One of the most famous examples where social capital is commonly referred to is in Silicon Valley (San Francisco). Silicon Valley is in the of the in in the . It contains many high tech businesses that are supplying the global market with many innovating technologies and silicon microchips. In Silicon Valley, there is a very high level of knowledge held within individual firms, but this would be true whether they were located in clusters or in isolation. There is also a very high level of knowledge about the firms as well. This information is differentially more available to those in the Valley and in the network. This knowledge is not just technical, it is knowledge about who is a good manager or well connected. It is embedded in the social setting, a knowledge that comes from learning and being in the place where the knowledge is being used, and having an opportunity to use it in that setting. It is about knowledge use and production in action.
Social Capital – promotes knowledge sharing and communication
Many contemporary theorists who conducted studies on social capital identified two differing perspectives within the concept. These concepts are socio-centric, and ego-centric. The socio-centric approach argues that the social structure of interpersonal contacts is important for organizational success (Sandefur and Laumann, 1998). A business can benefit from a strong social structure, by allowing employee cooperation that will enable flexibility and innovation.
Knowledge sharing helps employees perform their jobs more effectively, retain their jobs, and guides them in personal and career development. It also rewards them for successful achievements, and brings more personal recognition so that knowledge sharing will become more practiced. By sharing and collaborating with others an employee is more likely to succeed in providing solutions to his/hers own jobs and by helping others achieve their objectives. The philosophy of modern knowledge management exponents is that ‘intrinsic motivation’ is the only real motivator of knowledge sharing. This is where an individual, group or community are sympathetic to each other’s goals, those of the organisation work for collective goals-if these are best achieved through sharing then this is what happens. Intrinsic motivation is making sure that individuals feel part of the business and culture through reward and recognition.
The second perspective of social capital is concerned with the relationships between
individuals. Sandefur and Laumann (1998) refer to this as the egocentric
approach of social networks, where “an individual’s social capital is characterized by
their direct relationships with others and by the other people and relationships that they
can reach through those to whom they are directly tied”. From this perspective, social
capital is able to explain the differences in the success of individuals and firms in a competitive environment (Adler and Kwon, 1999).
A learning organisation views its future and subsequent competitive advantage based on continuous learning and adaptive behaviour. It develops a culture and processes to improve its ability to learn and share both at an individual and organisational level. The main aim is to create a flexible, agile organisation able to handle uncertainty and then hopefully organisations will use this uncertainty to generate new ways of working, to build on this success and learn by mistakes. For example: a large multinational company, British Airways (BA) identified its culture as the biggest barrier it had to learning and sharing so it set out to create an environment where this was made easy. BA developed facilities for staff to access knowledge, libraries, have meeting rooms, training rooms that enhanced its culture. Therefore the facilitation of personal contacts and network, and the enhance role of training and development being a core was British Airways success for its new culture.
Social capital – barrier to knowledge sharing and communication
As developed in Ronald Burt’s theory (1998), the socio-centric notion can act as a barrier to generating and sharing knowledge in an organisation. The socio-centric perspective includes the concept of power benefits acquired by individuals that control structural holes. This idea shows how certain individuals within an organisation may have power over groups of employees and act as the link between them. Such individuals are said to be ‘filling a structural hole’, therefore their relative contacts have no direct contact with one another. This allows such an individual to have a certain level of manipulation over knowledge sharing between the two groups and benefit from the social capital derived from them. This can be both an advantage and disadvantage to the firm. It can be an advantage to the individual in that their social capital is increased, and that it allows the two departments to communicate ideas effectively.
However the filling of structural holes with one individual could also act as a barrier to generating and sharing new knowledge within the firm. Because when implemented in a firm it means that individuals in different departments do not need to communicate between each other eliminating knowledge sharing within the individuals in each department.
Within an egocentric network, sharing of knowledge can be one of the most difficult problems faced by knowledge organisations. In most organisations knowledge sharing requires a change in corporate culture, from ‘information is power’ to ‘knowledge sharing build power.’ Many organisations decide that the most effective way to encourage individual sharing appears to be through appraisal systems where individuals are asked to assess their own knowledge-sharing behaviours and consider their colleagues view of their sharing performance.
The most obvious disadvantages are: an employee may fear senior experts or a supervisor. This fear can have an impact on the way the employee conveys his/her opinions. Another disadvantage is that employees can get compromising solutions from a group of experts with conflicting opinions. This would not give the knowledge engineer an accurate view of the knowledge needed. Also, there can also be a Lack of confidentiality as employees may feel threatened by knowing that their contributions will be shared with and evaluated or validated by other domain experts. However, the results of the appraisals may affect promotion and salary but their use is part of the development culture that includes knowledge sharing as a core competence.
Conclusion
Social capital has been described as a non-tradable form of capital that will depreciate if not used. Social capital increases in value through use, as relationships get stronger and weak ties are increased (Klaus Nielsen, 2003). In this article we have established that social capital is a rapidly growing notion, more commonly referred to by theorists when discussing issues of economics and organisational knowledge sharing. The concept has been criticised for the diversity of its definition, measurement challenges, and over-versatility (Woolcock and Schuller, 2000). These theorists concluded that social capital can have both a positive and a negative impact on the overall success of an organisation. Positive, in the aspects that a well working network of sharing knowledge can lead to innovation, and greater efficiency of the employees working relationships. Negative in the sense that strong social capital for an individual, or a group of employees does not necessarily guarantee a benefit on a macro scale for the organisation.
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