Bureaucratic Systems' Facilitating and Hindering Influence on Social Capital

Authors


  • The authors thank Duane Ireland and Luis Gomez-Mejia for their helpful comments on earlier drafts of this manuscript.

Please send correspondence to: Patrick A. Saparito, tel.: 610-660-1157; e-mail: psaparit@sju.edu, and to Joseph E. Coombs at jecoombs2@vcu.edu.

Abstract

This study demonstrates how banks' bureaucratic systems (i.e., formalization, management continuity, customer orientation) are associated with social capital's relational and cognitive dimensions. We collected survey data from a matched sample of 884 small- and medium-sized enterprises (SME) executives and 217 bank managers across 22 banks to test hypothesized relationships. Our results showed that formalization is negatively associated with both dimensions of social capital, while management continuity and customer orientation are positively associated with them. These results are a first step in answering calls in the literature to study bureaucratic systems' influence on social capital. Theoretical and future research implications are discussed.

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