management on Finance Company Performance in Indonesia," International Business Research, Canadian Center of Science and Education, vol. 11(1), pages 87-101, January.
    • Handle: RePEc:ibn:ibrjnl:v:11:y:2018:i:1:p:87-101
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    More about this item

    Keywords

    social capital; absorptive capacity; knowledge management; company performance;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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