The moderating effect of firm size on relational capital and firm performance. Evidence from Europe
| DOI | https://doi.org/10.1108/JIC-03-2019-0044 |
| Pages | 510-532 |
| Date | 01 October 2019 |
| Published date | 01 October 2019 |
| Author | Antonio Corvino,Francesco Caputo,Marco Pironti,Federica Doni,Silvio Bianchi Martini |
| Subject Matter | Information & knowledge management |
The moderating effect of firm
size on relational capital
and firm performance
Evidence from Europe
Antonio Corvino
Department of Economics, University of Foggia, Foggia, Italy
Francesco Caputo
Department of Pharmacy, University of Salerno, Salerno, Italy
Marco Pironti
ICxT Interdepartmental Center, University of Turin, Turin, Italy
Federica Doni
Department of Business and Law, University of Milano-Bicocca, Milano, Italy, and
Silvio Bianchi Martini
Department of Economics and Management, University of Pisa, Pisa, Italy
Abstract
Purpose –The purpose of this paper is to contribute to the ongoing debate regarding the relationship
between relational capital (RC) and firm performance, by investigating the moderation effect of firm size and
its key role in defining conditions for competitive advantage.
Design/methodology/approach –The paperuses the interpretative lensof the resource dependencetheory,
and refreshesconsolidated studies rootedin RC. It identifies a set of variables to measurethe influence of RC on
firm performance,including the cost of goods sold,interest expenses and earnings pershare. Content analysis
was used to capturespecific features of corporate disclosure tools using 51 itemspertinent to RC. The authors
used a specificdisclosure index drawingon data collected from 73 listed firms in France,Germany, Italy and the
UK. Data covering theperiod from 2011 to 2013 were analyzedusing six regression models.
Findings –Firm size has a moderating effect on the relationship between RC and some variables linked to
firm performance.
Originality/value –The study combines an internal and external perspective to investigate the interplay
between firms and market environments, and therefore, enriches the ongoing debate concerning the
relationship between RC and firm performance. It outlines possible ways through which RC can become an
effective source of competitive advantage.
Keywords Relational capital, Firm performance, Content analysis, Firm size, European context,
Moderation effect
Paper type Research paper
1. Introduction
Recently, there have been several market and organizational changes that have affected
social and economic dynamics. These require a radical reconsideration of the levers firms
can use to help them survive by creating long term and defendable competitive advantages
(Miles, 1975; Hofstede, 1993; Ghoshal, 2005; Calabrese et al., 2018; Tronvoll et al., 2018).
A number of organizational, marketing, managerial and economic studies have responded
to organizations’requests for new conceptual frameworks, managerial approaches and
technical instruments to support a better understanding and managing of emerging market
configurations. Several studies have focused on the advantages that firms can obtain by
efficient approaches to managing the multiple dimensions of intellectual capital (Malone,
1997; Petty and Guthrie, 2000). This paper recognizes the relevance of this research field in
Journal of Intellectual Capital
Vol. 20 No. 4, 2019
pp. 510-532
© Emerald PublishingLimited
1469-1930
DOI 10.1108/JIC-03-2019-0044
Received 3 March 2019
Revised 9 May 2019
Accepted 11 June 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1469-1930.htm
510
JIC
20,4
providing more efficient managerial models and approaches, and aims to focus attention on
the specific issue of relational capital (RC). It considers it as a wider concept covering
variables, processes and dynamics related to the value that a firm can produce as a
consequence of its interaction with its market environment (Martín de Castro et al., 2004;
Bianchi Martini et al., 2016).
The paper used the interpretative lens of the resource dependence theory (RDT) (Scott,
1987; Pfeffer and Nowak, 1996) as a way to systematize and refresh the literature regarding
RC. Reflecting upon previous contributions about the effect of firm size on RC and firm
performance, the paper underlines the existence of a research gap with reference to the ways
in which companies can manage these variables for better qualifying their relationships
with social and economic environment. For bridging this gap, we identified several variables
for firm performance that may be influenced by RC. They are both internal and external to
the firm, but related to its relationship with its external environment. These included the
cost of goods sold (COGS), interest expenses and earnings per share (EPS). Research
hypotheses were developed for these variables, and the possible moderating effect of firm
size was investigated for each of them. The hypotheses were tested using a mix of
qualitative and quantitative approaches, including content analysis (Weber, 1990) and
regression models (De Jong, 1993). We used a sample of 73 listed firms in France, Germany,
Italy and UK for the period from 2011 to 2013.
The research path was developed to contribute to the ongoing debate regarding the
relationship between RC and firm performance, and particularly the moderating effect of
firm size. The rest of paper is structured as follows: Section 2 sets out the theoretical
framework, Section 3 reviews the literature and derives a set of research hypotheses,
Section 4 describes the methods used, Sections 5 and 6, respectively explains and discusses
the findings, Section 7 provides theoretical and practical implications. Finally, Section 8
draws conclusions, portrays limitations and suggests future research avenues.
2. Theoretical framework
It is challenging to define a theoretical framework to describe firms’processes and support
easy identification of elements and conditions that can influ ence firm performance. This
has attracted attention from researchers and practitioners i n both managerial and
economic fields (Miles, 1975; Hofstede, 1993; Ghoshal, 2005). In line with prior studies in
the social sciences, the contributions interested in defining theoretical frameworks under
the managerial umbrella have been influenced by the high level of subjectivity through
which it is possible to observe, analyze and describe firms’structure and processes
(Goulding, 2002). This subjectivity means that many theories have been developed. These
include the transaction cost view, which focuses on the relationship between firms and
their environment and the associated costs (Williamson, 1975; Barringer and Harrison,
2000). The relational view focuses on the opportunity for firms to improve their
performance by collaborating with other economic and social actors (Dyer and Singh,
1998). The extended resource-based view explains firms’competitiveness as their ability
to combine internal and external resources to obtain individual advantages (Lavie, 2006).
The social exchange theory extends the managerial perspective to the social advantages
that can influence individual performance and how individuals collaborate to achieve firm
objectives (Das and Teng, 2002).
This paper rests on the RDT (Scott, 1987; Pfeffer and Nowak, 1996). Studies rooted in the
RDT suggest that firms’survival depends on their ability to interact with their external
environment to acquire resources that are not available within the firm (Barringer and
Harrison, 2000). The RDT offers opportunities to look beyond firms’boundaries in
managerial studies (Paulraj and Chen, 2007), focusing on the relationships between firms
and their environment. Saeed et al. (2016) stated that the RDT is, therefore, an interpretative
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RC and firm
performance
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