Human Capital, Inter-firm Mobility and Organizational Evolution

Human Capital, Inter-firm Mobility and Organizational Evolution

Johannes M. Pennings and Filippo Carlo Wezel

The authors of this fascinating and original work contend that by analysing the conduct of organization members, a great deal can be learnt about firm behaviour and about the cooperative and competitive forces that underlie industry evolution.

Chapter 3: Social Capital of Organizations: Conceptualization, Level of Analysis and Performance Implications

Johannes M. Pennings and Filippo Carlo Wezel

Subjects: business and management, human resource management, organisation studies


INTRODUCTION Organizations are presumed to have boundaries. They are endowed with various kinds of assets on which they make ownership claims, and which are protected with isolating mechanisms such as patents and contracts. They are liable for the products and services they produce. Also, they have members whose inclusion in the organization is usually beyond dispute. In fact, the firm as a collection of individuals is often bracketed when considering the competitive game it is playing with other firms. Yet, organizational boundaries are precarious and certainly permeable. They have exchange relationships with suppliers and clients, collude with competitors, and forge all kinds of alliances with them because they cover only part of the value added in their value chain. In their positioning across the chain they face such decisions as whether to ‘make or buy’ components and supplies, whether to share or even outsource R&D efforts, or to operate on a stand-alone basis. Their coherence and integrity might decline and bundles of resources often unravel into discrete parts, but these resources might also become combined – for example in divestments and acquisitions, respectively. Organizations are embedded in a web of relational ties. In this chapter, the term ‘social capital’ captures this relational web. Social capital of organizations constitutes a distinctly collective property that might be mediated by individuals, yet is uniquely organizational. Social capital complements financial and human capital as assets that are more or less valuable, scarce and imperfectly tradable (Barney, 1991). Social capital is even more unique...

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