One Hundred Years of ‘Social Capital’ Historical Development and Contribution to Collective Knowledge Creation in Organizational Innovation

Abstract

Understanding complex processes of organizational innovation and personal learning, and ways to support sustainable innovation, is becoming more and more important. The concept of Social Capital proves to be a key concept in declaring innovation in many domains. Main question of this research is: does the concept of Social Capital provide valuable insights for professionals to improve innovation in their workplace and to enhance personal capabilities? This literature review on Social Capital theory, focuses on the domain of professional education, but also has a broader scope. The paper examines the potential of the concept for increasing understanding of complex innovations. After description of the concept of Social Capital in creating new knowledge, and a historical retrospect, we compare the theory with four prevailing theories of innovation. The Social Capital perspective appears to better reveal intangible processes as the dynamics that drives sustainable innovation, and offers an interesting framework for guiding innovation.

Introduction

The past decades have been characterized by large-scale innovations aimed at preparing organizations for the era of the knowledge economy. These innovations were common across Europe and beyond, and demanded changes at various organizational levels. Not seldom these were unsuccessful and caused tension and frustration of employees. In the sector of professional education in The Netherlands, universities designed long-term multilevel and organization-wide programmes that aimed to implement a paradigm shift in the minds and actions of the entire staff. University boards, management and consultants diligently sought strategies to handle these enormous changes. Despite the quite huge resistance with which the universities were confronted, some of them succeeded in creating a climate in which professionals felt committed to achieving common goals. It seemed, as Fullan states (2006) [1] that successful large-scale innovation requires a collective process of knowledge creation, in which colleagues, by sharing explicit knowledge and revealing tacit knowledge, collaborate.

Over the past 20 years, substantial attention has been devoted to Social Capital theory, since it appears to contribute significantly to our understanding of the factors that determine the success of complex innovations in different sectors and countries (Field, 2005[2] ; Kostova & Roth, 2003[3] ; Leana & Van Buren, 1999[4] ; Tsai, 2001[5] ). However, the concept of Social Capital seems to be an under-researched topic in the educational sector (Kirschner, Hendriks, Paas, Wopereis, & Cordewener, 2004[6] ). This article examines the potential of this theory for increasing our understanding of complex large-scale innovations. For this purpose we examined literature on Social Capital theory with the focus on the main empirical studies since the first publication in 1916 (Hanifan, 1916[7] ). The search showed that there has hardly been any research on large-scale educational innovation from a Social Capital theory perspective. We therefore also considered studies in adjacent domains, such as non-profit organizations in non-educational sectors and knowledge-intensive organizations in the private and public domains.

We start this article with an overview of the evolution of the concept over the past century, including its origins, applications and meanings in various periods. We then present, in detail, a model from Nahapiet and Goshal (1998)[8] that is widely acknowledged by scholars in different scientific disciplines. This model illustrates how the process of creating new collective knowledge and knowing capacity occurs. Next, we compare the main features of the Social Capital theory with features of four prevailing innovation theories that share the emphasis on the professional as essential factor in innovation. We conclude by discussing merits and pitfalls of the Social Capital theory and its value for understanding of complex innovations.

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Citing this article

This article is part of a thesis:

Corry.G.J.M. Ehlen. 2015. Co-creation of Innovation: Investment with and in Social Capital. Open University. Heerlen. The Netherlands. ISBN 97894 91825 77 4.

You should reference this work as:

Ehlen, C.G., Van der Klink, M., Boshuizen, H.P.A. (2014). One Hundred Years of ‘Social Capital’: Historical Development and Contribution to Collective Knowledge Creation in Organizational Innovation. Open University. Heerlen. The Netherlands.

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References

  1. Fullan, M. (2006). The future of educational change: System thinkers in action. Journal of Educational Change, 7(3), 113-122. ^
  2. Field, J. (2005). Social Capital and Lifelong Learning. The encyclopedia of informal education. Policy Press: Bristol. ^
  3. Kostova, T., & Roth, K. (2003). Social capital in multinational corporations and a micro-macro model of its formation. Academy of Management Review, 297-317. ^
  4. Leana, C. R., & Van Buren, H. (1999). Organizational Social Capital and Employment Practices. The Academy of Management Review, 24(3), 538-555 ^
  5. Tsai, W. (2001). Knowledge transfer in intra-organizational networks: Effects of network position and absorptive capacity on business unit innovation and performance. Academy of Management Journal, 996-1004. ^
  6. Kirschner, P. A., Hendricks, M., Paas, F., Wopereis, I., & Cordewener, B. (2004). Determinants for Failure and Success of Innovation Projects. The Road to Sustainable Educational Innovation. Surf publicaties, 363-386. ^
  7. Hanifan, L. J. (1916). The Rural School Community  Center.  Annals of the  American Academy of Political and Social Science, 67, 130-138. ^
  8. Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23(2), 242-266. ^

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