Social Capital

Social CapitalAn inclusive understanding of the concept views social capital as the potential resources derived from an individual’s social relationships as well as valued resources available from the organization of that social network of relationships. Individuals or groups exchange social capital to gain access to needed resources from others in the social system or to enhance image through association with the social system. An individual in good standing in a group has social capital to request assistance from members of that group or could mention association with the group to impress others and gain access to otherwise unavailable opportunities. In the business environment, a greater number of promotions and salary increases are samples of benefits for employees with social capital, and searches for a new job are facilitated by the use of social capital.

The value of social capital varies with the task for which it is needed. Resources needed for careers include information, trust, status, sponsorship, and opportunities for development or visibility. Social capital extracted from work organization relationships is more valuable for promotions, while social capital derived from external networks is more valuable for a career shift to a new profession. The lack of social capital can result in constrained opportunities and accomplishments. The bottom line for careers is that one wants social capital for the help it provides in reaching career goals.

Examples of Social Capital

How often do you call on others to fix a computer glitch? Understand a customer’s problems? Identify the best company or job for you? These are examples of information resources available because of connections through a social network due to the exchange of social capital. Such connections can help the individual accomplish what otherwise might be difficult, time consuming, or impossible. Having the ability to get timely information from others, such as a company’s difficulties while job seeking or a new boss’s personal format preferences for compiling a report, can help an individual avoid career setbacks. Investment in relationships and the social structure of those relationships provides social capital that can be used to acquire specific information when needed.

An individual who invests time in maintaining a strong relationship with a mentor can exchange social capital from that investment for resources from the mentor. Mentors can provide information about political traps not readily seen by a newcomer in an organization or by someone new to a position in the hierarchy. They can also provide constructive feedback for personal development, sponsorship for advancement opportunities, and moral support in times of difficulty. Association with the mentor can lead to higher status in an organization. Not surprisingly, someone who has one or more strong mentoring relationships will have more social capital to draw on for career development and advancement. The mentor also builds social capital from the relationship, since the organization is benefiting from the mentor’s investment in the protege. The mentor can exchange social capital with the organization for leadership opportunities.

There are three dimensions of social capital: relational, structural, and cognitive. The relational dimension of social capital involves trust between the parties, norms of behavior within the group, expected obligations among the group’s members, and identification with the group. A work organization with hierarchical relationships contains status differences that facilitate or constrain access to others. A senior executive, for example, is likely to have more immediate access to the expertise of individuals throughout the company than a floor manager. The status provides authority, which is social capital that has value. Status and status symbols, such as job titles, are social capital because of the impressions of success they create. Thus where one is positioned in the network increases or decreases the social capital derived from that network.

Social capital also lies in the structure of the network itself. The structural dimension of social capital includes the number and nature of relationship ties, the network configuration, and the organization of the network in terms of its practices. The size, location, diversity, and closeness of ties within the network can make it easier or more difficult to access relationships and, consequently, affect the amount of social capital one has available to exchange for needed resources. A large, dispersed network makes it more difficult to identify and to reach the needed resources. For example, a business executive has access to a wide number of people, including employees in the work organization, customers, and fellow members of professional organizations, as well as associates in personal networks affiliated with the executive’s family, neighborhoods where the executive has lived, schools, and religious and social organizations. This network of relationships consists primarily of weak ties with many people. If the executive’s child wants to go to a particular college and needs a recommendation from an alumnus of that school, sorting through all the personal connections could be time consuming. However, a large, diverse set of relationships increases the likelihood of finding someone with the needed resources for different situations. In this manner, social capital can be utilized for a greater variety of tasks.

On the other hand, the closeness of relationships creates greater trust, facilitates the sorting process, and increases the possibility that the other person will feel inclined to help. This is possible because more is known about those with close ties and the closer relationships allow for stronger trust. Yet closer relationships are more often found among similar individuals, and networks of similar individuals might not provide resources needed for changing needs.

A third dimension of social capital, the cognitive dimension, includes shared narratives, language, and codes. As an illustration of this aspect of social capital, consider the terminology that MBAs develop through their studies. They form a kindred group that shares case study examples and metaphors of leadership and organizations. Members of this group have social capital at their disposal for exchanging information.

How Social Capital Provides Value

The norms and purpose of a social structure will affect the amount of social capital that can be extracted from the relationships of that social network. Family relationships can carry stronger expectations for supporting one another than professional relationships. This is seen in the advancement of family members over others to senior-level positions in a family owned business. In such a case, there are expectations of keeping the business family owned and run and that family members will rise to the occasion to keep the firm in business. It is an expectation based on trust, beliefs, and obligations: trust in the capabilities and motivations of family members to perform well, the belief that family members are privileged, and the obligation to give family members advancement opportunities and support. In contrast, two people who have met briefly through professional encounters will not feel compelled to help each other with a business problem if they see each other as business competitors. However, they may exchange information about their graduate programs. There is an expectation for showing pride in your alma mater but also an expectation of confidentiality surrounding specific business issues as well as sanctions for violating confidentiality. The old adage, “Don’t air dirty laundry in public,” is relevant here and implies that certain types of information and modes of behavior can be shared within a specified network but not beyond. Groups with strong ties among its members are said to have a strong “bonding” form of social capital.

There are two schools of thought about how network structure affects social capital. One view asserts the value of rich, closed networks where everyone is connected and shares freely within the network. A family business is an example. Here this bonding form of social capital within the family is maximized when the network has strong enough ties to understand the specific needs of individuals and has built trust among the members to exchange social capital. This closed network type of social capital is used to explain how groups of individuals such as racial groups are advantaged or disadvantaged. For example, being a member of a company golf league where the latest news about impending company changes is shared may provide social capital for an executive, putting nonmembers of the league at a disadvantage. Obviously, country clubs hosting the league that do not allow women or racial minorities disadvantage those groups in the company. A less obvious aspect of this example is that women and certain minority groups are less likely to have acquired the game of golf in their younger years to play well enough to join the league. The construction of the league itself exacerbates the gap between the advantaged and disadvantaged groups and limits their available social capital relative to the league members. Moreover, this network might have been closed to particular individuals earlier in life than may be apparent. Members of the golfing community form a bond of relationships with its own vocabulary and ways of viewing the world.

The other school of thought, structural holes theory, purports that positioning within a network where one can supply needed information from personal networks not available to others creates more social capital. The person who always knows somebody who can help is seen as having a great deal of social capital. Furthermore, that person can choose to use that social capital as a bargaining tool, such as exchanging introductions for a choice project assignment. Again, the strength of the relationship affects the social capital that can be extracted from the ties. If the boss’s son is a fan of your friend who plays in a rock band, an introduction can become a bargaining tool for career advancement opportunities. The tie with the boss only needs to be strong enough to know about the boss’s son’s fondness for your friend’s band and strong enough to provide the opportunity for you to express career ambitions to the boss. The tie with your friend needs to be strong enough to impose a favor. The ability to act as a liaison between other networks is what establishes the value of social capital according to structural holes theory. This type of social capital is referred to as bridging and is used to explain the competitive advantage that some have over others because they have social capital to exchange in groups that are closed to others.

Social capital is an asset that with investment grows to yield greater possibilities for future benefits. It has value because it can be traded to obtain other valued assets. Since social capital is derived from a social system, it is dependent on the collectivity of that system. If the structure fails, or if the members change norms, or if the level of trust one is granted within the system falls, social capital will be affected negatively. Withdrawing capital from the social net­work or structure comes with an expectation of future payback with an uncertain time horizon. If there is a violation of reciprocity, the group member will receive sanctions and lose social capital.

When the concept of social capital is applied to the organizational level, there are reciprocal implications at the individual level due to the “collectivity” nature of social capital. Just as an individual can use an organization’s reputation to build social capital, so too can an organization use the visibility of an associated prominent individual to improve its reputation. In both cases, the relationship is exploited for gain. For this reason, social capital is referred to as appropriable when used between or within levels of analysis. Negative perceptions from associations are also possible, and they decrease the value of social capital.

Social capital can be a complementary form of capital. For example, an entrepreneur with limited funding for a growing enterprise can call on friends and family for free support or advice. Similar to physical and intellectual capital, social capital needs maintenance. The activity of maintaining social capital is staying connected with one’s network and attending to the members’ needs. A strong level of trust may minimize the amount of maintenance needed.

Social Capital and Careers

The career competencies framework of knowing-why, knowing-how, and knowing-whom can be used to examine the value of social capital to careers. The identity exploration competency of knowing why is enhanced by constructive feedback from others that can be obtained with the use of social capital. Social learning is one example of how using social capital to get closer to experts assists the development of job-related capabilities, or knowing-how. Social capital buys access to relevant people, or knowing-whom, and thus presents access to opportunities as well as resources and information for personal skill development and identity sense making.

Social capital helps individuals find educational and developmental opportunities to qualify for more career options. It can also facilitate job searches through a greater awareness of opportunities and with introductions to prospective employers. Social capital is associated with greater career success, whether success is defined as the number of promotions, level of salary, or career satisfaction. Career success is achieved through the exchange of social capital for information, resources, and sponsorship.

Entrepreneurs have an extensive list of needs, and social capital can facilitate the process of starting a business by providing access to information and resources. The goodwill of others can be tapped to provide goods and services in the early stages of a start-up when one has social capital.

Career success may not be associated exclusively with individual exchanges of social capital. The combination of individual and organizational level exchanges can promote career success. Exceptional team or organizational performance can draw attention to an individual’s capabilities. Social capital facilitates group effectiveness that can lead to individual career success by providing access to resources outside the group through bridging behavior. Also, the bonding form of social capital helps the group utilize its internal resources. A high-performing organization leads to an impressive resume and notoriety that can open doors for individual opportunities.

Finally, other types of human capital that lead to career success can be enhanced by social capital. Intellectual capital, for instance, is increased when social capital is used to gain more information and resources that lead to the creation of greater knowledge than possible without assistance. Companies that recognize the connection screen for social capabilities and networks as well as intellectual abilities in job interviews, given the complexity of organizational life and the resulting need for teamwork.

Building Social Capital for Building a Career

Simply put, the sources of social capital are relationships and the network structure of those relationships. Another saying, “Network, network, network,” applies here. Much of career building is associated with competitive advantage, so weak ties to a variety of networks are especially valuable. Professional organizations in one’s functional area offer continuous development and connections to current opportunities. The development of a mentoring relationship outside one’s current work organization gives one social capital that is more applicable across situations. In addition, spending time with coworkers throughout an organization develops trust and sets the stage for bonding through the development of shared stories and language. This bonding creates a market for the use of social capital derived from external networks to create a competitive advantage for career advancement within the organization.

Building social capital entails the development of strategically significant relationships and maintaining those relationships. Barriers may exist to entering some groups, and identification with certain groups may constrain behavior (e.g., religious and cultural groups). However, the formation of weak ties such as professional relationships may be possible with some well-developed skills.

The development of certain cognitive and social skills can improve the ability to build and use social capital. Aspects of emotional intelligence help an individual interact with others effectively. The ability to think strategically and to identify political coalitions helps an individual identify strategic opportunities to use social capital. These are skills that are developed through practice. Even though some people are endowed with more social capital from birth, the skills needed for increasing one’s stockpile of social capital can be learned, so building social capital is theoretically possible for everyone.

See also:


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