The Negative Effects of Social Capital in Organizations: A Review and Extension

Numerous studies have examined the positive effects of social capital in organizations, whereas the possible negative effects have attracted considerably less scholarly attention. To rectify this imbalance, this paper first undertakes a rigorous review of the published scholarly empirical evidence pertaining to the negative effects of social capital in organizations through a search of Web of Knowledge and Scopus, and then enumerates six potentially negative effects arising from increased levels of social capital. The review focuses on negative effects arising from bonding social capital and those arising from dense networks and closure, advancing new theory to elucidate the generative mechanisms that give rise to the proposed negative effects. Finally, the authors identify potential moderators of the negative effects thus theorized. Using the lens of social identification theory, the authors argue that dysfunctional identification processes restrict the processing of information and stimulate over‐commitment to established relationships, diluting in turn the dialectical process, and inhibiting individual learning within organizations, culminating in groupthink, the postponement of structural adjustments, the non‐rational escalation of commitment, and the blurring of firms’ boundaries. This review thus furthers the agenda of a more balanced inquiry into the effects of social capital in organizations.     

‘Belonging’ to a Virtual Research Centre: Exploring the Influence of Social Capital Formation Processes on Member Identification in a Virtual Organization

Identification, a person's sense of belonging, is thought to have positive outcomes because those who identify strongly will be more motivated to achieve organizational goals. This study applies a social capital lens in order to highlight how different social capital formation processes contribute to member identification, with a focus on virtual organizations where dispersed membership may preclude face‐to‐face interactions. The study provides a rare opportunity to explore variation in identification in a single organizational context. The results highlight how some dimensions of social capital augment each other and affect identification through the four conditions that influence social capital development: time, interdependence, interaction and closure. The study suggests that, while creating interdependence and an array of means for interaction support the development of both social capital and identification, not all members of the organization need to feel equally connected. Partial closure appears beneficial for information flows and ‘renewal’ of the virtual organization.     

E‐Procurement Infusion and Operational Process Impacts in MRO Procurement: Complementary or Substitutive Effects?

The procurement of maintenance, repair, and operating (MRO) goods has remained a relatively understudied topic in the literature. Though vital cost efficiencies can be extracted from procurement processes through investments in e‐procurement systems, there is little empirical work that addresses how such systems should be deployed within organizations. In this study, we focus on the role of e‐procurement systems in MRO procurement and study two critical aspects of infusion. The first dimension captures the depth of e‐procurement use within the procurement function, while the second dimension depicts the breadth of use. We argue that these two dimensions of e‐procurement use, and their interaction, will be related to the performance of the MRO procurement process. Using survey data from 193 service organizations and structural equation modeling techniques, we show that the two infusion dimensions are significantly associated with improved process performance. Additionally, we show a substantial substitutive effect between the two use dimensions on performance. Our work has significant implications for managers who seek to gain efficiencies by the deployment of Internet‐based technologies within operational processes. Our conceptualization of e‐procurement infusion along two dimensions provides a more fine‐grained analysis of performance benefits accruing from the infusion of information technologies within organizations.     

Diversity as a Basis for Shared Organizational Identity: The Norm Congruity Principle

Although the social identity approach is generally used to explain the negative consequences of diversity for the formation of a common identity within organizations, we propose that social identity processes can also lead employees to evaluate their differences in a positive way. We propose norm‐congruency as a central principle to understand these issues. We argue that when differences among team members in organizations are congruent with norms and expectations, diversity can become a basis for organizational identification.     

Shareholders and managers: Who care more about corporate diversity and employee benefits?

We test two competing theories that explain a firm’s engagement in corporate diversity and employee benefits: socially responsible investment theory and management overinvestment theory. We find that publicly-traded companies with strong shareholder rights are more likely to promote women and/or minorities to the positions of CEO and board of directors in their organizations, conduct business with women- and/or minority-owned operations, and provide better family benefits to their employees than firms with strong management power. These findings indicate that the companies with strong shareholder rights engage more actively in internal aspects of CSR activities, which supports the socially responsible investment theory rather than the management overinvestment theory. Shareholders (i.e. institutional investors) tend to integrate their social goals (i.e. internal CSR issues) and financial goals into their investments. In response to these changes, managers should engage in the internal aspects of corporate social issues more aggressively as the agents of shareholders.     

Understanding stability and change in fields

In the literature on organizations, there are two very different views of social change. One emphasizes piecemeal change and actor learning. The other views change as more revolutionary resulting in entirely novel forms of organizations. On the surface, these two conceptions of social change seem incompatible. But, I argue that by situating organizations in field analysis, we can make sense about the conditions under which both can occur. This paper offers a framework for understanding strategic action in organizational fields. Embedded in this framework is the idea that these different theories of change operate under quite different structural conditions of fields. The emergence or transformation of a field implies radical change precisely because all elements of the structuring of the field are in flux. If one is observing an already existing field, then the dynamics of interaction are likely to be quite different. Actors in existing fields will work to maintain their position in the field. They will engage in strategic action to make changes in response to what others are doing in the field. Thus, in a stable field where the game for position is ongoing, we expect change to be more incremental, more imitative, and often, in reaction to the moves of others. I end by presenting an example of stability and suggesting a research agenda.     

Unpacking the Mechanism by which Corporate Responsibility Impacts Stakeholder Relationships

Most research on corporate responsibility (CR) has investigated CR from the perspective of organizations, often focusing on how organizations define, manage and implement CR to gain benefits or competitive advantage. The benefits of CR for organizations are, however, often said to be achieved through increased support of stakeholders. Despite this, limited attention has been given to understanding CR from the perspective of stakeholders and, in particular, the mechanism by which CR drives stakeholder support. This study addresses this deficit. Building on advances in the application of psychological theories to the field of management, the research develops and empirically tests a theoretical model of how CR‐related experiences and beliefs drive stakeholder trust and positive intent. The research is conducted with customers (n = 708) and employees (n = 359) of a service organization in the UK that introduced a range of CR‐related activities into their business. The findings contribute to literature by empirically demonstrating (a) the impact of CR‐related experiences on the development of beliefs about, and trust towards, the organization; (b) the importance of ‘others‐related’ CR experiences even in the presence of ‘self‐related’ CR experiences; and (c) the role of beliefs as partial mediators in how experiences of CR, both ‘self‐related’ and ‘others‐related’, translate into trust and positive intent.     

The role of internal social capital in organisational innovation. An empirical study of family firms

Using a sample of 172 Spanish family firms and two responders per firm, consisting of a family member and a non-family member (344 returned questionnaires), we examine the effects of internal social capital on organisational innovation. Building on the relational, cognitive, and structural view, and on social capital theory, we propose that internal networking relationships between family members (family social capital) and between non-family members (non-family social capital) in family firms facilitates innovation. Moreover, its benefits flow from the relationships among the firm's internal groups. The results of structural equation models indicate that the social capital of both family members and non-family members has a direct and positive effect on innovation. Further, our findings provide evidence that non-family social capital is just as effective as family social capital for family firm innovation, establishing a new line of research from an empirical perspective. The findings also test whether social factors are key assets of family firm innovation.     

Righting the balance: Understanding introverts (and extraverts) in the workplace

Since being introduced over a century ago, trait extraversion and introversion have generated substantial research. However, this research has focused primarily on extraversion, with introversion being relatively neglected. Accordingly, the purpose of this paper is to take stock of extraversion and introversion research in the workplace. Doing so allows us to propose a shift in focus away from extraversion to the study of introversion and its potential positive benefits. First, we briefly review the traits’ evolution during the past century and then examine 10 commonly used trait extraversion scales to better understand how extraversion and introversion are studied. Thereafter, we review 10 years of scholarship (2009–2019) appearing in 12 leading management journals. Overall, we find that there is a positive bias towards extraversion and its positively valenced characteristics such as positive affect, outgoingness and socialness. In contrast, our review reveals that introversion is treated as ‘low extraversion’ and often imbued with negatively valenced characteristics such as social awkwardness and low social self-esteem. Based on our multilevel review of the literature, we propose a working list of positively valenced characteristics of introversion and suggest how these introversion characteristics might be beneficial at multiple levels in organizations. In doing so, we hope that our paper will generate new ways of seeing introversion and extraversion alike, which should help right the balance in our shared understanding of how extraversion and introversion can positively shape workplace outcomes.     

International venture capital research: From cross-country comparisons to crossing borders

Venture capital (VC) has become an international phenomenon, and VC firms are a specific kind of service firm whose characteristics have distinctive implications for international behaviour. There is now a disparate body of research on international aspects of VC across a number of disciplines comprising finance, economics, strategy, entrepreneurship, international business and economic geography. A novel aspect of this paper is that we review and synthesize this disparate literature. A number of research gaps and limitations in the theoretical and methodological approaches involved in previous studies are identified and suggestions made for further research. We show that the vast majority of the literature relates to cross-country comparisons; that is, macro-level comparisons of VC industries across different countries and micro-level comparisons of VC behaviour across countries. From our review of the literature, we argue that an under-researched area concerns the influence of institutional contexts, especially the role of social networks and cultures. Furthermore, our review of the literature indicates that there is a major research gap in relation to work dealing with the crossing of country borders by VC firms. We suggest that resource-based, capabilities, institutional and network theories may be offer insights to further our understanding of the behaviour of VC firms in this area.     

The downside of transformational leadership when encouraging followers to network

Network scholars argue that one responsibility of leaders is to help their followers develop social capital. We suggest that one way leaders do this is by encouraging followers to engage in networking behavior. However, we argue that such encouragement is more effective when leaders are seen as less transformational, because followers are then less able to benefit from their leaders’ social capital. We support our arguments with a study of 142 followers and their leaders. Our findings show that followers engage in greater networking behaviors when encouraged by their leaders to do so, but this association is moderated by leaders’ transformational leadership style such that it is stronger as transformational leadership behaviors decrease. We thus introduce an unrecognized cost of leaders’ transformational leadership behaviors. Our findings contribute to research on networking behavior by investigating the role of transformational leadership style, and suggest avenues for research linking social capital and leadership.     

Forms of Network Resource: Knowledge Access and the Role of Inter‐Firm Networks

The leveraging of inter‐firm networks is increasingly considered to be a strategic resource that can potentially be shaped by managerial action. In recent years, scholars have turned to the concept of social capital to understand how the transfer of knowledge occurs within and across firms. However, this has resulted in an overstretching of the social capital concept. The aim of this paper is to refine and add specificity to the current broad application of the social capital concept. It is argued that although the social capital concept explains investments in networks based on a network logic relating to sociability and socialization, it does not explain investments in networks based on a logic relating to economic expectations. These expectations result in network participation that is more calculative than networks containing social capital. The paper introduces the notion of ‘network capital’ to explain the resources contained within inter‐firm networks that do not necessarily equate with the type of trust and obligations associated with social capital. Network capital is defined as an investment in calculative relations through which firms gain access to knowledge to enhance expected economic returns. It is argued that while network capital can be strategically managed, particularly to influence knowledge flow, the nature of social capital is such that it is very difficult to manage. It is concluded that the network capital–social capital framework opens a number of avenues in terms of future research, especially in relation to the extended resource‐based view of the firm and theories of open innovation.     

Social sexual behavior at work

Organizational leaders and scholars have long regarded social sexual behavior in the workplace as deviant, harassing in nature, and something that organizations must eliminate to ensure maximal performance. Regardless of this perspective, however, social sexual behavior is an inescapable feature of human interaction that cannot be completely controlled in organizations. Moreover, there are many aspects of social sexual behavior that have not been considered or granted enough research attention to entirely warrant the broad assumption that social sexual behavior is always problematic to organizations and individuals. In the current paper, we highlight these under-researched or ignored facets of social sexual behavior. First, we consider the potential buffering effects that consensual social sexual behavior at work can offer to those involved, in terms of protecting them from the negative impact of workplace stressors. Next, we discuss the ways in which social sexual behavior is used as a tool of social influence at work. Finally, we consider the role of social sexual behavior at work as a precursor to the development of romantic relationships among employees. Throughout this discussion, we highlight both the potential benefits and drawbacks of engaging in social sexual behavior at work rather than adopting the perspective that all social sexual behavior at work is harmful. We encourage future research to consider all angles when investigating social sexual behavior at work, so as not to be completely detached from the reality that social sexual behavior can be consensual and sometimes enjoyed.     

More than a Metaphor: Organizational Identity Makes Organizational Life Possible

Recent papers by Cornelissen (2002a, 2002b) and Gioia, Schultz and Corley (2002a, 2002b ) have debated the utility of organizational identity as a metaphor for understanding organizational life. In the present paper we argue that this debate is limiting because it frames issues of organizational identity purely in metaphorical terms and fails to explore the social psychological basis and consequences of the discontinuity between personal and organizational identity. Extending this debate, we argue that the power of organizational identity as a theoretical and applied construct derives from the fact that it has the capacity to be both an externally shared and negotiated product and an internalized aspect of the collective self. Consistent with recent research informed by the social identity approach to organizational psychology, we discuss how an appreciation of the identity‐based dynamic between the social facts of organizations and the socially‐structured psychology of organizational members is essential for both theoretical and practical understanding of organizational life.     

TRUST,SOCIAL CAPITAL,AND ECONOMIC DEVELOPMENT

Many argue that elements of a society's norms, culture, or social capital are central to understanding its development. However, these notions have been difficult to capture in economic models. Here we explore a possible role for “trustworthiness” as corresponding to social capital. Individuals are trustworthy when they perform in accordance with promises, even if this does not maximise their payoffs. The usual focus on incentive structures in motivating behaviour plays no role here. Instead, we emphasise more deep‐seated modes of behaviour and consider trustworthy agents being socialised to act as they do. To model this socialisation, we borrow from a process of preference evolution pioneered by Bisin and Verdier (2001). The model developed endogenously accounts for social capital and explores its role in the process of economic development. It captures in a simple, formal way the interaction between social capital and the economy's productive processes. The results obtained caution against rapid reform and provide an explanation for why late‐developing countries may not easily be able to transplant the modes of production that have proved useful in the West. (JEL: O1, O3, O4, Z1)     

Perceptions of demotion decisions: A social capital perspective

This article examines how demotees and co-workers understand involuntary demotion decisions, using a social capital lens. Drawing on data based on semi-structured in-depth interviews from 23 demotees and 46 co-workers (two co-workers of each demoted worker), we find that the likelihood of being demoted is determined by several factors. The personal characteristics of the demotee influence three aspects of social capital: 1) the quality of the employee-management relationship, 2) the ability to socialise with other organizational members and 3) visibility in the organization. Our findings contribute to the relational embeddedness perspective of social capital as well the growing body of literature on the dark side of social capital in organizations by showing how a lack of social capital impacts on demotion decisions. Relevant implications for organizations and HR practitioners for utilizing demotion as a HR tool are discussed.     

Reinvigorating Research on Gender in the Workplace Using a Positive Work and Organizations Perspective*

Gender inequality is a widespread organizational challenge, however, research on gender in the workplace suffers from stagnation in mainstream management research. A positive work and organizations perspective has the capacity to augment problem‐focused gender research with new approaches to boosting gender equity. Yet, contributions that utilize such a perspective are sparsely spread across nearly two decades’ time and dozens of journals with differing disciplinary foci. This paper aims to reinvigorate gender research in management research by consolidating insights that have emerged through the application of a positive perspective. Therefore, we systematically review articles published in 21 management and psychological journals between 2001 and 2016. Four main themes emerged as drivers of gender research from a positive perspective: performance, social integration, well‐being, and justice/moral matters. The contributions within these themes highlight pathways to organizational flourishing through positive diversity and inclusion behaviors and practices. Thus, this paper provides a conceptual map for navigating and planning further research.     

The impact of corporate social performance on the cost of debt and access to debt financing for listed European non-financial firms

This study addresses the controversial issue of how non-financial performance affects the cost of debt capital and access to it. The relationship between corporate social performance and two measures of debt cost (accounting-based and market-based) and the measure of debt access are analysed by means of a multi-theoretical framework combining economics with social theories. By observing a sample of listed European non-financial firms over an 8-year period from 2005 to 2012, we find a negative relationship between corporate social performance and interest rate. Consistent with this result, we find a positive relationship between corporate social performance and debt rating. Thus, corporate social performance has a positive role in reducing the cost of debt capital. Moreover, firms with better corporate social performance are more attractive to lenders in terms of leverage allowance. Overall, our findings provide deeper insight into the reasons why companies should improve their corporate social performance.     

Ethnic Minority Women in the Scottish Labour Market: Employers' Perceptions

This paper contributes to an under‐researched area through investigating employers' perceptions of ethnic minority women in the Scottish labour market. Adopting a social constructionist approach which acknowledges agency and structure and incorporates insights relating to organizational and social group culture, the study highlights the influence of individual (micro), organizational (meso) and contextual (macro) factors on ethnic minority women's participation in the labour market. The paper is based on qualitative research involving Scottish employers in the public and private sectors to examine perceptions and practices related to the employment of ethnic minority women. Institutional commitment to equality issues is questioned, although individual instances of engagement with key equality issues were sometimes evident. Proactive recruitment strategies and career support for ethnic minority women and men were not in evidence, and there was low awareness of the unique position of ethnic minority women in employment and society. We argue that these findings call for a multi‐level approach to advancing human resources management policy, practice and research within a wider socio‐political environment in which the responsibilities and duties of public sector organizations are clarified and more support is provided for organizational promotion of equal opportunities.