Is social capital associated with corporate innovation? Evidence from publicly listed firms in the U.S

Iftekhar Hasan*, Chun-Keung (Stan Hoi), Qiang Wu, Hao Zhang

*Corresponding author for this work

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We find that social capital in U.S. counties, as captured by strength of social norms and density of social networks, is positively associated with innovation of firms headquartered in the county, as captured by patents and citations. This relation is robust in fixed-effect regressions, instrumental variable regressions with a Bartik instrument, propensity score matching regressions, and a difference-in-differences design that isolates the effects of over time variations in social capital due to corporate headquarter relocations. Strength of social norms plays a more dominant role than density of social networks in producing these empirical regularities. Cross-sectional evidence indicates the prominence of the contracting channel through which social capital relates to innovation. Additionally, we find that social capital is also positively associated with trademarks and effectiveness of corporate R&D expenditures.

Original languageEnglish
Article number101623
Number of pages27
JournalJournal of Corporate Finance
Early online date8-Apr-2020
Publication statusPublished - Jun-2020


  • Social capital
  • Trust
  • Cooperation
  • Innovation
  • Patents
  • Citations

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