The Effect of Social Capital on Organizational Performance in Different Cultures: A Cross-National Comparison of the United States and South Korea

The main purpose of this study is to analyze the effects of social capital on organizational performance of local government and whether the effect varies across national cultures. The study hypothesized that organizational level social capital in a public sector organization has a positive influence on organizational performance. To investigate the relationship, surveys were sent to public officials of local government organizations in the city of Omaha in the United States and Wonju city in South Korea. Based on Hofstede’s definition of national culture, these two countries contrast strongly on important cultural characteristics. The two cities were selected as typical representatives of each country. Social capital was operationalized as structural, relational, and cognitive, and organizational performance was measured in terms of efficiency, effectiveness, responsiveness, and equity. The surveys were distributed to public officials working in various city departments. The departments were chosen to represent the three main policy types (as defined by Lowi): regulatory policies, distributive policies, and redistributive policies. Out of 407 surveys sent, 294 usable and valid responses were received. The data were analyzed using SPSS computer software and included descriptive statistics, ANOVA, Pearson’s simple correlation, t-test, factor analysis, linear regression analysis, dummy regression analysis, and moderator regression. The results showed that organizations with higher levels of structural, relational, and cognitive social capital achieve higher levels of organizational performance. However, the effect of social capital in a public sector organization on organizational performance did not differ across cultures. Rather, within a given culture, the relationship varied by policy type. The findings provide some practical guidelines to government leaders on how to increase social capital to enhance organizational performance. By integrating public organizational theories with social capital literature, this study suggests the determinants of public sector performance