The relationship between social capital, transaction costs, and organizational outcomes: A case study

Abstract

Purpose

The purpose of this paper is to explore the connection between social capital, transaction costs, and organizational outcomes.

Design/methodology/approach

The study is based on a survey of 176 employees of a high‐tech manufacturer of electronics located in the Mid‐Atlantic region of the USA. The survey included three self‐report measures: social capital, transaction costs, and organizational outcomes. Self‐report items were used to measure three dimensions of social capital: structure, relationships, and communication. Transaction cost items measured information exchange, problem solving, conflict management, and behavior regulation. Questions measuring organizational outcomes included quality, change, equity, and fairness.

Findings

The central finding of this research is the significant association between social capital and both transaction costs and organizational outcomes. As expected, trust served as a predictor of both transaction costs and organizational outcomes. In addition, the social capital components of access, timing, and network ties were significantly associated with transaction costs and organizational outcomes.

Research limitations/implications

The items used to measure the communication dimension of social capital did not demonstrate sufficient reliability to be entered into the analysis.

Practical implications

The results suggest an alternative approach to considering the connection between communication management and organizational achievement. This approach, also, theoretically centralizes communication and communication related concerns as foundational for social capital analysis.

Originality/value

This study offers a valuable alternative theoretic approach to understanding the impact of communication on organizational affairs.

Citation

Fussell, H., Harrison‐Rexrode, J., Kennan, W.R. and Hazleton, V. (2006), "The relationship between social capital, transaction costs, and organizational outcomes: A case study", Corporate Communications: An International Journal, Vol. 11 No. 2, pp. 148-161. https://doi.org/10.1108/13563280610661688