SMEs and social capital: exploring the Brazilian context

This study aims to explore the extent to which social capital plays a role in firm development, internationalization and growth, in the context of an emerging market, Brazil. The study aims to provide a new context and perspective on the role social capital plays in fostering growth and internationalization among small and medium enterprises (SMEs) in an emerging market.

This is an exploratory study. First, empirical data are drawn from a commodity industry, the Brazilian Stone industry, which is a competitive, well-established sector in the country. Using a previously validated questionnaire from the World Bank, the extent of social capital possessed and used by the firms in this industry is correlated to their growth and performance. Based on the exploratory results, a set of research propositions are developed that point the way to questions that are important and interesting to further understand the role of social capital in this context.

The results point to fairly low levels of social capital among Brazilian SMEs in this sector and relatively low levels of awareness of the potential opportunities to exploit social capital to further development and internationalization.

Social capital matters for firm growth and performance, but the extent of development of social capital in this context is fairly low. The limitations include the sample size and the homogeneity of the sample, which restricts generalizability.

Building and exploiting social capital is a void that currently exists in the commodity sector in Brazil. Developing this can lead to more positive firm performance and growth, especially as the institutional context in Brazil continues to develop.

The paper offers a unique context, as well as a new perspective on the role of firm social capital, by using an emerging market and a commodity industry that has been rarely studied in the literature.