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Social Capital

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The idea of researching social capital in firms and organizations is relatively new. “Social capital theorists have long argued that personal relationships provide people with labor market opportunities. Conventional wisdom suggest that by relying on personal contacts with friends, relatives, and acquaintances, workers are able to find employment that might not be readily accessible through more formal job search channels, such as reading the want ads or applying directly to employers” (McDonald, & Elder, p.521). Social capital has been defined, “as the aggregate of resources embedded within, available through, and derived from the network of relationships possessed by an individual or organization” (Inkpen, & Tsang, p. 150). Another definition states that, “social capital refers to the actual and potential resources individuals obtain from knowing others, being part of a social network with them, or merely from being known to them and having a good reputation” (Baron, & Markman, p.107).

“The findings show that social capital matters very little early in the work career. However, during mid-career, people with the greatest social resources are more likely to get their jobs without searching, and non-searchers tend to receive better jobs than formal job seekers. These payoffs mainly accrue to male non-searchers who have a great deal of work experience. Women with a great deal of work experience are much less likely than men to get their jobs without searching. And, when these highly experienced women get their jobs without searching, they do not receive the same payoffs that men receive. However, women’s deficit in social capital seems the more likely culprit. Women tend to have fewer social resources and fewer work contacts in their social networks than men, hindering their chances of receiving job information informally” (McDonald, & Elder, p.542).

According to Lengnick-Hall, HR needs to restructure its organizational role to enhance development towards social capital. “The creation of social capital that benefits an organization is a function of creating relationships between individuals, among groups, and across organizations. While managing relationships is not the sole responsibility of any single business function, HR is in a unique position to facilitate, coordinate, and monitor an organization’s management of relationships that matter. Each employee is responsible for building relationships, both for personal survival and to benefit the organization. HR’s role is that of facilitator and coach in identifying, encouraging, and supporting the establishment of relationships that are useful and valuable for the organization, and in putting formal and informal systems in place that nudge these relationships in the right direction. If HR effectively reorients and extends its role within these organizations to emphasize building effective relationships, this rhetoric is more likely to become a reality” (Lengnick-Hall & Lengnick-Hall, p.62). Lengnick-Hall believes that HR should manage six types of relationships which include; individual to individual, individual to group, individual to organization, group to group, group to organization, and organization to organization. “An organizational culture that celebrates diversity, promotes exposure to varied settings, and emphasizes collaboration creates a setting that facilitates healthy individual to group relationships” (Lengnick-Hall, & Lengnick-Hall, p. 59).

“Social capital is the soft side of business or the informal networks, accumulated know-how, mutual understandings, and trust that make organizations effective. While

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