The effect of Social Capital on Exploration and Exploitation: Modelling the moderating effect of Environmental Dynamism

Purpose – A vast literature has already dedicated much attention on understanding which antecedents can help organizations to pursue knowledge exploration and exploitation. Our work enters this debate by investigating the role of Social Capital and Environmental Dynamisms on units’ ability to exploit existing knowledge as well as exploring new knowledge. Our contribution is grounded on existing insights that cohesive and strong ties across units or organizations are significant antecedents of innovation capabilities. At the same time, there is no empirical evidence on the actual link between social capital and exploitation/exploration. Past research on organizational learning has in fact focused mostly on organizational and managerial factors such as absorptive capacity, slack resources, culture or performance feedbacks. Design/methodology/approach – Our model considers three dimensions of social capital – structural, relational and cognitive social capital. It also considers the moderation of environmental dynamism – the hypothesis is that social capital exerts stronger impacts in conditions of environmental stability. Head physicians from Italian hospitals were surveyed using a self-compiled questionnaire. The survey consisted on multiple questions on exploration/exploitation, social capital and environmental dynamism of hospital wards. The dataset consists of 174 observations, analyzed using Seemingly Unrelated Regression techniques. Originality/value – This research provides evidence of the role played by the structural, relational and cognitive dimensions of social capital – thus adding to a literature which has thus far concentrated on contextual factors (e.g. culture, organizational identity) and on units’ properties (e.g. size, functions). Cohesive and strong ties emerge as highly instrumental for units in gaining access to external knowledge assets and to stimuli to recombine the knowledge already available within the unit. The results also adds to conflicting evidence on environmental dynamism – which is shown here to exert a direct positive impact on exploitation and exploration; and to moderate the link between relational capital and exploration – while having no moderation effect towards exploitation. Practical implications – The empirical evidence on the link between social capital and exploitation/exploration can support hospital managers in designing initiatives that recognize the centrality of network ties for strategies of continuous improvement. Social networks represent the locus in which hospital units can identify and acquire knowledge from outside (supporting an explorative capability) as well as the locus in which knowledge can be shared, recombined and turned into novel solutions (supporting an explorative capability). Managers should thus encourage initiatives that support systematic connections among units and facilitate knowledge exchange. – e.g. through systematic plenary meetings to more sophisticated ones such as “boundary spanning” tools (e.g., ICT solutions) and roles (e.g., knowledge brokers).