The paradox of social capital: structural, cognitive and relational dimensions

Recently, there has been a shift in the way management scholars view the firm, from more traditional models that are based on ideas of opportunism and market failure (Williamson, 1975), to newer knowledge-based theories that argue for a more socialized perspective (Kogut & Zander, 1992). One of the key components of these theories is the notion of social capital. Social capital is the set of resources that accrue to an individual or group by virtue of possessing a set of relationships. Scholarly research suggests that firms can leverage the social capital that is embedded in the relationships of their members to develop intellectual capital (Naphiet & Ghoshal, 1988). As such, social capital can be used to create differential organizational advantage. In this paper, we question the contention that the accumulation of social capital has a positive and proportionate effect on the performance of projects in organizations. To do this, we use data collected from over 38 interviews of senior and middle managers in five firms operating in different industrial sectors in the United Kingdom. Our findings indicate that while social capital has many beneficial effects with respect to information access and retrieval, that there are also a host of lessbeneficial aspects to utilizing social capital, which are under-explored in the current empirical literature. Implications and future research directions are discussed.

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