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Today's 'social capital' is yesterday's 'old boy's network.'


All of a sudden social capital is a hot topic. Set in motion by Harvard professor Robert Putnam with his 1995 essay titled "Bowling Alone: America's Declining Social Capital" in the Journal of Democracy and picking up steam with the press surrounding the publication of his book titled Bowling Alone: The Collapse and Revival of American Community (Simon & Schuster, 2000), the topic seems to be gathering more mainstream momentum with the recent publication of books such as Wayne Baker's Achieving Success Through Social Capital: Tapping the Hidden Resources in Your Personal and Business Networks (Jossey-Bass, 2000) and now In Good Company: How Social Capital Makes Organizations Work by Don Cohen and Laurence Prusak (Harvard Business School Press, 2001).

Arguing that the research and literature on social capital has focused "almost exclusively on individuals and social groups such as communities, neighborhoods, cities, regions, and nations" and not business organizations, Cohen and Prusak claim that there is "enough commonality between these entities and businesses to suggest that social capital analysis of the former can teach us valuable truths about the latter". With this in mind, the authors state their purpose in writing this book as being "to speak the unspoken obvious truths" surrounding the workings and importance of social capital in organizations -- primarily businesses.

According to the authors, not only is the concept of social capital "generally still a new idea" in organizations, the focus on and predictions regarding such things as the virtual office, telecommuting, and other technological transformations of work "ignores or grossly underestimates the profoundly social nature of work" and the role of social interaction in the creation of shared norms, values, and knowledge within organizations. In addition to discussions on the importance of space design along with the need to respect and nurture "emergent" social spaces such as the coffee room, water cooler, and parking lot in organizations, the authors give considerable attention to the role and importance of "social talk" such as gossip and various types of storytelling in creating and building social capital within organizations. They also discuss how various practices such as too much emphasis on speed and efficiency can not only be damaging to social capital but can "limit the basic thoughtfulness that complex work requires."

In presenting their case, Cohen and Prusak reference a range of scholarship on the subject of social capital including work by Jane Jacobs, George Homans, James Coleman, Glenn Loury, French sociologist Pierre Bourdieu, and others in addition to the work of Robert Putnam. They also give a variety of examples of organizations such as UPS and Hewlett-Packard which they consider to have high social capital. And, they provide a few examples of specific cases in which they considered the lack of sufficient social capital to be problematic. In concluding, they devote the two final chapters of the book to discussions of the challenges of volatility and virtuality to social capital in organizations and the dangers of underestimating the need for and importance of social interaction in organizations. As further evidence of the increasing focus on the importance of social capital, they cite the efforts of organizations including the World Bank, the United Nations, OECD, and the European Union to develop indicators "that include far more than per capita GNP to measure social capital and get a handle on why a state, county, or global region works well -- what makes it successful socially and economically".

The bottom line that the authors offer on social capital is that while there is a danger in overuse of the concept of "capitalization" and the term "capital", "social capital, like other forms of capital, accumulates when used productively" and that is what makes it important to organizations. Accordingly, "a social capital approach to organizational work differs from an individualistic or atomic theory of organizations which ignore networks of relations". "It differs, too," however, "from the currently popular idea of a work world defined by free agency -- of independent 'companies of one' drawn together for particular projects, collaborating over the Internet and going their separate ways when the project is done". The foundation and fuel of social capital is trust and, according to the authors, the level and degree of trust required is best, and perhaps only, built and maintained through a certain amount and quality of face-to-face social interaction.

Reading the book, one can certainly agree with the authors' insights about the importance of social capital in organizations and the various ways in which social capital is built and maintained and how social capital works to the benefit (and sometimes to the detriment) of organizations. And, for anyone who has spent much time in business, the authors' conclusions about what appears to be a general lack of understanding and appreciation of some of these seemingly obvious insights and their underlying principles -- "hidden truths" that the authors say remain "hidden by their very commonness" -- also ring true.

From a more critical perspective, however, this book and the current wave of attention being brought to the topic of social capital gives one pause to reflect and consider why this particular labeling and packaging of what is, by the authors' own admission, not a new idea. Given their own observation that other terms such as goodwill, quality of life, and culture have all been used before to discuss many of the same things, might lead one to ask: So, why "social capital" and why now? One possible explanation worthy of consideration is that it is an updated, more commercial packaging of a conceptual idea to fit the times in order to capitalize on its marketability. As such, it has obvious appeal to a market society and culture in which everything is commodifiable and, therefore, becomes "capital" of one sort or another. Not only is it a sexy new buzzword to add to the vocabulary of management "science", it provides for a new area of professional expertise building and becomes the marketing "handle" for a new practice niche for management and organization development consultants alike. In the process, the real danger is not only that, as the authors warn, the concept of capitalization becomes overused, but that the idea of social capital becomes yet another utilitarian tool both for those who promote it and those who exploit its use in practice primarily for economic gain or as a tool of manipulation.

Of course, the real hope -- and this is the value of In Good Company -- is that bringing heightened awareness and engaging in thoughtful dialogue on the importance of the social in organizations by these and other authors who have legitimacy with the business community will serve to make organizations and the work done in them more humane amidst the volatility and virtuality that, as Cohen and Prusak remind us, present unique challenges to the social dimension not only of organizational life but our lives in general. And they do give some good general guidelines for doing this, which fall under the rubrics of encouraging informal social interaction and networking and the space and time in which to do it. Nevertheless, given the practical importance they attach to doing this, we felt the absence of more concrete, strategic principles that organizations could use in prioritizing and focusing their efforts in developing social capital.

From another perspective, given the authors' nod to sociological approaches to social capital, it is striking that their book, in its characteristically American egalitarian, optimistic, and -- let us say -- somewhat naive attitude, glosses over one of the main points of these approaches: that social capital is not only a wonderful resource inherent in social networks but, like financial capital, also a primary source of social inequality. Of course the administrative assistants gossiping around the water cooler in an office build up social capital that they can draw on if they need assistance in an emergency or on a big project. But can this compare with the social capital available to the CEOs who attend the World Economic Forum at Davos? Can the social capital available to a graduate of a community college in a rural Southern or mid-Western state compare to the social capital available to a graduate of Harvard or Stanford? Of course, as the authors say, "we all use our established personal networks and communities as tools for making sense of the world." But not all personal networks and communities are created equal, and in the normal course of daily life, despite exciting occasional leaps of social mobility, the networks and communities available to the vast majority of individuals are shaped by their prior class, ethnic, and gender status. Indeed, what is an "old boys' network" other than social capital? This does not mean that social capital can't be developed in a democratizing or egalitarian direction, as the authors clearly would like. For social capital, however, to be not merely a "feel good" concept but a critical one, it needs to take cognizance of pervasive social inequality and the role of social capital in maintaining it. It is important not to forget Edgar Bronfman's famous line: "To turn $100 into $110 is work. To turn $100 million into $110 million is inevitable." Much the same holds for social capital.


Tony G. LeTrent-Jones and Jeremy J. Shapiro are respectively a Ph. D. candidate and faculty member in the Human and Organization Development Program at The Fielding Institute.