Social Capital of Organizations: Volume 18

We develop the argument that organization network structures that yield positive social capital in some task situations convey social liability in other situations. Using the distinction between exploration and exploitation tasks among teams, we show that the network position that conveyed positive social capital for teams engaged in exploration tasks was a social liability for teams pursuing exploitation tasks. Results of an analysis of 67 new product development teams showed that exploratory teams completed their projects more quickly if they had a social network structure composed of many strong external ties that were non-redundant. In contrast, teams pursuing tasks that exploited existing expertise took longer to complete if they had this type of social network structure, mainly because external ties had to be maintained but were not much needed for the task. We propose that organization network theories of tie strength and structural holes need to be broadened to reflect the effects of task differences, network costs, and difficulties in getting others to help.

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.

This study develops a model of the causal impact of social capital on organizational performance, with particular attention to specifying the contingencies that transform some kinds of network ties into social capital or social liability. The study unpacks the “black box” linking social structure and firms' goal attainment by turning to mid-level theories of group heterogeneity and group processes. Hypotheses were tested using data from a national survey of investment clubs. The findings indicate that net increases in instrumental ties at the individual level produce social capital at the organization level in two ways: by increasing the information pool available to decision makers, and increasing their willingness to engage in constructive debate about that information. The combined effects produce increased profits for the organization.

Corporate Social Capital has been receiving increasing attention in recent study of organizations. In this paper we focus our attention on strategic orientation of firms and reveal the ways they are affected by the social structure in which they are embedded. We focus on the way strategic orientation is socially determined and diffused. Our empirical application analyses 100 Israeli software firms, operating in four industrial districts. We reveal five generic business orientations. Applying corporate social capital as a framework, we find that similarity in business orientation is significantly associated with a firm's position in the inter-organizational network and with a firm's geographic location. Both network position and geographic location serve as a pool of social resources for adopting firm strategic style, deem successful in a highly uncertain sector thus creating corporate social capital.

This article analyses inter-firm relations from the perspective of learning, and proposes instruments for governance. It takes into account both social capital and liability, and the trade-offs between them. The purpose is a generic box of instruments, but contingencies are analysed, both for the objective of learning and for the design of an appropriate mix of instruments. The contingencies pertain to industry, markets, technology and institutions. A limited number of network features are taken into account, such as density, intensity, durability of linkages, structural holes and some of the roles that third parties may play. Use is made of a theory that embraces a social exchange perspective and elements from transaction cost economics.

Export promotion organisations in a number of countries have initiated programs to broker networks of relationships between small and medium sized enterprises (SMEs). Their goal is to assist firm growth and promote export activity. However, an explicit framework that explains why public facilitation of inter-firm relationships is necessary, and how economic benefits are derived, is generally absent from both the rationales for these programs and the extant academic literature on export promotion. In this paper we argue that the concept of corporate social capital (CSC) recently advanced by Leenders and his colleagues (Leenders & Gabbay, 1999), along with the broader literature on social capital, provide a relevant framework. The essence of our reasoning is that network-brokering programs attempt to correct failures in the market for relationships between SMEs brought about by the public good nature of CSC. Networking enhances external economies, levering the resources available to firms, and improving opportunities for growth and export expansion. This furthers societal interests in productivity, employment growth, and the expansion of export activity. We illustrate this argument using general findings from the literature on SME networking, and our observations of New Zealand's export promotion programs.

The aim of this study is to assess the significance of social capital in a public organization according to two theoretical frameworks. Following the structural hole theory (Burt, 1992), a sparse social network enables employees to gain control and information benefits. According to the social capital theory (Coleman, 1988), a cohesive social network creates trust and an obligation to cooperate. The theories describe favorable outcomes of the opposite poles of social structure, but the discussion shows that the social capital might not be realized because of unfavorable contextual factors. Empirical findings indicate that a sparse ego network increases an employee's indirect control and that a dense work unit network increases trust in the democracy of decision making. The discussion suggests that a sparse social network might be most beneficial to a bureaucratic organization and that cohesiveness does not automatically induce commitment if it is not supported by favorable social norms. Unless prerequisites of social interaction are well secured, the organization faces the risk of having inadequate levels of social cohesion, which might impede the creation of social capital. In conclusion, the management is faced with the challenge of social liabilities arising from both social cohesion and the lack of it.

The purpose of this paper is to combine insights from collective action theory and from a structural approach to contribute to a theory of control among peers. Drawing on a network study of a medium-sized Northeastern corporate law firm, I show that partners — all formally equal and locked in a cooperative situation — have developed an informal pattern of “lateral control” to help protect their common interests against free loading due to individual expressive problems. This pattern helps peers exercise early monitoring and sanctioning by providing status-based guidance for choices of “sanctioners” who exercise pressure on behalf of the firm. The analysis identifies partners who are most likely to be chosen as sanctioners, offers structural hypotheses to explain these choices, and outlines the implications of these findings for a theory of cooperation among peers.