*2.4. The Moderating Role of External Social Capital*

According to social network theory, organizations have social utility. People in social situations think and act in similar ways because of the bonds they share. Social networks represent not only two interrelated actors but an aggregate of polyglot indirect relationships and paths that encompass all actors in society [109]. Moreover, the network relationships created bring opportunities and challenges to organizations [110]. Furthermore, the social capital of enterprises consists of the resources that are embedded in the social network and acquired and mobilized through purposeful actions [111]. It has been noted that, in a trust-based relationship network, the ability to borrow resources through the relationship network and the enterprise assets created and accumulated by the economic or non-economic actions taken to achieve an enterprise's goals constitute actual or potential resource aggregation, and the assets are considered important capital, in addition to material capital, human capital, and cultural capital [112]. According to the theory of resource dependence, the business activities of enterprises require resources [113]. Enterprise development depends on internal and external information and resource exchanges [114]. As the "collection of actual or potential resources" of an enterprise, social capital is one of the key business resources that affect or even determine the acquisition of other enterprise resources, such as capital and human resources, information resources, and legal support [115].

The external social capital of a company refers to the positive network ties that a company maintains through its customers, suppliers, financial institutions, government agencies, and other organizations to maintain mutually viable relationships [116]. Mainly, external social capital reflects the resource acquisition capability embedded in an organization's external social network and emphasizes the organization's diverse external social relationships and the network's relationship quality [117]. Most researchers on external social capital believe that external social capital is conducive to an enterprise's access to various types of information, reduces the cost of information search, and brings

information diversification to businesses [118]. Moreover, social capital promotes resource exchange and integration between enterprises, enhances cooperation between enterprises, reduces transaction costs [119], and promotes knowledge sharing and cooperation between organizations, which is conducive to the generation of new ideas and innovations in enterprises [120]. First, enterprises are in the same industrial chain as their suppliers and customers, and customers and suppliers are both the closest business partners in the production and operation of enterprises as well as the primary providers of important product information to these enterprises [121]. Furthermore, establishing good relationships with companies with low external social capital can enable leaders to access useful information and feedback, which will have an important impact on the innovation activities of enterprises [122]. Second, firms maintain good relationships with their business partners to help form complementary resource models with other entities over time. Moreover, firms share resources to master complex technologies, promote resource integration and knowledge exchange, and acquire valuable external knowledge, thus helping leaders reduce search and information costs, negotiation and decision costs, and regulatory and enforcement costs, thus enhancing organizational innovation capabilities [123]. Finally, government agencies have jurisdiction over regulations, R&D funding, standard settings, procurement, and other functions that shape the innovation capabilities of firms. They also hold more innovative and strategic resources and intervene more in the economy [124]. Establishing and maintaining good relationships with the government also helps business leaders gain access to a variety of scarce innovative resources controlled by the government [125]. Based on this, the following hypotheses are proposed:

**Hypothesis 5 (H5).** *External social capital can positively moderate the relationship between transformational leadership and organizational innovation.*

Integrating H4 and H5, this study proposes a mediating-role model moderated with the following hypothesis:

**Hypothesis 6 (H6).** *External social capital positively moderates the mediating role of organizational innovation in the relationship between transformational leadership and ESG performance.*

The research framework is shown in Figure 1.

**Figure 1.** Research Framework.
