ABSTRACT
The study assessed the effects of social capital on the performance of First Bank and Zenith Bank Nigeria Plc in Abia State. The specific objectives of the study were to: ascertain the effect of structural social capital onorganisational profitability; find out the effects of cognitive social capital on organisational responsiveness; and ascertain the effects of relational social capital on the effectiveness of First Bank and Zenith Bank Nigeria Plc. The study adopted survey research design approach. Primary and secondary sources of data were used. The study population consists of all the employees of First Bank and Zenith Bank Nigeria Plc in Abia State. Data obtained from field work were analysed using descriptive statistics and Multiple Regression analysis were used to test the hypotheses. Findings revealed that; the fact that internal coordination and joint working in the organization, institution external coordination with other stakeholders, internal connectivity and cross departmental working within the organization is contributing to the profitability of First Bank Plc and Zenith Bank Plcis 99% verifiable; the fact that departments clearly and widely understanding the institutions mission, values and objectives,; departments believing that the missions and objectives of the institution are valuable is contribution to the responsiveness of First Bank Plc and Zenith Bank Plc is 99%verifiable; that the fact that departments having high level of trust in the organisation’s Directors/Chief Executives, high level of trust among co-workers in departments, and departments having high level of trust in other departments contribution to the effectiveness of First Bank Plc and Zenith Bank Plc are 99% verifiable The study concluded that formal and informal collaboration and coordination as well as interaction between colleagues, units, departments and network ties which provide access to resources and information in the organization (Structural Social Capital) is positively affecting the profitability of First Bank and Zenith Bank plc, that the embeddedness, willingness and ability of employees in both organisation to define collective goals, share a common understanding and approach to the organisational goals and objectives (Cognitive Social Capital) is facilitating their abilities to satisfy customers demand regularly and in a timely manner (responsiveness), that the level of trust and reciprocity between employees (Relational Social Capital) in First Bank and Zenith Bank Nigeria Plc is aiding the employees to improved quality of business process, improved quality of customers care and attention, which leads to growing number (Effectiveness) of First Bank and Zenith Bank Nigeria Plc customers. This concludes that social capital (Structural, Cognitive and Relational) have a positive and significant effect on the performance (profitability, responsiveness and effectiveness) of First Bank and Zenith Bank Nigeria Plc within the period under review (2008-2017). The following recommendations were underscore: the Managements of First Bank, and Zenith Bank Nigeria Plc should through beneficial work environment build formal and informal collaboration, coordination, interaction between employees in different departments and should create network ties between employees. Management should through ethical and human resource practices build a relationship of trust and mutuality between employees. The need to regularly reinforce organisational social capital talents by creating viable internal and external networks through professional practices and appropriate technologies were also emphasised.
TABLE OF CONTENTS
Cover Page
Title Page i
Declaration ii
Certification iii
Dedication iv
Acknowledgements v
Table of Contents vi
List of Tables ix
Abstract xi
CHAPTER 1: INTRODUCTION
1.1
Background
of the Study 1
1.2
Statement
of the Problem 3
1.3
Objectives of the Study 5
1.4
Research
Questions 5
1.5
Research
Hypotheses 5
1.6
Significance
of the Study 6
1.7
Scope
of the Study 7
1.7.1
Unit scope 7
1.7.2
Content scope 7
1.7.3
Geographical scope 8
1.8
Limitations
of the Study 8
1.9
Definition
of Terms 9
CHAPTER 2: REVIEW OF
RELATED LITERATURE
2.1
Conceptual Review 12
2.1.1 Concept
of social capital 12
2.1.2 Concept
of organisational performance 15
2.1.3 Background of social capital 22
2.1.4
Functions of social capital 27
2.1.5 Dimensions of social capital 29
2.1.6 Social capital and organisational performance 33
2.1.7 Social capital and organisational
profitability 35
2.1.8 Structural social
capital and organisational performance 37
2.1.9 Relational social
capital and organisational performance 38
2.1.10 Cognitive social
capital and organisational performance 40
2.1.11 Cost of social capital 41
2.1.12 Managing social capital 41
2.2
Theoretical Review 44
2.2.1 The resource based view theory 44
2.2.2 Stakeholders theory 46
2.2.3 Legitimacy theory 47
2.3
Empirical Review 50
2.4
Summary of Reviewed Literature 63
2.5
Gaps
in the Review of Related Literature 63
CHAPTER
3: RESEARCH METHODOLOGY
3.1
Research Design 64
3.2
Population of the Study 64
3.3
Sources of Data Collection 65
3.3.1 Primary
data 65
3.3.2 Secondary
data 65
3.4 Sample Size
Determination 65
3.4.1
Sample and sampling procedure 67
3.5
Validity of the Instruments 67
3.6
Reliability of the Instruments 67
3.7
Methods of Data Analysis 69
3.8
Model Specification 69
CHAPTER 4: DATA
PRESENTATION AND ANALYSIS
4.1
Data Presentation 71
4.2
Effect of Structural Social Capital on the Profitability of First Bank and
Zenith
Bank Nigeria Plc 72
4.3
Effect of Cognitive Social Capital on the Responsiveness of First Bank and
Zenith
Bank Nigeria Plc. 77
4.4
Effect of Relational Social Capital on the Effectiveness of
First Bank and
Zenith Bank Nigeria Plc 82
4.5
Discussion of Findings 87
CHAPTER 5: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1
Summary of Findings 90
5.2
Conclusion 91
5.3
Recommendations 91
5.4
Contribution to Knowledge 92
References 94 Appendices
LIST OF TABLES
3.1 Showing
Coefficient of Correlation of the Reliability of the Research Instrument. 68
4.1 Showing the total number of
questionnaires sampled at First Bank and
Zenith Bank Nigeria Plc and the number that were
return. 71
4.2.1: Showing descriptive statistics analysis
result on the effect of structural
social capital on the profitability of First Bank
Nigeria Plc. 72
4.2.2 Showing Multiple Regression analysis
result on the effect of structural
social capital on the profitability of First Bank
Nigeria Plc. 73
4.2.3 Showing descriptive statistics analysis
result on the effect of structural
social capital on the profitability of Zenith Bank Nigeria Plc. 74
4.2.4 Showing Multiple Regression analysis
result on the effect of structural
social capital on the profitability of Zenith Bank Nigeria Plc. 75
4.3.1 Showing descriptive statistics analysis result
on the effect of cognitive
social capital on the responsiveness of
First Bank Nigeria Plc. 77
4.3.2 Showing Multiple Regression analysis result on the
effect of cognitive
social capital on the responsiveness of
First Bank Nigeria Plc. 78
4.3.3 Showing descriptive statistics analysis result
on the effect of cognitive
social capital on the responsiveness of
Zenith Bank Nigeria Plc. 79
4.3.4 Showing Multiple Regression analysis result on the
effect of cognitive
social capital on the responsiveness of
Zenith Bank Nigeria Plc. 80
.4.1: Showing descriptive statistics analysis result on the effect of relational
social capital on the effectiveness of
First Bank Nigeria Plc. 82
4.4.2 Showing Multiple Regression analysis result on effects of relational
social capital on the
effectiveness of First Bank Nigeria Plc. 83
4.4.3 Showing descriptive statistics analysis result on the relational social
capital on the effectiveness of
Zenith Bank Nigeria Plc. 84
4.4.4 Showing Multiple Regression analysis result on effects of relational
social capital on the
effectiveness of Zenith Bank Nigeria Plc. 85
CHAPTER 1
INTRODUCTION
1.0
BACKGROUND OF THE STUDY
In contemporary business environment
with characteristics like globalisation, competition and high rate of changes
in technology, tangible assets such as capital, land, equipment and raw materials
continue to be important factors in the production of goods and services,
however, their relative importance in creating competitive advantage for
organisations has dwindled overtime, and replaced by the important intangible
assets.
With the paradigm shift from tangible
assets to intangible assets as a catalyst for competitive advantage, organisations
are exploring the potentials of intangible assets as a base for sustainable
competitive advantage and to strengthen their performance frontiers. Portes
(2000) averred that the concept of social capital is arguably one of the most
successful exports from sociology to other social sciences and to public
discourse. The position of social capital in; restoring social cohesion,
reinforcing local networks and formal and informal groups which seek to
facilitate integration and cooperation is increasingly recognised, especially
in the development of intermediate organisations. Leana and Van Buren, cited in
Dorothea, (2012) defined social capital “as a resource reflecting the character
of social relations within an organisation”. Furthermore, social capital can be
considered an asset that can create positive effects to the organisation itself
and to the people that are part of those organisations (Leana and Van Buren,
cited in Dorothea, (2012).
Social capital creates value and
facilitates the actions of individuals within the organisational structure. Social
capital function as a social structure and a set of social resource producing
advantage through personal relationships. It enable social actors create and
mobilise their network connections within and between organisations to gain
access to other social actors’ resources in order to facilitate organisational
performance (Knok, cited in Raheleh,
Amin and Sheida, 2015).
Accordingly, organisational
performance is one of the basic notions in management and most of management’s
tasks are formed according to this notion, and performance is an important
outcome in the study of social capital. Mayo’s Hawthorne experiment (Mayo,
cited in Jung, 2016) shows that, compared to the
traditional scientific management method (i.e., control and direction from
management), laborers are more sensitive to social pressure from colleagues.
Namely, the social or psychological aspects that the human relations school
emphasis, has an important influence on organisational performance. Similarly, in
the words of Jung and Lee (2012), social relations and participative management
style have stronger influences than physical conditions on public employees’
perceived performance. Barnard cited in Jung,
(2016)
also emphasised the importance of informal organisational networks as one of
the components of social capital-that is, considering organisations as
cooperative systems. Social capital has
potential power that can enhance social performance compared to other capitals.
The reason is that other capitals-namely, material resources and human
resources-can
be depleted, but the more social capital is used, the more its efficiency
increases (Lee, Park and Jeon, 2007). Therefore, the increase in the value of
social capital could be very significant in relation to organisational performance,
especially in the banking sector that is relational based and performance
driven.
Be it as it may, First Bank and Zenith Bank Nigeria Plc as organisations
in the banking sector, are knowledge-intensive, skill-based and
relationship-rich organisations. In harmony with the
tenets of social capital, First Bank and Zenith Bank Nigeria Plc leverage on the
potentials of social networks available within and outside their organisation
to create social relationships. These relationships serve
as a resource reflecting employees’ levels of collective goal orientation and
shared trust which create value by facilitating successful collective actions
towards organisational goals and objectives. Through social capital platforms, First
Bank and Zenith
Bank Nigeria facilitate collective work and effective
interpersonal coordination, which makes collective work easier and facilitates
the strength and opportunities of the bank among its contemporaries. However,
social capital as moral capital increases when it is used; if not used, it
become drained and remain at variance with organisational performance. To that
end, there is need for First Bank and Zenith Bank Nigeria to continuously consolidate on their social
capital for exceptional organisational performance.
Against this
backdrop, the study: Effects of social capital on the
performance of First Bank and Zenith Bank Nigeria Plc in Abia State within the
period covered by the study were initiated.
1.1
STATEMENT OF THE PROBLEM
In the business world, organisations
face a complex environment, with growing environmental pressure, global markets
with different rules and cultures and increasing competition. Also, organisations
especially those in the banking sector work in an environment which constantly
needs to improve performance to maintain their customer base, and banks
endeavor to reach elevation in their performance in order not to be outwit by
competitors. Organisations in the banking sector are seeking ways to maintain a
competitive edge over their competitors with assets and resources that are
difficult to copy which are internalized within the organisation, thus there
has been a beam light on how to improve the efficiency of human capital through
social capital. Because to solve organisational problems, consensus and cooperation
among employees in an organisation is needed, which is the mediating role of effective
organisational social capital platform.
Moreover, in an
increasingly complex and more liberal business environment, the performance of banking
institutions may be influence by the quality of social capital and the extent
to which the industry is able to leverage or use their social capital
potentials. Also, social capital theory argues that
one’s relationship network determines the extent to which one can gain access
to information, wield influence, and effect change in organisational
performance. Therefore, to First Bank and Zenith Bank Nigeria Plc, creating and
sustaining internal relationship network through internal coordination, external
co-ordination, internal connectivity, interpersonal trust, and institutional
trust are essential in achieving organisational mission, values, and
objectives which hinges on effective organisational social capital
operationalisation.
Thus, social capital which is an embodiment of structural,
cognitive and relational social capital are required to create
social relationships that will serve as a platform for collective work and
effective interpersonal coordination necessary to facilitates the strength and
opportunities of First Bank and Zenith Bank Nigeria Plc towards been;
responsive, effective, profitable and
to strengthen inter-organisational relationships. Structural social
capital being a form of social interaction, configurations of linkages between
people and units, formal and informal collaboration and coordination as well as
interaction between colleagues, units and departments creates cohesion within
the organization. Cognitive social
capital which is the capacity of the organisation to share the same vision,
mission and goals among members encourages team work and group commitment. Relational
social capital refers to the level of trust and reciprocity between individuals
within an organization which builds a
sense of job security and improves performance.
However, as noted in the
introduction, First Bank and Zenith Bank Nigeria Plc are leveraging on
their social networks available within and outside their organisation to create
social relationships required for organisational performance. But the need to
regularly evaluate the effect of organisational social capital on
organisational performance in order to correct deviances and strengthen
performance cannot be over emphasised. Thus, the need for this study: Effects
of social capital on the performance of First Bank and Zenith Bank Nigeria Plc
in Abia State.
1.2
OBJECTIVES
OF THE STUDY
The broad objective of the study was to evaluate the
effect of social capital on the performance of First Bank and Zenith Bank
Nigeria Plc in Abia State. The specific objectives are to:
i.
ascertain the effect of structural social capital (internal
coordination, external coordination, internal connectivity etc.) on the profitability of First Bank and
Zenith Bank Nigeria Plc.
ii.
find out the effects of cognitive social capital (organisational mission,
values, objectives etc) on the responsiveness
to customers of First Bank and Zenith Bank Nigeria Plc.
iii.
ascertain the effects of relational social capital (interpersonal
trust, institutional trust etc.) on the effectiveness of First Bank and
Zenith Bank Nigeria Plc.
1.3
RESEARCH QUESTIONS
The following research questions were answered
by this study:
i.
What are the effect of structural social capital (internal
coordination, external coordination, internal connectivity etc.) on the profitability of First Bank and
Zenith Bank Nigeria Plc?
ii.
What are the effects of cognitive social capital (organisational mission,
values, objectives etc) on the responsiveness
to customers of First Bank and Zenith Bank Nigeria Plc?
iii.
What are the effects of relational social capital (interpersonal
trust, institutional trust etc.) on the effectiveness of First Bank and
Zenith Bank Nigeria Plc?
1.4
RESEARCH HYPOTHESES
The following hypotheses were tested in null
form:
HO1:
Structural social capital (internal
coordination, external coordination, internal connectivity etc.) does not have
any significant effect on the
profitability of First Bank and Zenith Bank Nigeria Plc.
HO2:
Cognitive social capital (oganisational mission,
values, objectives etc) does not have any significant effect on the responsiveness of
First Bank and Zenith Bank Nigeria Plc.
HO3:
Relational social capital (interpersonal
trust, institutional trust etc.) does not have any significant effect on the
effectiveness of First Bank and Zenith Bank Nigeria Plc.
1.5
SIGNIFICANCE OF THE STUDY
This study findings will be of great importance
to First Bank and Zenith Bank Nigeria Plc and other
financial institutions in Nigeria. The findings will also be of importance to employees of First Bank
and Zenith Bank plc, students and research scholars.
1. The study findings will help First Bank
and Zenith Bank plc in particular and other banks to evaluate, harness, and
judiciously put into use their social capital platforms. It will enable them to
ascertain the worth and operational effectiveness of their social capital
platforms and its overall effect on the performance of their organisation.
2. The study findings will also help the
banks to articulate practical measure and effective ways to improve their
social capital platforms in other to enhance their profitability,
effectiveness, responsiveness and inter-organisational relationship.
3. Also, the study findings will enable First
Bank and Zenith Bank Nigeria Plc
to facilitate collective work and effective interpersonal coordination among
its employees within the organisation. The study findings will enable First
Bank and Zenith Bank Nigeria Plc
envisage ways to create and mobilise their network connections within and
between organisations to gain access and tap from other organisations social
platforms and resources.
4. The
study findings will also help the banks to facilitate internal coordination,
external coordination, internal connectivity, interpersonal trust,
institutional trust and inter-organisational relationship which will horn their
strength and opportunities within the banking sector.
5. On the part of the employees, the study findings
will assist individual employees to collectively reach their goals in working
towards the common good of the organisation. It will help the
employees to harness the resources obtainable from simply knowing others and
being part of social networks within an organisation.
6. The
study findings will ascertain the relevance of the Resource Based view Theory
by establishing the effect of social capital on organisational performance.
7. The
study findings will prove if an organisation social capital platform can serve
as a competitive advantage in improving organisational performance above its
competitors.
8. The study will also add to the list of
scholarly materials available on the research topic which will assist students
and other potential researchers in their research work.
1.6
SCOPE OF THE STUDY
This research work focused on the effects
of social capital on the performance of First Bank and Zenith Bank Nigeria
Plc in Abia State within the period of 2008-2017.
1.6.1 Unit scope
The
research involve all the employees (both core staff and non-core staff) of
First Bank and Zenith
Bank Nigeria Plc in all their branches in Abia State.
1.6.2 Content scope
The
study focused its interest on how social capital (structural, cognitive and relational social
capital) have affected the performance (profitability, effectiveness and
responsiveness) of First Bank and Zenith Bank Nigeria Plc from 2008 to 2017.
1.6.3 Geographical scope
The
study was conducted in Abia State. Abia State is an abbreviation of four of the
state’s densely populated regions Aba, Bende, Isuikwuato and Afikpo. It is one
of the thirty-six (36) states that constitute the Federal Republic of Nigeria.
Aba people are of the Igbo ethnic group who predominates much of the
south-eastern part of Nigeria. Their traditional language is Igbo. English is
widely spoken and serves as the official language in governance and business.
Abia is 2.4mm people are mainly Christians. Abia state consists of seventeen
(17) Local Government Areas. They are: Aba north, Aba south, Arochukwu, Bende,
Ikwuano, Isiala Ngwa North, Isiala Ngwa South, Isuikwuato, Obingwa, Ohafia,
OsisiomaNgwa, ugwunagbo, Ukwa, East, Ukwa West, Umuahia North, Umuahia South, Umunneochi.
Abia
State, which occupies about 5,834 square kilometers. The southern part of the
state lies within the riverine part of Nigeria. It is low-lying tropical rain
forest with some oil-palm brush. The southern portion gets heavy rainfall of
about 2,400 millimetres (941n) per year especially intense between the months
of April through October. The rest of the state is moderately high plain and
wooded savannah.
Crude
oil and gas production is also a prominent activity, as it contributes to 39%
of the GDP. The manufacturing sector only account for 2% of the GDP.
Agriculture, which employs 70% of the second economic sector of Abia with its
adequate seasonal rainfall, Abia has much arable land that produces yam, maize,
potatoes, rice, cashews, plantains, karo and cassava. It is in this environment
that these Microfinance Institutions are located.
1.7
LIMITATIONS OF THE STUDY
Obviously, there is no study without
limitations. Thus, the researcher encountered some limitations in completing
the study. The main constraint encountered by the researcher was the study
apathy expressed by the bankers that formed the respondents of the study. Many
of the bankers declined interest in being part of the study with excuses like
“I am busy, meet my colleagues” and many that accepted to be part of the study
find it difficult to complete their questionnaire. The researcher visited the
banks on many occasions soliciting for the questionnaires to be completed. The
experience was saddening and it added to the hitches of the study. Furthermore,
getting a reliable social science statistician that assisted the researcher in
analysing the data obtained from field was arduous which delay the completion
of the study.
1.8
OPERATIONAL DEFINITION OF TERMS
The followings are the operational definition
of terms in this study:
Cognitive social capital: Cognitive social capital
is the capacity of the organisation to share the same
vision, mission and goals among employees working in an organisation. It is
also the willingness and ability to define collective goals among employees
that are then enacted collectively within the organisation.
Effectiveness:
Effectiveness is ensuring that the output
from any given activity of an organisaion is achieving the desired results
postulated. It is the extent in which an organisational desired goals is
established, approved and achieved towards the success of the organisation.
Inter-organisational
relationships: Inter-organisational
relationships is concerned with understanding of the
patterns, origins, rationale, and consequences of relationships between and
among organisations. It involves partnership, alliance, cooperation, coalition,
network of organisations within a geographical space.
Organisational
performance: Organisational performance is the
extent to which an organisation performs well in pursuing its mission, produces
outputs or services towards achieving its mission. It can also be referred to
as the measurement of the achievement level of an organisation’s strategic
goals and objectives within a defined period of time.
Performance: Performance
can be seen as a rating system which is used in most organisation to determine
and evaluate their abilities and output within a particular period of time.
Profitability: profitability is the
ability of an organisation to earn returns above its expenses from the products
and services rendered by the organisation. Profitability ratios measure the
firm’s ability to generate profits from its products and services which reflect
the overall success of organisation. Put simply, it is the ability of an
organisation to earn return from its investment.
Relational
social capital: Relational social capital is the
level of trust and reciprocity between individual employees within an
organisation. It also involves
the positive expectations individuals have about the intent and
behaviours of multiple organisational members based on organisational roles,
relationships, experiences, and interdependencies.
Responsiveness: Responsiveness
being quick to respond or react appropriately;
sympathetically and sensitively towards the desired goals and objectives of an
organisation for it accomplishment. It also referred to the responsiveness,
swift reaction to the bureaucratic needs and preferences of clients in the
accomplishment of organisational set goals and objectives.
Social
capital: Social capital is a form of social
relationships among organisational actors, and the relationships are created by
exchange of social interactions and interest which leads to differentiation of
power and privilege among the organisational actors. Social capital can also be seen as a set
of intangible assets and resources available to the organisations that enable
them to facilitate social benefits, the economic dealings with internal and
external elements of the organisational network.
Structural social capital: Structural social capital
refers to the configurations of linkages between
people and units in an organisation. It is the formal and informal
collaboration and coordination as well as interaction between colleagues, units
and departments in an organisation.
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