Social Capital

Social Capital is defined as the goodwill available to individuals or groups.

As depicted in the figure above, the source of social capital lies in the structure and content of a actor’s social relations. The most appropriate theory to examine social capital is Social Network Theory because of its focus on relationships.

Adler and Kwon 2002 did a review of social capital research with an aim to integrate the various relevant streams of research and to encourage dialogue across perspectives. These are some of the most relevant takeaways:

  • Definition
    • Goodwill toward an actor that he can materialize in the unknown time in the future. It derives from opportunity, motivations and ability. A person tied to the actor, who is willing to and provides benefits.
  • Benefits:
    • Information
    • Influence, control and power
    • Solidarity
  • The risk of social capital are:
    • Inefficiency in some cases
    • A trade off between power and information benefits
    • Overembeddedness in the structure (free-riding, hinder entrepreneurship)
    • Negative externalities
    • Downward leveling norms
  • Three contingencies:
    • Task contingencies (strong vs weak ties; Coleman’s closed vs. Burt’s structural holes)
    • Symbolic contingencies (influence the value of a given stock of social capital)
    • Complementary capabilities

Social capital has been studied in a number of ways in strategic management. Some relevant ones include:

  • Seibert, Kraimer, Liden 2001
    • They examined an individual’s social capital (network structure and access to social resources) and its effect on individual’s career success. Their findings show that network structure was related to social resources and the effects of social resources on career success was fully mediated by three network benefits: access to information, access to resources, and career sponsorship (Social capital→ network benefits → career success).
  • Zjixing and Tsui 2007
    • They examined whether Burt’s structural holes theory holds in different cultural contexts. They argue that, on the level of national culture, the typical collectivistic culture of China will dampen the effects of structural holes and the benefits of brokerage benefits, and at the organizational level, in organizations that foster a high-commitment culture, the information benefits of structural holes cannot materialize due to the communal-sharing values in such organizations. In their study of four high-tech companies in China, they found evidence supporting their arguments.
  • Galunic, Ertug, Gariulo 2012
    • They ask if there are spillover effects to an actor’s social capital. They specifically look at the second-order connections. In particular is their rank and sparseness had an effect. The found that second-order social capital matters when the contacts have senior positions.
(Adapted from course notes)
(Flashcards and other resources here)

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