Linkage between Relational Capital and Firm Performance: A Study in the Context of Clustered Clay Tiles Firms in Saltora Region in West Bengal, India

Abstract

This paper seeks to analyse the impact of relational capital components on the performance of clay tiles clustered firms in Murlu, Saltora region of Bankura district, in the state of West Bengal in India. It is based on an assemblage of relational capital for assessing and determining the importance of relationships in the perspective of firm performance level. The study considered eight relational capital indicators for eliciting firm responses to the level of relational capital. A survey was conducted on 60 firms in the cluster. Cronbach’s alpha has been used to test the reliability of a series of individual components of relational capital. Principal component method was applied to derive the relational capital index based on all the indicator components. It is found to be strongly related to profitability performance. Overall, regression of the profitability figures carried out on individual relational capital components has yielded a significant outcome and some of the components are also found to have a significant impact on firm performance level. Based on the analysis, concrete suggestion is provided for spotting areas of relational capital, which, if handled and cultivated proficiently and deftly, can play a significant role in influencing firm performance level.

Keywords: Relational Capital, Cronbach’s Alpha, Principal Component Analysis, Entrepreneurship, Regression

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