Social Capital Knowledge

Organizations have capabilities for creating and sharing knowledge (intellectual capital) that give them their distinctive advantage over other institutional arrangements, such as markets (Ghoshal & Nahapiet, 1998). But, what is the basis of a firm’s knowledge development capabilities? At least in part, the answer is that these capabilities stem from the social capital that an organization possesses as a result of bringing people together for extended periods of time, creating interdependence through specialization and integration, forcing interaction, and providing boundaries and directions. Following the resource-based theory of the firm (Conner & Prahalad, 1996), enterprises that cultivate particular forms of social capital are likely to realize competitive advantages (Ghoshal & Nahapiet, 1998). This article traces the connections between an organization’s social capital and the organization’s development of knowledge. Understanding these connections is important for leaders of knowledge management initiatives, particularly if they seek to leverage knowledge production into enhanced competitiveness. We begin with a background discussion of the nature of social capital including its structural, cognitive, and relational dimensions. This is followed by a consideration of intellectual capital (i.e., knowledge that can be used to achieve an organization’s purpose) and an explanation of the supportive role of social capital in furnishing conditions necessary for developing this knowledge. We describe a model of knowledge conversion processes whereby intellectual capital is developed within a social capital context known as Ba. Some future trends in socially-based processes of knowing by people and organizations are outlined, followed by concluding remarks.