Social Capital Theory

Question 1

Nahapiet & Ghoshal (1998)

What is the organizational advantage?

Answer 1

How do orgs hold an advantage over traditional exchanges? They are uniquely able to create and share knowledge.

Question 2

Nahapiet & Ghoshal (1998) Key Ideas, Assumptions

Answer 2

Social Capital is “actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit”

Assumptions:
o relationships between persons are a valuable asset that can produce information benefits for each person and the collectives to which they belong
o Social capital cannot be easily traded/sold in an open market
o Obligations arising from relationships are not easily transferred to others

Orgs foster social capital development by their facilitation of:
o Time: continued interaction between workers
o Interdependence: roles/requirements to work together to achieve goals
o Interaction: maintain relationships

Question 3

Nahapiet & Ghoshal (1998) Dimensions of Social Capital

Answer 3

Structural: people that can be reached through a network and how they are typically reached by the focal actor (i.e., strong vs. weak ties)

Relational: the assets created and leveraged through relationships based on the history of interactions between the parties

Cognitive: shared perceptions, language, and codes of focal actors in a network and their influence over the combination and exchange of information.

Question 4

Critique of Nahapiet & Ghoshal (1998)

Answer 4

• Don’t address agency, intentions to withhold info
• Ignores context, org structures that facility exchange relationships needed for social capital to develop, ignore the goal alignment/role structures that best facilitate interdependence
• Contrast to agency theory that assumes information is a commodity that can be easily purchased…SCT needs trust between parties whereas AT assumes trust is low
• SCT considers time and frequency of interactions
• SCT and agency focus on the dyad, assume that trust reduces opportunism and the need for costly monitoring, structure can influence behavior (i.e., network or contract), the greater the interdependence, the more likely they need to share information (SCT)/comply (AT) because they don’t have as many other options

Question 5

Adler & Kwon (2002)

Answer 5

Construct clarity is an issue

Two main branches of research (value is in structure) vs. value is in content of ties

Structure: looks at structural holes/closure
Content: shared norms/beliefs

We need to look at opportunity to exploit tie:
-structure, motivation, and ability

o Strong ties great for transferring tacit knowledge
o Weak ties great for introducing new information/connections

Question 6

Inkpen & Tsang (2005)

Answer 6

New knowledge especially knowledge from outside the firm, can be an important stimulus for change and organizational improvement

Trust is key for transfer of tacit knowledge (i.e., know-how), those on periphery of network can see more opportunities for resource redeployment

Question 7

Wasko & Faraj (2005)

Answer 7

If sharing knowledge makes you more dependent…why share, especially in online community where people can free-ride?
 Collectivism theories
 Social capital relies on relationships
 Individuals share when they believe it may enhance their professional reputation, when they have experience to share, and when they enjoy helping others

Empirical piece studying contributions to online forum

Question 8

Burt (1997)

Answer 8

• Social capital is more valuable to the manager with few peers b/c he/she has less referents by which to govern their behavior, less peers = less competition and easier time demonstrating legitimacy
• When many people are doing the same work, the value of social capital decreases (i.e., redundant info)