How closeness matters: the role of geographical proximity in social capital development and knowledge sharing in SMEs
Article publication date: 20 August 2021
Issue publication date: 7 February 2023
This study aims to investigate the impacts of geographical proximity on social capital development through the inter-relationship between three social capital dimensions (structural, relational and cognitive dimension) and the knowledge sharing between small- and medium-sized enterprises (SMEs). The authors empirically test a main hypothesis that the mechanism of social capital development that subsequently results in tacit knowledge sharing is different for SME buyer-supplier partners across their different geographical distances.
Multiple-group analysis in structural equation modeling (SEM) was conducted to test the research hypotheses using data collected from approximately 200 SMEs in Thailand’s food industry.
At a great geographical distance, the structural dimension impacts the cognitive dimension only in an indirect way through a relational dimension, which subsequently leads to knowledge sharing between SME buyer-supplier partners. At close geographical proximity, while the indirect impact of structural dimension on cognitive dimension through a relational dimension is still presented as it is in a great geographical distance, structural dimension has a positive and direct impact on the cognitive dimension as a complementary way to jointly reinforce knowledge sharing between SME partners. Among distant SME partners, the relational dimension shows a stronger impact on the cognitive dimension. In contrast, the direct influence of structural, relational and cognitive dimensions on knowledge sharing is identical, regardless of geographical distance.
The managers of SMEs can design their network-building approach in such a way that different location partners can enhance knowledge sharing. Policymakers could consider these results as a guideline when imposing SME development policies and geographical cluster policies in emerging economies.
This study provides empirical evidence that demonstrates how geographical proximity between SME partners in an emerging economy influences their social proximity through the lens of social capital development mechanism and thus leads to knowledge sharing between them.
The authors thank editor Philippe Gugler for his guidance throughout the review process as well as the anonymous reviewers for their constructive comments and help in improving this article. Authors also thank Abhirup Chakrabarti, Amonrat Thoumrungroje, and Kiattichai Kalasin for their comments on earlier drafts of the article. Finally, authors thank the Office of SMEs Promotion (OSMEP) the Thai Ministry of Industry for their support in the data collection process. All errors remain authors own.
Chumnangoon, P., Chiralaksanakul, A. and Chintakananda, A. (2023), "How closeness matters: the role of geographical proximity in social capital development and knowledge sharing in SMEs", Competitiveness Review, Vol. 33 No. 2, pp. 280-301. https://doi.org/10.1108/CR-03-2021-0038
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