THE EFFECT OF SOCIAL CAPITAL ON THE INNOVATION PERFORMENCE OF FOREIGN TRADE MICRO-, SMALL AND MEDIUM-SIZED ENRERPRISES (MSMES) IN HUNAN, CHINA

Abstract

Small- and medium-sized enterprises (SMEs) and mid-sized companies are the backbone of economies. They account for 90% of all companies and are responsible or almost 70% of global employment and GDP. The data shows that private enterprises dominated by foreign trade micro, small and medium-sized enterprises maintain the status of China's largest foreign trade operators, and foreign trade micro, small and medium-sized enterprises play a vital role in promoting economic growth and innovation. This research aims to investigate how social capital influences the innovation performance of foreign trade MSMEs in Hunan, China. It specifically examines the mediating role of knowledge creation and dynamic capabilities in this relationship. According to the literature review, we develop a research model showing a positive relationship between social capital and innovation performance. Using data from 300 enterprises within Hunan Province. Based on the Structural Equation Model (SEM) results by Partial Least Square (PLS) method, research hypotheses were supported. Results show that social capital impact innovation performance directly. It is found that social capital, knowledge creation and dynamic capabilities facilitate innovation performance. Findings presented in this paper may help academics and managers in making full use of social capital to improve the innovation performance of micro-, small, medium and enterprises in foreign trade.