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Empirical research on the role of internal social capital upon the innovation performance of cooperative firms

BACKGROUND: Internal social capital in the cooperative firms has emerged in recent years as an important concept for improving innovation performance. OBJECTIVE: We explore whether the cohabitation of the different interacting social groups, namely cooperative members, and non-cooperative members, will generate disparate impacts on the circumstance for enhanced innovation. METHODOLOGY: A sample of 180 cooperative firms in Ethiopia, with two respondents per firm, consisting of one adherent and one non-adherent member, we reflected on the theory of social capital, and by adopting a relational, cognitive, and structural concept. We conducted Structural Equation Modeling (SEM) through PLS to analyze the importance of each group for innovation performance. RESULTS: Our results suggested that the internal interaction between adherent and non-adherent members of cooperative enterprises positively influences their “innovation performance”. The findings also revealed that non-adherent members were more involved in building innovation than adherent members. CONCLUSIONS: The results provide empirical evidence that internal social factors are essential assets for effective innovation in cooperatives, and established a new line of research within an empirical perspective.