CHAPTER 2: SOCIAL NETWORKS
2.4 CONTESTED DEFINITIONS OF SOCIAL CAPITAL
The concept of ‘structural holes’ is differentiated from ‘weak ties’ in that it stresses social networks as a function of brokerage opportunities rather than the strength of the tie and views a lack of connections (often called ‘sparseness’) between separate clusters in social networks as a source to create social capital (Granovetter, 1973;
Burt, 1992; Monge et al., 2008). In the context of inter-firm networks, Tsai & Ghoshal (1998:467) found that social interaction in the form of bridging ties of team members with other business units directly contributed to an increase in information exchange, which consequently had a significant effect on product innovation. The potential for ECFs to innovate, therefore, seems likely when more and more of these owner/managers interact (network) with different owner/managers from different groups who exchange new information at all times.
2.4.1 THE BONDING VIEW
Bonding social capital (or exclusive social networks) is about the closeness of members of very small groups or organisations (Putnam, 1993:129; Burt, 2007:38;
OECD, 2007:78; Purdue, 2007:10; Laser & Leibowitz, 2009:97). Other scholars (Coleman, 1990; Fukuyama, 1997; Putnam, 2001) offered an internal view of social capital, which suggests that social capital is not only the result of the structure of the linkages between actors within the collective, but also the result of features that give the collective cohesiveness and its associated benefits and thereby facilitate the accomplishment of collective goals (Coleman, 1990:243; Fukuyama, 1995:29;
Putnam, 1995:665, Bhandari & Yasunobu, 2009:488). In ECFs’ context this kind of view always manifests itself in some kind of what is referred to in South Africa as a kind of “broederbond” relationship. In this typical relationship information flow is restricted to the minority individual members who are governed by strict rules and obligations.
2.4.2 THE BRIDGING VIEW
Prior studies with this external perspective (Bourdieu, 1986:247; Baker, 1990:621;
Portes, 1998:3; Burt, 2007:89; Acquaah, 2008:14) suggest that the actions of individuals or groups can be facilitated by their direct and indirect networking with other actors in a social network. This view on social capital focuses on an actor’s relations with other actors. In fact, the ability of ECFs to tap effectively into other firms or competitors is one of the critical advantages of emerging construction firms that cooperate with other organisations.
These two broad types of social capital (the bonding view and bridging view) have opposite views of the success of organisations in achieving their goals. Bonding social capital refers to social links of people based on a sense of common identity, as in the case of family, close friends and people who share common culture or ethnicity (Putnam, 1993:5; Laser & Leibowitz, 2009:87).
A potential benefit of bonding social capital can be seen in the closeness of members of very small groups, who support each other emotionally, socially and economically (OECD, 2007:81). By contrast, bridging social capital refers to links that extend beyond a shared sense of identity. In this context, Burt (2007:7) underlines the influence of outside contacts in helping such small groups accept new ideas and move ahead.
Bridging social capital, Purdue (2007:10) asserts, is a “social oil” type of trust, embedded in denser social networks. The ability to “bridge” allows different groups some advantages in the creation of social capital for both the individuals who bridge the networks and their networks in general (Dahal & Adhikari, 2008:5; Laser &
Leibowitz, 2009:88). In the context of ECFs the ability to “bridge” enables ECFs to gain better knowledge and intellectual capital, which they would not necessarily gain in closed or bonded networks.
2.4.3 AN INTEGRATED VIEW
Other authors (Nahapiet & Ghoshal,1998:243; Lin, 2001:24; Adler & Kwon 2002:23;
Dahal & Adhikari, 2008:5) offer a neutral take on the internal vs. external perspectives.
These scholars regard the distinction as a matter of different frameworks and units of analysis and describe the two views (internal and external) as not mutually exclusive.
The integrated view of social capital offers ECFs the opportunity to explore both internal and external resources. This view on social capital implies that its definition can differ depending on the level of analysis. Table 2.1 below summarizes the major views or definitions of social capital reviewed.
Table 2-1: Major views/definitions of social capital
View Author(s) Definition of social capital
INTERNAL
Coleman (1990:302) Defined by its function; consists of aspects of a social structure; facilitates certain actions of individuals within the structure.
Fukuyama (1997:378) A 'radius of trust', where a circle of people operate according to certain co- operative norms.
Putnam (2001:167) Social networks and the norms of reciprocity and trustworthiness that arise from them … that can improve the efficiency of society by facilitating coordinated actions.
EXTERNAL
Bourdieu (1986:243) The aggregate of the actual or potential resources which are linked to the possession of a durable network of more or less institutionalized relationships of mutual acquaintance or recognition.
Baker (1990:619) A resource that actors derive from specific social structures and then use to pursue their interests; it is created by changes in the relationship among actors.
Portes (1998:6) The ability of actors to secure benefits by virtue of membership in social networks or other social structures.
INTERGRATED
Lin (2001:24) Resources embedded in social relations and social structure, which can be mobilized when an actor wishes to increase the likelihood of success in a purposive action.
Adler and Kwon
(2002:23) The source lies in the structure and content of an actor’s social relations.
Its effects flow from the information, influence and solidarity it makes available to the actor.
Zikmund et al.
(2013:40) The resources embedded in the social networks that an individual has which can be accessed whenever needed.
In sum, from the variety of views and/or definitions of social capital in Table 2.1 above, it is concluded that social relationships are a common element across definitions and that the use of the term social capital refers to the resources (for both private and collective goals) that emerge from one’s social ties (Nahapiet & Ghoshal, 1998:245;
Bhandari & Yasunobu, 2009:486). Bhandari and Yasunobu (2009:487) further argue that the main difference between these definitions is that they treat social capital as either personal resources or social resources. In treating social capital as personal resources ECFs will rely more heavily on close acquaintances to use such resources for private gain whereas the treatment of social capital as a social resource will result in ECFs promoting the welfare of all members of the social network.
Through analysing the various definitions, there are two different typologies of social capital that were examined throughout the literature. In fact, social capital was perceived as either a public or private good. The public social capital refers to those assets that flow to and benefit all individuals that are part of a community, whereas the
private one refers to the potential goods that a focal individual may derive from its social network as an exclusive private property. Social capital in this study is approached as a public good, which benefits ECFs in order to attain their specific goals- firm performance and subsequent wealth for their owners and general members of the social network.
In the context of this study, one can contend that social networks constitute the social capital of ECFs. For the purpose of this study social capital is defined as a collective asset comprised of social relations embedded within and derived from the networks of relationships possessed by the firm which can be utilized to maximize its value. This definition is very similar to those of Nahapiet and Ghoshal (1998) and Lin (2001), since it stresses an actor’s ability to gain valuable resources.
Thus, it is necessary that ECFs engage in social relationships to gain valuable resources that increase their competitive advantage. Accordingly, the study’s working definition suggests that ECFs are expected to engage in the maintenance or extension of relationships to gain access to valuable resources and increase their success. That said, these resources can also be serendipitously gained through social relations. That is, the resources can be a by-product as much as they can be the result of social interactions. For example, ECFs’ owner/managers may gain valuable innovation information or guidance while participating in some activities whose main purpose is not to share innovation-related information. As indicated, the definition of social capital depends on the researcher’s analytical level. Previous researchers have studied social capital at multiple levels, including aggregated levels of societies, nations and regions and individual firms and organisations. The next section delineates studies of social capital at various levels.