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Potential of Social Capital in Organizations

| by Ben Linders Follow 26 Followers on Mar 11, 2015. Estimated reading time: 4 minutes |

"After 100 years of building organizations and 50 years of HRM, the future of work now lies in mastering the art of engaging and developing social capital of our organizations" says Bart Cambré, Director of Research at Antwerp Management School. At the No Pants Festival 2015 he talked about unleashing the full potential of social capital in organizations.

InfoQ interviewed Cambré about why social capital is important for organizations, how success depends on relationships, how social capital can support collaboration in agile teams and how it can help organizations to increase their agility.

InfoQ: What is social capital, can you describe it?

Cambré: "Social capital is the goodwill available to individuals or groups. Its source lies in the structure and content of the actor’s social relations. Its effects flow from the information, influence, and solidarity it makes available to actors." (Adler & Kwon, 2002).

It is important to understand that social capital is a characteristic of your relations, it refers to the resources you can mobilize through your network. Resources refer to access to financial, cultural or intellectual capital, access to people, to knowledge and to systems and/or tools.

InfoQ: What in your opinion makes social capital important for organizations? Why should they invest time and money in it?

Cambré: Social capital is directly linked to organizational success. Quality, knowledge, innovation and flexibility are no longer part of one single organization. They belong to several organizations, therefore these organizations need to collaborate in a network to achieve an outcome that they cannot achieve themselves. Nowadays, resources are global, that is no single organization possesses the necessary resources to make a product or deliver a service. Therefore, organizations need to collaborate. No longer in a make or buy relationship (i.c. alliances) but from the perspective of co-sourcing, jointly working towards an outcome that no single organization can achieve. An example can be a retailer working together with an ICT company and a service provider to build a tool that allows customers to buy products in a different way.

InfoQ: Success is social, it depends on the relationship with others as you mentioned. Can you give some examples of this?

Cambré: There is a broadly perpetrated fiction in modern society that success is individual. Research shows that finding a job, getting promoted, gaining access to venture capital, marketing, and even individual features such as health, education and the manifestation of talent is directly linked to your social capital. For examples of such research, see Granovetter (1973) which was one of the first to clearly describe the fact that finding a job works through social capital. Also there are nice examples in an interesting and easy to read book "Achieving success through social capital" by Wayne Baker (2000).

InfoQ: With agile software development, people work intensively together in teams. How do you think that social capital can support such collaboration?

Cambré: It is an enabler, but also a barrier. It obviously enables people to connect easier and with many others. But communication as such and collaboration as such do not necessarily lead to social capital that allows you to produce interesting results. You have to "work hard" for your social capital. You have to manage your network. You have to make choices in setting up relations, managing them, sustaining them, ending them (if necessary). Hence, a network needs active management.

Furthermore, more connections do not necessarily mean better connections. Social capital is not linked to the number of people/teams in your network. It’s not the number that counts (e.g. see Facebook; linked-in) but the quality of your network: connections resulting in additional resources, new knowledge, etc. As human beings we are bound to a certain limit of connections we can manage.

InfoQ: Do you have suggestions on how social capital can help agile teams to work effectively with their stakeholders like customers, managers and the business?

Cambré: Focus on the things you can achieve together, and that cannot be achieved by all participants in isolation. Focus on differentiation, because innovation is the result of heterogeneity, not from homogeneity. But keep in mind that differentiation also needs integration, therefore make sure you can manage your network and make it effective.

InfoQ: Can social capital help organizations to increase their agility? How?

Cambré: Yes, it allows them to focus on a very limited core of activities, while expanding their periphery through a network that is flexible, constantly changing and evolving over time. It increases agility because it allows them to work on N=1, that is delivering a solution for specific needs instead of a standardized solution that has to fit all needs.

An example: we investigated Dutch networks on "safety houses", hence in crime prevention. No two questions or situations (e.g. by abused women) are the same. The network allows to come up with solutions for N=1, that is for every specific case. So it is counter-intuitive: you expect that because a number of organizations have to work together (social services, police, government, medicines, etc.) that it will be less agile, but it is the opposite. Real answers are given in every situation.

We currently investigate the Flemish health care from the same perspective. Organizations (wit-geel kruis, huisarts, specialist, ziekenhuis) do not collaborate as a network, hence the care for the patient remains sub-optimal. By forming a network with these institutions, the care will become better, resulting in more effective health care and more satisfied patients.

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Further reading? by Anurag Joshi

Are there any books or recommended further reading about this topic?

Re: Further reading? by Alexander Dill

Yes, the WHO study "Is social capital good for health"?
www.euro.who.int/__data/assets/pdf_file/0005/17...
and on the current definition of SC "What is Social Capital 2015":
commons.ch/english/wp-content/uploads/What_is_S...

Ambiguous Social Capital by Alexander Dill

A lot of effort in networks is needed only to keep them "bonding". Networks are like a harddrives consuming all their space and energy for running the programs. In fact you are the more effective the less you have to adjust with your network. One way to achieve this is trust, friendliness, helpfulness and solidarity.
So in my point of view Social Capital is not hanging around for meetings and adjustments, writing endless mails and setting x-people .cc or providing and updating org charts, but just do your thing in full trust that it works.
Paradox: a network is the better the less it acts like a network but only as a virtual entity of individuals trusting to each other.
Therefore some small companies in California are more successful than most of the well organized companies.

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