The moderating effect of social capital and cosmopolitanism on marketing capabilities: A comparison of Chinese and Korean companies

The aim of this study was to examine the role of top management’s social capital – focusing on specific components of social capital – in shaping a company’s marketing capabilities. In addition, the study was designed to determine the extent to which cosmopolitanism as a top management’s characteristic serves as a moderator that allows top management’s social capital to influence corporate marketing capabilities.

This study’s sample comprised small- and medium-sized companies in Korea and China. After excluding insincere responses, 636 questionnaires (329 from Koreans, 307 from Chinese) were used for the analysis. A mediated hierarchical regression analysis was performed to verify the hypothesis.

This study proposed the hypothesis that top management’s social capital would have positive effects on corporate marketing capabilities: pricing strategies, product development, distribution strategies and marketing communications. While managerial tie utilization and solidarity were revealed to have positive effects on corporate marketing capabilities, trust did not show statistically significant effects.

This study is subject to several limitations. First, it has not fully addressed various foundational concepts or factors that comprise or facilitate the building of social capital. In addition to trust and the sharing of core values and knowledge among organizational members, there may be other factors involved, so systematic studies should be conducted using a model that can review the roles of various explanatory variables that constitute social capital.

This study’s empirical results contribute valuable data to the literature, as it was based on a survey conducted with actual Korean and Chinese top managers. In addition, the study’s findings are likely to suggest a valuable direction for evaluating corporate marketing strategies and business performance. The study identified powerful effects of top management’s social capital on corporate marketing strategies. Therefore, greater investments should be made to build the top management’s social capital, so that the corporate capacity for marketing strategies will be able to produce maximum effects.

The results of this study suggest the following additional points. A company with a high level of cosmopolitan orientation may have excellent strategies for competing on overseas markets. Companies targeting global markets should leverage accumulated top management’s social capital to discover overseas business opportunities and acquire knowledge of overseas markets. When the corporate executives of companies that attempt to make inroads into overseas markets have such a cosmopolitan orientation and actively seek and seize overseas market opportunities, they are more likely to avoid path dependency, following domestic business activities and become successful in those global markets.

The present study segmented social capital into sub-factors, thereby identifying their relationships with the behavioral outputs of corporate executives, such as business practice processes, marketing capabilities and business performance. Based on the findings of this study, top management’s social capital should enable companies to consolidate corporate business practice capabilities and, eventually, to be seen as closely associated with business performance and the essential qualities and characteristics of top managers.