Social Capital of Young Technology Firms and Their IPO Values: The Complementary Role of Relevant Absorptive Capacity

Journal of Marketing · 2011 · Volume 75 · Issue 6

Abstract

The strategic importance of business-to-business (B2B) relationships is well recognized, but their financial impact remains equivocal. This study links social capital from three types of B2B networks of young technology firms with their initial public offering (IPO) value. The authors identify three relevant types of absorptive capacity that facilitate the transformation of B2B social capital into IPO value. For the transformation to occur, the authors find that young firms need not only the opportunity to access the resources provided by B2B relationships but also the ability to leverage them through the complementary capability—namely, absorptive capacity. They test the hypotheses on a sample of 177 IPOs, and the results are robust to endogeneity concerns and alternative measures. As one of the first studies in marketing–finance interface to focus on young firms, the findings provide novel insights, such as the deleterious financial consequence of having marketing and research-and-development B2B relationships without the relevant absorptive capacity. The authors conclude with a discussion of managerial implications regarding communicating the value of absorptive capacity, disclosure of marketing-related information, and the importance of marketing for young technology firms.

Keywords

business-to-business relationships, social capital, absorptive capacity, stochastic frontier estimation, initial public offering value, marketing–finance interface

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