THE EFFECT OF SOCIAL CAPITAL ON KNOWLEDGE SHARING AND INNOVATION TO IMPROVE THE PERFORMANCE OF BUSINESS (Studies on SMEs Embroidery and Convection in Kudus, Central Java)

Abstract

The purpose of this study is to verify and analyze the influence of trust, social interaction, social norms, shared vision towards knowledge sharing and innovation and business performance on small medium enterprises embroidery and convection industry in Kudus, Central Java. This study took a sample of 125 respondents. Respondents were owners of small and medium enterprises embroidery and convection industries. Technical analysis  using Structural Equation Model (SEM) with AMOS software.This research generally has a positive effect on trust, shared vision, social interactions toward knowledge sharing. Knowledge sharing has positive effect on innovation and business performance, as well as innovations affect business performance.The theoretical findings in this study are: (1) improving  business performance can be done by increasing trust, shared vision, and social interaction, through knowledge sharing, (2) to improve the business performance can be done through increasing knowledge sharing and innovation.This study contributes the findings in the theory of social capital as a based theory in collaboration with  the social action theory, in explaining the role of knowledge sharing as variable that mediated social capital variables.

 Keywords: Business Performance, Knowledge Sharing, Social Capital