Saturday, 24 November 2007

Social capital

From my book:

Social or relational capital is an emergent property arising from the organisational system – the organisation and the people working in the organisation. Social capital includes the network of relationships and features of social life within an organisation, the knowledge tied up and shared in these relationships, the ability to work together with other people in value creation, the corporate culture, beliefs lived and values demonstrated by employees. It provides the glue that holds organisations together. Social capital is even less tangible than human capital and demonstrates even more attributes of complex systems. How is this for a paradox: it is not owned by the people but leaves when they leave and is not contained within the organisation but does not exist in the same way without it:

‘Social capital is owned jointly by the parties in a relationship, and no one player has, or is capable of having exclusive ownership rights’

(Nahapiet and Ghoshal)


It cannot be managed but it can be influenced, mainly through conversation. I also think that there are some signs of a positive feedback loop here. As social capital along with other intangibles becomes more important, so it needs to be increasingly socially constructed which needs effective conversations. This increases the importance of social capital, which requires it to be socially constructed, ad infinitum.