Learning and capability development: The impact of social capital

Advances in Applied Business Strategy

ISBN: 978-0-7623-1472-0, eISBN: 978-1-84950-520-8

ISSN: 0749-6826

Publication date: 4 February 2008

Abstract

A firm's resources and capabilities can form the basis for performance differences among firms. The question is “how do firms face the challenge of acquiring resources and developing capabilities during their day-to-day activities in order to face competition?” Case study research involving day-to-day activities of a project-firm in a B2B context suggests that social capital – the sum of structural, relational and cognitive resources – built in networks increases the ability to face the challenge of resource acquisition and capability development even during daily activities. A communication network study clearly maps this influence of social capital. More precisely, dominant or powerful employees should be avoided. Next to organizational structures characterized by hierarchy, high and low communications are also not desirable. Moreover, too much trust can harm firms’ abilities to develop capabilities when performing day-to-day activities. Even a complete shared vision hinders firms’ capability development during their day-to-day activities. This study supports the negative impact of overembeddedness; shows the value of articles discussing the downside of social capital and confirms the paradox of embeddedness: overembeddedness as well as underembeddedness has negative implications for a firm's performance. Moreover, from the research results important managerial lessons can be deducted, such as (1) the basis for performance differences can be formed during day-to-day activities and (2) social capital management is a critical success factor in outperforming competitors. Therefore, managers should be aware of the potential value embedded in their day-to-day activities and relationships based on economic transactions. They can leverage their day-to-day activities and relationships based on economic transactions and consider them as sources for resources and capabilities that can be deployed in their search for a competitive position. Moreover, managers should not only pay attention to their financial and human capital but also to the social capital built in the firm's networks and in their employees’ networks. Social capital can influence – among others – divisional learning and divisional capability development.

Citation

De Wever, S. (2008), "Learning and capability development: The impact of social capital", Heene, A., Martens, R. and Sanchez, R. (Ed.) Advances in Applied Business Strategy (Advances in Applied Business Strategy, Vol. 10), Emerald Group Publishing Limited, Bingley, pp. 121-157. https://doi.org/10.1016/S0749-6826(07)10006-8

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited

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