Social Capital and the Boundary of the Firm: Evidence from Relationship-Specific Investments
Abstract
Abstract We investigate the role of social capital in mitigating hold-up problems along the supply chain. We find that supplier firms are more willing to make relationship-specific investments (proxied by their citations to customers’ patents) when transacting with customers headquartered in high social capital areas. This effect is more pronounced when the potential for expropriation by the customer is greatest: when the supplier has a weak bargaining position, faces high asset specificity, or the customer is in poor financial condition. High social capital firms are less vertically integrated and are more likely to form (longer-lasting) trading relationships with each other.
Fields of Study & Subjects
Intellectual Capital and Performance Analysis
Family Business Performance and Succession
Entrepreneurship Studies and Influences
Publication details
- Journal / source
- Journal of Financial and Quantitative Analysis
- Publisher
- Cambridge University Press (CUP)
- Pages
- 1–30
- Publication date
- 13 April 2026
- Language
- EN