Governance Mechanisms for the Promotion of Social Capital for Knowledge Transfer in Multinational Corporations

The aim of this paper is to extend social capital approaches to knowledge transfer by identifying governance mechanisms that managers can deploy to promote the development of social capital. In order to achieve this objective, insights from the micro-level, knowledge governance approach are combined with theory on the determinants of social capital. Three governance mechanisms are identified: market‐based mechanisms, hierarchical mechanisms, and social mechanisms. The findings, based on data from two Danish MNCs, indicate that although the use of social governance mechanisms promotes positive assessment of social capital, hierarchical governance mechanisms constrain its development. The application of market‐based governance mechanisms has no significant effect. In addition, the findings provide evidence that social capital has a positive impact on knowledge transfer.