Int. j. econ. manag. soc. sci., Vol(3), No (12), December, 2014. pp.

863-868

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International Journal of Economy, Management and Social Sciences

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The Relationship between the Dimensions of Social Capital and

Organizational Innovation in Bank Melli Iran
Sanjar Salajeghe
Department of Management, Kerman Branch, Islamic Azad University, Kerman, Iran.

Mostafa Hoseinali Beigi

Department of Management, Kerman Branch, Islamic Azad University, Kerman, Iran.

Niusha Meftah*
Department of Management, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran.

Ali Asghar Zamani

Department of Management, Azadshahr Branch, Islamic Azad University, Azadshahr, Iran.

Shabnam Vaziri
Department of Management, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran.
*Corresponding author: f_shab2007@yahoo.com

Keywords

Abstract

social capital
cognitive aspect
structural aspect
relational aspect
organizational innovation

The objective of this study is to investigate the relationship between the dimensions of social capital and
organizational innovation in Bank Melli Iran Central Tehran Branch Administration employees. The
population of the study consisted of 510 employees, of which 210 were selected as sample. The tools used in
this study are Nahapiet and Ghoshal's social capital questionnaire (1998) and Wang and Ahmed
organizational innovativeness questionnaire (2004). The questionnaire reliability was calculated using
Cronbach's alpha coefficient. This coefficient was 0.87 for social capital questionnaire and 0.85 for
organizational innovativeness questionnaire. To analyze the information, Pearson correlation test and
stepwise regression were used. The main hypothesis result of this study showed that there is a significant
relationship between social capital and organizational innovation. The results also indicated that there is a
significant and positive relationship between cognitive, structural and relational aspects of social capital and
organizational innovation. The results of stepwise regression showed that the best predictor of organizational
innovation, in relational aspect, has been social capital.

1. Introduction
As of today, the future organizations will work in a highly competitive and complex environment. Rapid flow of scientific information and
human knowledge in the twenty-first century provides various factors needed for viability of the organization. In these circumstances, the
organizations which make themselves agile and dynamic reproduce themselves; forget faulty process changing illusion and start a dramatic
movement from a written language to a living language, from machine-based patterns to ecology-based patterns and from rigid structures to
changing environments, are successful. These changes require capital.
Therefore, each organization needs at least three types of capitals to achieve its objectives. These capitals are complementary and the
organization growth and development is subjected to these three minimum capital categories of social, human and economic resources. Today,
in terms of capital, the literature of development contains a variety of this concept. Capital, in its broadest sense, denotes the set of available
assets, facilities and resources which is found in various forms [10].The capital is divided into different segmentations. In a classification, it
divided into four categories; economic, human, social and cultural capital. Economic capital is the financial assets or infrastructures including
buildings and manufacturing machinery and equipment [15].
The concept of human capital contains the skills and capabilities, such as specialized knowledge of the organization's staff [18]. In fact, human
capital includes the skills and capabilities which the people acquire. Capabilities in the fields of education, verbal and communication skills, selfconfidence and leadership abilities are among them [15]. Culture capital is another aspect of capital. According to Bourdieu, whenever we speak
about the cultural capital, set of knowledge and cognitive ability is taken into account which is manifested in the form of cultural goods and
tools.
Eventually, Social capital, as a fourth dimension, is the result of potential or actual resources accumulation such as expertise and skills. These
expertise and skills are related to the ownership of a durable network of more or less institutionalized relationships among individuals which are
created through the membership in a group. Social capital is embodied in the relations among individuals. Social capital is created when the
relations among individuals change in ways that facilitate action. Social capital is the set of norms of social systems which increase the level of
members cooperation of that community and decrease of the level of transaction and communication costs [15].
Therefore, in this study, we seek to answer this question: how is social capital aspect related to organizational innovations?

2. Research Literature
2.1 Social Capital
As one type of capital, social capital is placed among other resources which influence the economic growth. Mainly, at the first look, social
capital is ignored in the economic growth but this kind of capital is necessary for the economic development of any society. Economic growth
requires regular relations of social activists [22]. Bourdieu (1983) has defined Social Capital as actual or potential resources which are related to

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International Journal of Economy, Management and Social Sciences Vol(3), No (12), December, 2014.

the possession of a durable network of more or less formal relationships of mutual and admitted acquaintance [9]. "A certain set of norms or the
informal values in which the group members with the cooperation permission have some share [3]. Collective value of the social networks
which includes the reciprocity criteria and the desire to perform tasks related to network members an also increases the power of the potential for
economic development in a community by creating and strengthening the social relationships and patterns of social organization, is among social
capital definitions [19]. Bourdieu, Coleman, Putnam and Fukuyama are social capital theorists.
Nahapiet and Ghoshal, with their organizational approach, have classified the social capital into structural, cognitive and relational aspects [11].
1) Structural aspect
The structural aspect refers to the impersonal configuration of linkages between individuals or social units. The important aspects of this
dimension are network links, network arrangements, and network stability [24]. Network link contains certain manners which link members of
community with together and cause their cooperation [12]. In general, network link includes the extent and intensity of communication in
network [5]. Network arrangements determine the patterns of link between members of social units [12] and contain network hierarchy, the
degree of communicability and network congestion. Network stability includes closeness and similarity of individuals in a social unit [12].In
general, network stability deals with the fact that how much network created for a specific purpose may be used for other purposes [5].
2) Cognitive aspect
Cognitive aspect concentrates on those aspects which provide the representations, interpretations and conceptual systems shared between
members. It reflects the extent of project team members involvement in
the common perceptual and common cognitive practice
development among themselves [24]. Cognitive aspect focuses on resources that enable the manifestation, interpretations, and systems shared
among groups. The most important aspect of this common language is the medium by which people communicate with each other and exchange
the information. Common language increases the ability to synthesize information [11]. Shared stories are those stories and metaphors which led
to preserving the semantics collection in a society [11].
3) Relational aspect
It is the personal relationships which are grown among people by interaction background (which can be seen more in organizational
environment). An important aspect of the relational dimension is the trust which is grown among group members [24]. The most important
aspects of this dimension of social capital are trust, norms, and identities.
2.2 Innovation
The existence of social capital within the organization brings about different consequences such as organizational innovation for the
organization. Peter Drucker states that Business has only two main tasks. He has a great emphasis on these two; Marketing and Innovation.
Completion of these tasks leads to the conclusion which brings about adding value. Other activities are only costly [2].
Innovation is the process which provides the added value and the degree of novelty for the organization, suppliers and customers through the
development of new methods of trade and creating strategies, solutions, products and new services [16]. Innovation is the process of getting
creative ideas and turning them into products, services, and new methods of operation. Innovation creates the talent and the ability to change or
adapt [1].
2.3 Innovation Principles
Managers should realize that creating an innovative environment requires the correct principles. These principles include:
1. Cost: Organizations often deal with innovation inevitably and one way to do it is having attention toward costs. It is necessary for all people to
remember that efforts should be daily. This attitude itself leads to innovation.
2. Quality: If everyone in the organization from top management to lower level employees has the permission to speak and act in the world
class, then, they will achieve innovation and improve products and services continuously.
3. Efficiency: Innovation does not only mean good ideas which occasionally occur. It means to focus constantly on what is needed for greater
efficiency.
4. Relevance: Companies need to know what is related to their business and markets and what is irrelevant. Innovation is worthwhile when it is
employed.
5. The awareness about the market: Innovation depends on identifying market gaps. This means that companies should be aware of market
opportunities as much as possible.
6. Competition: Many companies involved in manufacturing forget that they are in a competition and their income depends on being better and
innovative compared to their competitors. Peoples mentality should be in a way that if there is no morality, they may lose their jobs in any
moment [6].
2.4 Types of innovation from the organization perspective
Stem Innovation: This fundamental innovation leads to the creation of new market.
Performance Development Innovation: with the existence of innovation in a product, companies try to increase the use of this new product.
Reproducing Technology Innovation: Reproducing technology requires borrowing materials and equipment from other areas of industry to
produce a new product.
Innovation in naming and advertising the product label: Innovation in product labeling involves the creation of the desire to buy a particular
product.
Innovation of process: Innovation in manufacturing process enables the company to gain advantages, such as accelerating the production process
and increasing the flexibility of production from one product to another product, over its competitors.
Innovation in Design: One of the important issues in design is flexibility. This means that the products should have mitigation capabilities
according to the market conditions and consumer preference changes.
Innovation in revising the formulation: Formulation revising includes the change in the current product structure without changing its
components.
Innovation in providing services: Studies show that the cost of attracting a customer is seven times more than the cost of keeping him. Thus,
innovation in services is one of the most important issues in competition.
Innovations in packaging: Generally, the package changing will change the amount of purchase, its usage in a time period and open new markets
toward this product [13].

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International Journal of Economy, Management and Social Sciences Vol(3), No (12), December, 2014.

2.5 Factors affecting the innovation

Variables of organizational structure, culture and human resource capabilities to provide innovation are the most important influencing factors
which are described as follows [9]:
1. Organizational Structure
Based on extensive research and according to structural variables, three statements can be expressed. First, the organic structures have a positive
effect on innovation according to their lower working expertise, fewer rules and lower concentration compared to mechanical structures. It also
increases the flexibility, adaptability and fertility which facilitate the acceptance of innovations.
Second, easy access to abundant resources is the key factor of innovation. Abundance of resources enables the administrators to spend money for
innovation and accept their failures. Eventually, units connections break down the barriers which prevent innovation through accelerating the
interaction of organizational lines.
2. Organizational Culture
Innovative organizations have similar culture. They encourage the experiment, reward the successes and the failures and gain experience from
their mistakes. An innovative culture has seven characteristics including acceptance of ambiguity, tolerance in impractical affairs, low external
control, and patience in hardships, to learn in clashes, emphasizing the results instead of equipment and emphasizing the open systems.
3. Human resource variables
In the context of Human resource, it is found that innovative organizations are actively involved in education and development of their
members knowledge. They provide job security for their employees at a higher level to reduce the fear of being fired for a mistake and make the
individuals to be open to change.
2.6 The relationship between social capital and innovation
Several researches have been conducted about the relationship between social capital and creativity. In a study entitled measuring social capital
and its relationship with innovation in Iran Khodro, Tonder Unit, Saeedi, Azizimehr, Tousi and Tamizi (2010), have shown that the rate of social
capital in Iran Khodros Tonder unit was moderate. The results showed that there is apositive and significant relationship between social capital
and innovation and organization innovativeness. There is a significant relationship between the network registration and innovation and between
the social trust and innovation.
Rezvani of Toghrayi (2011) has conducted some research about the role of organizational social capital and its dimensions in tendency toward
organizational innovation in knowledge based companies. The results indicate the significant role of organizational social capital in the tendency
toward organizational innovation. Among the aspects social capital, the relational aspect of social capital was the predictor of tendency toward
innovation. The results showed that cognitive and structural aspects of social capital cannot be good predictors for tendency toward innovation in
organization.
Dakhli & clerck (2004) have conducted some research about the relationship between two aspects of capital (human capital and social capital)
and innovation in 59 different countries. Results showed that there is a significant and positive relationship between human capital and social
capital and organizational innovation.
Hauser et al (2007) have conducted some research about the impact of social capital on innovation. One important result of the study is that
social capital has a significant impact on innovation process.
Chen, Chang and Hung (2008) have conducted some research about the impact of social capital on creativity in project teams, using a sample of
54 high-tech companies in Taiwan. Factor analysis indicated four extracted factors from the concept of social capital; social interaction,
communication networks, mutual trust and shared objectives. The findings showed that social interaction and network communication have
significant and positive effects on creativity in project teams. But, mutual trust and shared objectives do not have these effects.
Chang and Chen (2008) have conducted some research about the relationship between social capital, entrepreneurial orientation and innovation.
The results showed that the companies with higher level of social capital and tendency toward to be entrepreneurship, have more emphasis on
strengthening the intellectual capital.
Akcomak and Weel (2009) have conducted some research about the mutual relationship between social capital and innovation and growth in per
capita income in Europe Union. The results showed that social capital indirectly affect the development of innovation.

3. The research hypotheses

The main hypothesis
There is a relationship between the social capital and organizational innovation.
Secondary hypotheses
1.
There is a relationship between the structural aspect of social capital and organizational innovation.
2.
There is a relationship between the cognitive aspect of social capital and organizational innovation.
3.
There is a relationship between the relational aspect of social capital and organizational innovation.
4.
Social capital aspects are able to explain the organizational innovation.

4. Research Method
In terms of objective, this research is a kind of applied research, in terms of nature and method, it is a descriptive and correlational research and
in terms of time, it is periodic. The population of the study consisted of 510 Bank Melli Iran Central Tehran Branch Administration employees,
of which 210 were selected as sample. The tools used in this study are Nahapiet and Ghoshal's social capital questionnaire (1998) and Wang and
Ahmed organizational innovativeness questionnaire (2004). The questionnaire reliability was calculated using Cronbach's alpha coefficient. This
coefficient was 0.87 for social capital questionnaire and 0.85 for organizational innovativeness questionnaire. To analyze the information,
Pearson correlation test and stepwise regression were used.

5. Data Analysis
The main hypothesis: There is a relationship between the social capital and organizational innovation.

Sanjar Salajeghe, Mostafa Hoseinali Beigi, Niusha Meftah *, Ali Asghar Zamani, Shabnam Vaziri

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International Journal of Economy, Management and Social Sciences Vol(3), No (12), December, 2014.

Table 1. Correlation coefficient of social capital and organizational creativity

Social Capital
0.235
0.055
0.016

Variable
Pearson correlation coefficient
Square of the correlation coefficient
Significance

innovation

P<0.05

According to Table (1), the correlation coefficient between social capital and organizational innovation (r = 0.235) is significant. According to
the coefficient of determination of (r2) 5.5, percentage of social capital variance and organizational innovation were common. Therefore, there is
a relationship between the social capital and organizational innovation.
The first sub-hypothesis: There is a relationship between the structural aspect of social capital and organizational innovation.
Table 2. The correlation coefficient between structural aspect and organizational innovation
structural aspect
0.232
0.054
0.008

Variable
Pearson correlation coefficient
Square of the correlation coefficient
Significance

innovation

P<0.01

According to Table (2), the correlation coefficient between structural aspect and organizational innovation (r = 0.232) is significant. According
to the coefficient of determination of (r2) 5.4, percentage of structural aspect variance and organizational innovation were common. Therefore,
there is a relationship between the structural aspect and organizational innovation.
The second sub-hypothesis: There is a relationship between the cognitive aspect of social capital and organizational innovation.
Table 3. The correlation coefficient between the cognitive aspect and organizational innovation
cognitive aspect

Variable

0.271
0.073
0.007

Pearson correlation coefficient

Square of the correlation coefficient
Significance

innovation

P<0.01

According to Table (3), the correlation coefficient between cognitive aspect and organizational innovation (r = 0.271) is significant. According
to the coefficient of determination of (r2) 7.3, percentage of cognitive aspect variance and organizational innovation were common. Therefore,
there is a relationship between the cognitive aspect and organizational innovation.
The third sub-hypothesis: There is a relationship between the relational aspect of social capital and organizational innovation.
Table 4. The correlation coefficient between the relational aspect and organizational creativity
relational aspect
0.231
0.053
0.022

Variable
Pearson correlation coefficient
Square of the correlation coefficient
Significance

innovation

P<0.05

According to Table (4), the correlation coefficient between relational aspect and organizational innovation (r = 0.231) is significant. According
to the coefficient of determination of (r2) 5.3, percentage of relational aspect variance and organizational innovation were common. Therefore,
there is a relationship between the relational aspect and organizational innovation.
The fourth sub-hypothesis: Social capital aspects are able to explain the organizational innovation.
Table 5. The table of multiple correlation coefficients of social capital and organizational creativity

The first step

Dependent and
independent variables

Multiple correlation
coefficient

Squared multiple
correlation coefficient

Adjusted squared
correlation

Sig.

Relational aspect
Organizational Innovation

0.243

0.060

0.062

7.204

0.009

P<0.01

Given the findings of table (5), among the variables of regression, relational aspect is the best predictor of organizational innovation in the first
step. According to the results of stepwise regression analysis, the relationship between relational aspect variables and organizational innovation
was significant. Accordingly, in the first step, relational aspect coefficient explains 6% of the organizational innovation variance. The observed F
in the level of P<0.01 was significant. The regression can be generalized to the statistical population.

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International Journal of Economy, Management and Social Sciences Vol(3), No (12), December, 2014.

Table 6. Beta coefficient table in anticipation of organizational creativity

Sig

0.009

2.684

The standard
beta coefficient
0.268

The non-standard beta coefficient

Standard error
B
0.210
0.563

Predictive variable
relational aspect

Statistical Indicator
The first step

Criterion variable
Organizational Innovation

P<0.01

According to Table (6), beta coefficient increase organizational innovation 0.268 times by each relational aspect increasing.
Table 7. Table of exogenous variables in the regression to predict organizational innovation
Significance
0.411
0.521

t
-1.005
0.573

Beta
-0.252
0.140

Scale
Cognitive Aspect
Structural Aspect

P<0.01

According to Table (7), the relationship between cognitive and structural aspects of social capital and organizational innovation was not
significant.

6. Discussion and conclusions

The main hypothesis
According to Table (1), the correlation coefficient between social capital and organizational innovation is 0.235 which is significant at level of
95%. This means that an organization, with appropriate level of social capital, has a high level of organizational innovation as well. Therefore,
the main hypothesis - there is a relationship between the social capital and organizational innovation is accepted.
Social Capital Network is constructed by the relationships and linkages based on interpersonal and intergroup social trust. It provides solidarity,
social cohesion, and social support for individuals and groups and the energy which is needed to facilitate actions in order to achieve individual
and collective goals. This capital consists of three components; resources embedded in the social structure, Accessibility to such social resources
and usage or collection of such social resources in targeted actions. The ability of social capital in sharing and creating knowledge is one of the
main reasons of the efficient and effective work environments consequences such as organizational innovation.
With the formation of internal and external dynamic relations caused by social capital, organizational trust-based teams will be formed and the
required energy will be provided to facilitate the interaction between them. The formation of informational teams in organization, as a social
capital consequence, provides the groundwork for development of ideas and encourages the staffs to solve their problems by using new methods.
Hence, it can be expected to have increased organizational innovation by social capital increasing.
The first sub-hypothesis
According to Table (2), the correlation coefficient between structural aspect and organizational innovation is 0.232 which is significant at the
level of 95%. This means that an organization, with appropriate level of structural aspect of social capital, has a high level of organizational
innovation as well. Therefore, the first sub-hypothesis - there is a relationship between the structural aspect of social capital and organizational
innovation is accepted.
To explain these findings, it can be said that the structural aspect of social capital refers to the impersonal configuration of ties between
individuals or social units. The important aspects of this dimension include network links, network arrangements, and network stability.
Generally, this aspect includes the existence of suitable systems of work, formation of working groups and proper selection of individuals for
different tasks. The existence of appropriate working system in an organization means correctly sorting the working team and classifying the
organizational tasks in accordance to expertise. Positioning of each employee in the specialized group provides a good condition to make them
familiar with the features of their job and tasks.
Hence, it can be expected that all job-related activities listed in the job description are consciously selected and organized. Besides having the
appropriate systems of work, the complete familiarity of employees with their work method encourages them to do their best. Obviously, in such
a work environment, generation of ideas increases to optimize the operating system and organizational innovation.
The second sub-hypothesis
According to Table (3), the correlation coefficient between cognitive aspect and organizational innovation is 0.271 which is significant at the
level of 95%. This means that an organization, with appropriate level of cognitive aspect of social capital, has a high level of organizational
innovation as well. Therefore, the second sub-hypothesis - there is a relationship between the cognitive aspect of social capital and
organizational innovation is accepted.
Cognitive aspect focuses on resources that enable the manifestation, interpretations, and systems shared among groups. The most important
aspects of this dimension are the common language and common stories. Language is the medium by which people communicate with each
other and exchange the information. Common language increases the ability to synthesize information and shared stories are those stories and
metaphors which led to preserving the semantics collection in a society.
The third sub-hypothesis
According to Table (4), the correlation coefficient between relational aspect and organizational innovation is 0.231 which is significant at the
level of 95%. This means that an organization, with appropriate level of relational aspect of social capital, has a high level of organizational
innovation as well. Therefore, the third sub-hypothesis - there is a relationship between the relational aspect of social capital and organizational
innovation is accepted.
Relational aspect reflects the personal relationships along with various interactions. The most important aspects of this dimension of social
capital are trust, norms (expectations are behaviors having common meaning), musts (represents a commitment to perform an activity in the
future) and identities (a process in which people feel that they are members of a single set with other people/ a process by which a sense of
belonging and solidarity is formed). The existence of hidden features such as musts (as individuals commitment to their jobs and activities) and
job identity in this aspect, leads to job commitment and better performance. In this case, internal force does not guide individual but his
commitment encourages him in organizational activities. Hence, it can be expected to have increasing organizational innovation and new ways
invention to do tasks.

Sanjar Salajeghe, Mostafa Hoseinali Beigi, Niusha Meftah *, Ali Asghar Zamani, Shabnam Vaziri

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International Journal of Economy, Management and Social Sciences Vol(3), No (12), December, 2014.

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