Institutionalized ties and corporate social capital: The case of hospital mergers and closures

Abstract

In this article the authors explore how institutionalized social ties may buffer organizations against threats to survival and then even at the brink of extinction enable them to merge instead of close. Drawing on social capital theory, we propose that legitimating and mutualistic ties both buffer and enable organizations. We examine this proposition by first testing how both types of social ties affect the likelihood of either merging into other organizations or closing entirely. We then test how the same ties affect the likelihood of merging relative to closing for organizations that undergo one of these two events. Results from the U.S. hospital industry provide little support for the hypothesized buffering roles of social ties but greater support for the enabling roles of such ties. It appears that certain social ties yield corporate social capital that reduces endangered organizations' losses but yield little or no social capital that protects against the threat to their survival in the first place.

Citation

Wells, R., Lee, S.-Y.D. and Alexander, J.A. (2001), "Institutionalized ties and corporate social capital: The case of hospital mergers and closures", Gabbay, S.M. and Leenders, R.T.A.J. (Ed.) Social Capital of Organizations (Research in the Sociology of Organizations, Vol. 18), Emerald Group Publishing Limited, Leeds, pp. 59-82. https://doi.org/10.1016/S0733-558X(01)18003-1