Martin Gargiulo

The Dark Side of Social Capital

Research on social capital has stressed the advantages that networks can bring to managers and other economic actors. The enthusiasm with this ‘bright side’ of social capital, however, neglects the fact that social bonds may at times have detrimental effects for a manager and produce social liability, rather than social capital. This chapter tries to correct the optimistic bias by looking at the ‘dark side’ of social capital. Continuing benefits from social capital require that managers can adapt the composition of their social networks to the shifting demands of their task environment. This often implies the ability to create new ties while lessening the salience of some of the old bonds—if not severing them altogether. Available evidence, however, suggests that this ability may be encumbered by the same relationships purportedly responsible for the prior success of the manager. When and how this may happen is the central question we address in this chapter. We argue that strong ties to cohesive contacts limit a manager’s ability keep control on the composition of his network and jeopardize his adaptability to changing task environments, which damage the corporate social capital of the organization. We test our ideas with data on managers working for a special unit of a high-technology firm operating in Europe.

The Dark Side of Trust

Gargiulo identifies three behavioural consequences of trust. First, trust is associated with lower levels of monitoring, vigilance and safeguards towards the behaviour of the trusted party. Second, trust is associated with higher levels of commitment to the relationship with the person or party being trusted. Finally, trust is associated with an expansion of the scale and scope of the exchange between the parties.

Maintaining Leadership Legitimacy in the Transition to New Organizational Forms

Numerous new organizational forms have been proposed for ensuring the continuous strategic renewal of a firm. In essence, these forms are distinguished by: (1) their emphasis on bottom‐up entrepreneurship, and (2) their reliance on a co‐operative network that allows these entrepreneurial units to share their competencies with one another. One of the key behaviours required for the success of such an organization is employee empowerment. We argue in this paper that the legitimacy of corporate leadership during the restructuring of a traditional bureaucratic organization is crucial to its eventual transformation to one of the new organizational forms. The current wisdom of a two‐stage transformation process, where an authoritarian restructuring precedes the more participative revitalization, is thus challenged. The transformation may get stalled after the restructuring stage because of top management’s inability to empower the firm’s employees at will, having lost their trust during restructuring

Can Informal Communication Networks Disrupt Coordination in New Product Development Projects

This paper investigates how the structure of the informal communication network that results from efforts to coordinate task interdependence between design teams in complex product development projects moderates the effect of task interdependence on interteam communication. Drawing on theoretical mechanisms from the social network and knowledge transfer literature, as well as on recent empirical advances in exponential random graphs models of social networks, we examine how the presence of a common third party in the communication network affects the likelihood of technical communication between interdependent teams designing the components of a large commercial aircraft engine. Although task interdependence has a strong and significant effect on the likelihood of communication between teams, this effect is moderated by the presence of common third parties. The nature of this moderation depends on the position of the common third party within the triadic communication structure. When the common third party seats in the middle of a communication chain between the potential source and the potential recipient of technical communication, its presence increases the likelihood of communication between these two teams. However, when the communication between the source and recipient can trigger cyclic exchanges between the three teams, the presence of the third party reduces the likelihood of communication between the two interdependent teams, increasing the risk of coordination disruptions. We discuss the implications of our findings on the literature of intraorganizational networks in new product development.

The Power of the Weak

Abstract Weak organizational actors can overcome the consequences of their dependence by securing the control of valuable resources or by embedding dependence relationships into social networks. While these strategies may not eliminate the underlying dependence, they can curtail the ability or the willingness of the stronger party to use power. Embedding strategies, however, can also have unintended consequences. Because the network structures that confer power to the weak are inherently more stable, they can persist beyond the point of being beneficial, trapping weak actors into unsuitable network structures. The power of the weak can thus become the weakness of the strong.

Homophily and Individual Performance

We study the relationship between choice homophily in instrumental relationships and individual performance in knowledge-intensive organizations. Although homophily should make it easier for people to get access to some colleagues, it may also lead to neglecting relationships with other colleagues, reducing the diversity of information people access through their network. Using data on instrumental ties between bonus-eligible employees in the equity sales and trading division of a global investment bank, we show that the relationship between an employee’s choice of similar colleagues and the employee’s performance is contingent on the position this employee occupies in the formal and informal hierarchy of the bank. More specifically, homophily is negatively associated with performance for bankers in the higher levels of the formal and informal hierarchy whereas the association is either positive or nonexistent for lower hierarchical levels.

ADDING VALUE TO OTHERS: THE POSITIVE EXTERNALITIES OF SOCIAL CAPITAL.

In this paper, we ask whether social structure can help explain why some employees are better able than others to add value to their peers, as rated by their peers. Our theoretical contribution concerns the distinct influences of two orders of social capital: first-order and second-order. First-order social capital is conceptualized as the social structure of the focal actor. Second-order social is conceptualized as the social structure of the actors boss, a central figure in the life of most managers. Using network sparseness to capture social capital, we find that not only first-order but also second-order social capital has significant effects on peer-to-peer value-added.