SOCIAL CAPITAL

The Relationship between Social Capital and Innovation

Table of Contents

Introduction1

Social capital1

Challenges to social capital in organizations2

War for talent2

Organizational volatility4

Obsession with social capitalism4

Innovation5

Innovation and social capital5

Structural dimension of innovation6

Ego network size and innovation6

Structural holes and innovation8

Network tie strength and innovation9

Network centrality and innovation9

Conclusion10

References11

The Relationship between Social Capital and Innovation

Introduction

Growth in today's age is one of the most crucial elements of company growth. Technological advancements in the last decade have been phenomenal affecting the way. Innovation is not something that takes place just like that for there is a mechanism behind it and this mechanism has been the focus of attention for many researchers. There are certain factors which induce innovation in the organization. The structural dimension of the organization is one of them along with the knowledge of technical resources, the attitude of the management towards change, the lines of communication internally and externally. Innovation research has recently included the concepts of social capital and social network in its domain. According to Subramaniam and Youndt (2005), the bedrock of innovation is social capital. Innovation is a process that takes into account different types of actors and their knowledge.

Social capital may be defined as “the sum of the actual and potential resources embedded within, available through, and derived from the network of relations possessed by an individual or social unit” (Nahapiet and Ghoshal, 1998, p. 243). The paper discusses the relationship between social capital and innovation. It throws light on the concept of innovation and the social capital perspective of innovation.

Social capital

Cohen and Prusak, in their book In Good Company: How Social Capital Makes Organizations Work, define social capital as "the stock of active connections among people: The trust, mutual understanding, and shared values and behaviours that bind the members of human networks and communities and make cooperative action possible." This space between people as highlighted by the two authors has largely remained unrecognized and has never been acknowledged in the same way in the past. When people are merged in an organization to form a cohesive force it facilitates the functioning of the organization. The knowledge sharing among the members of the organization helps them in their job and also increases their cooperation among one another in order to work for a common purpose. It also results in the decline in transaction costs. Since, employees are mostly happy with such an organization the employee turnover rate is very low and so is the turnover of customers as they are served well by the highly motivated employees of the innovative organization (Reagans & Zuckerman, 2001, p. 502).

Social capital is highly dependent on trust. This trust is imperative not only among the employees but also among the employees and the organization. Employees are found to be happiest with organizations that value quality human resource and assure a clear career ladder that provides many growth opportunities for the hard workers and strivers. In this context, it is imperative to state that trust is something which is both fragile and resilient ...