Corporate Social Capital and Liability. - Review - book review

Administrative Science Quarterly,  Dec, 2000  by Michael Lounsbury

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Roger Th. A. J. Leenders and Shaul M. Gabbay, eds. Boston: Kluwer Academic, 1999. 576 pp. $139.95.

Over the past two decades, social capital has emerged as an important concept of interest to a wide variety of researchers in sociology, political science, economics, anthropology and management (e.g., Bourdieu, 1986; Putnam, 1993, 1995; Woolcock, 1997; Portes, 1998). Building on the work of Coleman (1990), Burt (1992), and others, research applying the concept of social capital and network methods to the study of organizations has recently developed into a cottage industry. Corporate Social Capital and Liability is an impressive volume that provides a summary of and contributions to this nascent line of work while also proposing a framework to guide future research and theory development. The editors of this volume are ambitious in their aims yet remarkably humble in their claims.

The volume offers a wide range of conceptual and empirical papers by 45 scholars from around the world. Although the contents reveal that there is less than perfect agreement about how to approach the study of corporate social capital analytically, there are many exciting new ideas that promise to propel this research area to new frontiers. In their programmatic introduction, Gabbay and Leenders highlight two main contributions of the volume. The first is its emphasis on the multilevel application of the social capital concept to organizations and organizational life, as opposed to an exclusive focus on individuals. The second is the distinction between corporate social capital, which is defined as "the set of resources, tangible or virtual, that accrue to a corporate player through the player's social relationships, facilitating the attainment of goals" (p. 3, emphasis in original), and social liability, which concerns how social structure and negative ties constrain action in a way that impedes goal attainm ent. By distinguishing among social structure, social capital, and liability, Gabbay and Leenders set out to shift network-oriented research away from "a descriptive set of findings to a theoretically-based orientation with practical implications" (p. 11).

The volume is organized into five sections. The first explores conceptual issues about social capital, the second and third sections offer empirical chapters that focus on social structure at the individual level, and the last two sections provide studies that emphasize structure at the firm level. This section format provides an important ordering device, but there are many interesting connections to be made between chapters and across sections. Like many edited volumes, the collection of chapters provides an invaluable reference set, but it is not necessarily intended to be read straight through. I briefly review some key themes and contributions to provide a flavor for the diversity of the volume.

One of the real strengths of the volume is that it attempts to capture a wide variety of research approaches to the study of social capital, highlighting the value of this concept to many problematics that are of general interest to organizational theorists, economic sociologists, and researchers in related fields. For example, a number of studies investigate social capital in the context of markets and industries. Drawing on positional approaches to status, Podolny and Castelucci (chap. 23) highlight how social capital shapes strategic action in the venture capital industry, and Stuart (chap. 20) shows how social capital opens up access to resources in the semiconductor industry. Extending embeddedness ideas, Uzzi and Gillespie (chap. 24) use the concept of social capital to explain how resource allocation in markets is shaped by the extent to which those social systems are stratified. Uzzi and Gillespie's chapter is particularly valuable because it shows how studies that combine attention to both the positi ve benefits and the liabilities of social structure have the potential to contribute to managerial prescription as well as public policy.

One of the most refreshing aspects of this volume is that many of the chapters focus attention on the understudied topic of the potential liabilities of social structure, or what Gargiulo and Benassi (chap. 16) refer to as the "dark side." Gargiulo and Benassi, for instance, show how strong ties to cohesive contacts limit adaptability to changing task environments. Omta and van Rossum (chap. 19) highlight how the study of the complications and pitfalls in strategic alliances can generate new knowledge about how to optimize social capital and attain more effective partnerships. In one of the more interesting empirical studies in the volume, Higgins and Nohria (chap. 9) show how early mentoring relationships are negatively related to a protege's future stock of social capital, while mentoring later in one's career can increase social capital, what they refer to as "the sidekick effect."

While many empirical studies in the volume provide interesting approaches to the measurement of social capital, there are three more explicitly methodological chapters that are of note. Drawing on the idea that social capital is derived from an actor's position in a relational matrix, Doreian (chap. 7) uses perceptual data to construct a measure of organizational status or social standing. Han and Breiger (chap. 6) provide a more multiplex and thought-provoking image of social capital by decomposing network structure into three separable dimensions comprising status, volume, and proximity. Their suggestions may provide a particularly promising direction for researchers trying to avoid the conflation of social structure and social capital. In a somewhat different vein, lacobucci (chap. 8) highlights how the rapidly developing techniques of dyadic modeling can be employed to shed light on processes involving social capital. These chapters provide insights into how to approach the study of social capital analyti cally but also highlight that there is much more work to be done on developing more refined measures of how aspects of social structure lead to both benefits and liabilities.