A study of the relationships between social capital, knowledge acquisition and innovation in the toy industry in Hong Kong

The toy industry in Hong Kong is facing intense competition on price together with poor returns on investment. In addition, social and environmental responsibilities of toy firms and safety regulations imposed on toy products are increasing. Facing these challenges, toy manufacturers in Hong Kong must enhance innovation to improve competitiveness. Consequentially, this research examines the relationships between social capital (structural, relational and cognitive), knowledge acquisition and innovation in the toy industry in Hong Kong. A quantitative approach is used to analyse 200 valid responses from managerial personnel of toy companies in Hong Kong. Data analysis includes descriptive statistics of the participants, their companies and key variables (structural social capital, relational social capital, cognitive social capital, knowledge acquisition and innovation), together with factor analysis, reliability analysis and hypotheses testing of the key variables. The findings indicate that structural social capital and cognitive social capital (but not relational social capital) positively affect knowledge acquisition in the toy industry in Hong Kong. However, relational social capital on its own is a salient contributor of knowledge acquisition. Also knowledge acquisition is found to positively affect innovation. While the findings confirm that knowledge acquisition fully mediates the relationship between structural social capital and innovation, there is only partial mediation of knowledge acquisition on the relationship between cognitive social capital and innovation. The findings of the research contribute to the theory of social capital, knowledge acquisition and innovation by filling the research gaps and obtaining empirical results for the above variables in the context of the toy industry in Hong Kong. In addition, there are practical benefits for managers in toy companies in Hong Kong in that external knowledge through network relationships with key customers can be acquired and this benefits innovation. The structural and cognitive dimensions of social capital can also be cultivated and combined with knowledge acquisition, leading to improved innovation capabilities.