In a supply chain, company’s ability to leverage knowledge that resides
within the network of contracted and interacting firms is able to
improve not only company performance but also the supply chain
effectiveness as a whole. However, existing supply chain studies mostly
discuss knowledge at company level, and rarely at internal-hierarchical
levels. As a result, many things remain concealed, for example, how
knowledge exchange between people across levels in a supply chain is
influenced by the supply chain government. Moreover, most exsisting
studies focus on a rigid hierarchical supply-chain mechanism, and hardly
elaborate how  interactions in a less-rigid mechanism. This article
attempts to address these gaps, discussing how a supplier company that
deals with innovation generation activities acquires knowledge that
resides in its supply chain network. A qualitative case study about an
Indonesian machine-making company has been chosen to represent one of
supplier types in the automotive industry that deals with less-rigid
mechanism. A social capital perspective is applied to shed light on how
interactions between actors in a supply chain network influence
knowledge exchange. The study finds out a positive relationship between
social capital and knowledge exchange across levels and functions to
help generate innovations, allowing the company to manage conflicting
effect beliefs more effectively. The study also identifies a tendency of
the company to regard intensive knowledge exchange as part of
organizational learning process.