Social Capital
Introduction:
“Social capital refers to the institutions, relationships, and norms that shape the quality and quantity of a society's social interactions. Increasing evidence shows that social cohesion is critical for societies to prosper economically and for development to be sustainable. Social capital is not just the sum of the institutions which underpin a society – it is the glue that holds them together.”
“Features of social life - networks, norms, and trust - that enable participants to act together more
effectively to pursue shared objectives” (Putnam, 1995)
Globalization needs social capital between countries and even between people of different countries as the trade won’t be done between countries if they have negative social capital.so social capital plays an important role in multinational companies to be successful.
Importance of social capital for international organizations:
According to (Nahapier and Ghoshal, 1998) there are three types of social capital; structural, relational and cognitive.
Structural social capital: Structural factors of social capital are the "roles, rules, precedents and procedures as well as a wide variety of networks that contribute to cooperation" (Uphoff 2000: 218).Structural social capital is very important for MNE’s to share the knowledge within the company and improve the communication between different cultures. These benefits make the international companies better than the local companies.
Relational Social Capital: “The value added worth of a network. It can be thought of as the strategic advantage afforded by key relational ties” (Linksviewer.com, 2006), there are stages for relational social capital to be successful; Context, Visualization and Interaction. Context refers to the applied value of a network (Companies), Visualization means the illustrated value of the network (status and activity) and interaction is the shared value of the network. This will increase the activity between the company and employees and thus will reflect on company success and trust.
Cognitive Social Capital: Is defined as shared goals, norms and values that are created between people with time (Inkpen and Tsang, 2005). Cognitive social capital helps employees to share their information, goals and objectives.
There are also other types of Social Capital which are: Bonding, Bridging, Linking, corporate.
“The term “bonding” holds a negative connotation and generally refers to small circles of homogeneous people that do not cooperate with other outside the boundaries of the group.” (Putnam et al., 1993: P, 93)
Benfield (1958) stated that “to act together for their common good or, indeed, for any end transcending the immediate, material interest of the nuclear family”.
Bridging: Refers to shaping heterogeneous people with different background
Linking: (Knack and Keefer, 1997) stated that it is connecting people or groups who relate to political or financial power. It is very important for the company, to be successful as it helps in sharing the ideas and information.
Corporate: Professional associations, labour unions and political parties that pursue the special interests of their member’s organizations can behave pro-socially as well as anti- socially. (Olson, 1965)
Reference:
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