This study, based on the social capital theory, investigates social capital accumulated by Korean software(SW) development firms which have made considerable achievement in the Japanese market. In particular, the relationship between their social capital and financial performance is examined. Particular attention is given to assessing ways in which internal and external social capital can be acquired in the Japanese market. There are three major findings in this study. First, it establishes a positive correlation between the amount of social capital and financial performance. Second, it is found that this relationship is less strong if the firm deals in packaged SW products. It is explained in terms of localization requirements. Effective sales of standardized packaged SW requires less embedded network in the market than do enterprise solutions. Third, at the early stage the internal social capital works as a hygiene factor, without which it is not easy to localize products and implement marketing strategy. Firms tried to absorb the external social capital in their own peculiar ways. One way to absorb local experiential knowledge quickly is to make strategic alliance or a joint venture with Japanese firms. However, due to Japanese market characteristics, it is not easy for Korean SW developers to make a partnership with pertinent established Japanese counterparts. Thus, experiences and network relationship of a management team play an important role in establishing a strong tie with Japanese partners. Hiring a local expert as a general manager of an oversea subsidiary is another way to acquire the social capital quickly but it has shortcomings.