Facets of organizational social capital: how network renovation is key to favorable strategic space

Abstract

This paper studies the effect of organizational social capital on structural change in the context of socio-economic networks. In a networked economic system, organizational social capital is the outcome of a dynamic process; the effect of this process on firm performance is contingent on the management of structural change in the network. To further this argument, the paper proposes a process model and explains how variation in network renovation leads firms to dissimilar posterior positions with different performance implications even with congruous antecedent social capital. Subsequently, the paper discusses four such posterior positions; these positions are termed as strategic spaces. Strategic spaces are primarily organizational and network conditions which constrain or enhance the scope of structural position as well as relational content of a firm in a socio-economic network. These strategic spaces are outcome of the fit between the expectations of network members (termed as 'structural expectations') and the firm's capability. While explaining this fit, this paper synthesizes the structural perspective of social capital with the individualist perspective. In concluding, the paper discusses the performance implications of such strategic spaces.