Chapter 8: Capitalizing on Connections: Social Capital and Strategic Management
Janine Nahapiet1 Social connections and relationships are a major inﬂuence on organizational success. They always have been. However, they are increasingly prominent in current thinking about strategy and organization. Indeed, scholars now argue that we should view the ﬁrm as a portfolio of relationships rather than a portfolio of either businesses or capabilities. This view has profound implications for strategic management. Why are we seeing this renewed emphasis on social connections? What theories help us understand and take action if strategy is viewed from a relational perspective? Fundamental changes at the end of the twentieth century radically challenged conventional wisdom regarding competitive success. Two issues emerged: the crucial importance of the knowledge economy and the idea of collaborative advantage. Both implied the need for a new model of strategy – one built around value creation through social relationships. This chapter’s core argument is that social capital provides a distinctive perspective that can address directly these important challenges facing strategic management. Social capital theory focuses on the value of social connections; scholars argue that ﬁrms well endowed with social capital create competitive advantage through better access to opportunities, options and resources through their relationships. A growing body of evidence supports this view. The distinctive contribution of social capital lies in elucidating the themes that are emerging as central to strategic management. Recent scholarship shows how social capital helps to explain the mechanisms involved in creating and exploiting collaborative advantage and intellectual capital, both particularly critical to innovation and the knowledge economy....
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