2002 Does social capital determine innovation? To what extent? Technological Forecasting and Social Change

This paper deals with two questions: Does social capital determine innovation in manufacturing firms? If it is the case, to what extent? To deal with these questions, we review the literature on innovation in order to see how social capital came to be added to the other forms of capital as an explanatory variable of innovation. In doing so, we have been led to follow the dominating view of the literature on social capital and innovation which claims that social capital cannot be captured through a single indicator, but that it actually takes many different forms that must be accounted for. Therefore, to the traditional explanatory variables of innovation, we have added 5 forms of structural social capital (business network assets, information network assets, research network assets, participation assets, relational assets) and one form of cognitive social capital (reciprocal trust).Based on the survey data administered from April to June 2000 to 440 manufacturing firms of diverse industries in a region in the South-West of Montréal, we have found that 68,5 % of the firms have developed product or process innovations during the three years preceding the survey. Assuming that innovation is not a discrete event but a complex process, we have modeled the decision to innovate as a two-stage decision-making process: in the first stage, the firms deal with the decision abou