Network Closure or Structural Hole? The Conditioning Effects of Network–Level Social Capital on Innovation Performance

Abstract

This study contributes to the bonding–bridging debate in the social capital literature by examining the conditioning effects of collective social capital. Data generated from simulation reveals that network density, a measure of network–level social capital, negatively moderates the impacts of firm–level social capitals, measured separately by degree centrality and structural hole, on a firm's innovation performance. Specifically, in low–density networks, degree centrality and structural holes are complementary at enhancing innovation performance. In high–density networks, the positive impact of degree centrality weakens and structural holes turn out to be detrimental. The findings not only advance our understanding of the cross–level dynamics of social capital, but also provide a possible explanation for the mixed empirical results found in previous studies.