Social capital: an indispensable asset in the knowledge-based economy George M.M. Gelauff∗
Paper for the workshop Social Capital and Economic Development on the occasion of the 75th anniversary of the University of Tilburg, March 27, 2003
Abstract This paper explores the role of social capital in the knowledge-based economy with a focus on the creation and diffusion of knowledge in companies. Social capital consists of norms and networks that support cooperation. Bridging social capital, aimed at exchanging and learning skills instead of facts, may increase knowledge flows between various communities of practice in firms and may reduce the risk that vital information leaks to competitors. Hence, firms may better invest in activities and norms that encourage exchange of skills between employees, than in formal methods that record factual knowledge. In other words, create opportunities for frequent contacts between employees and cooperation in changing teams, rather than databanks on an intranet containing codified information on former education and working experience of employees.
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Nijmegen School of Management, University of Nijmegen and Ministry of Economic Affairs Tel: +31703796048, email:
[email protected] or
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Social capital: an indispensable asset in the knowledge-based economy Physical, financial and human capital are crucial inputs for a company. However, a successful company consists of much more than just a combination of high-quality inputs. The way people cooperate in a firm for a considerable part determines the efficiency of the production process and the success of a product on the market. Practical experience shows that too much emphasis on self-interest, envy or ill-directed incentives may lead to substantial loss of efficiency. That points towards the importance for a company of social capital: the total of norms and networks that support cooperation (Woolcock, 2000). Moreover, knowledge sharing in R&D seems to indicate that the importance of social capital increases in the knowledge-based economy. In contrast, also dynamism and differentiation increase, which make it more difficult to maintain long-lasting relationships. Hence, what is the role of social capital in the knowledge-based economy and how does that change due to various technological, social and organisational trends? How do these developments affect the creation and spread of knowledge in companies? The aim of this paper is to explore these main questions. Section 1 briefly summarizes the literature that shows why norms may support cooperation by reducing opportunism in complex cases characterized by incomplete contracts. Section 2 adds networks and differentiates between two main types of social capital. Bonding social capital refers to longlasting relationships in homogeneous groups, whereas bridging social capital relates to fluid networks open to outsiders. In addition, Section 3 argues that various trends, such as ICT and individualisation, bring about a shift from bonding social capital towards bridging social capital. By briefly presenting four main dimensions of knowledge, Section 4 introduces the knowledge-based economy. Section 5 explores the impact of bonding and bridging social capital on knowledge flows between various communities of practice in companies. Communities of practice are groups in which people cooperate and share a common knowledge base, such as researchers, engineers, marketing people or managers. Finally Section 6 concludes by sketching the challenges that companies face in order to find a balance between bonding and bridging social capital and various types of knowledge. 1
Norms support cooperation and trust
Every transaction contains a certain degree of cooperation and requires a certain amount of trust.1 Buying something in a shop, trust is limited to the moment of exchange, where buyers have to rely on getting value for money and sellers have to be sure they receive their money. Conditions to govern such a transaction are relatively straightforward and a standard buying agreement generally is sufficient to enable the transaction. In contrast, knowledge related transactions can be very complex. Two compagnies that perform joint R&D to set a standard for let’s say a DVD player, have to consider a broad range of technological, organisational and strategic aspects. It is very difficult to fully specify the contents of their joint venture in advance. Parties in a cooperative relationship frequently face an opportunity to behave opportunistically. In such cases a strictly rational utility maximizer takes advantage of the cooperative attitude of another party as soon as opportunism yields higher revenues than honest behaviour. 2 The prisoner’s dilemma is a well-known case in which opportunism constitutes the dominant strategy. No loss is suffered if the other party behaves 1 For additional background and references see Rousseau et al. (1998), Van de Klundert (1999a en b), Beugelsdijk and Van Schaik (2001), Bovenberg (2002) and James (2002). 2 According to the behaviourial paradigm of neoclassical economics, see James (2002) for a clear exposition.
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opportunistically. If the other party behaves cooperatively, taking advantage of that attitude yields extra benefits. However, following this dominant strategy both parties are worse off compared to the case in which they would cooperate. They are trapped in the prisoner’s dilemma: cooperation does not come about although it is in their mutual interest. In practice various institutions facilitate cooperation (Bovenberg, 2002, James, 2002). Institutions consist of formal institutions such as contracts, laws or rules, and informal institutions like values and norms. Parties, who agree on a contract, change the pay-off structure of their transaction in such a way that opportunism no longer forms the dominant strategy. They agree on penalties for non-cooperative behaviour and thus raise the cost of not keeping an agreement. By means of laws or rules an independent authority punishes opportunism and in that way also changes the pay-off structure towards cooperation. However, formal institutions are of limited value to support the type of complex transactions that often occur in knowledge-related activities. Contracts or laws would be largely incomplete, in other words the parties or the authorities concerned would not be able to enforce them in courts. For instance, two companies performing joint R&D may enter into a contract to formalise the joint venture. Yet, it is impossible to ex-ante specify al possible contingencies that might arise during the R&D process. Hence the contract is highly incomplete; if parties disagree on some unforeseen problem it would be very difficult to settle the issue in court. Informal institutions, norms and values aimed at cooperation, may be a feasible alternative to support cooperation, in particular with complex transactions governed by implicit contracts. In this context, Bovenberg (2002) identifies two roles of norms and two roles of values. Firstly, norms may entail the conviction that current partners in a transaction always reward cooperative behaviour and punish non-cooperative behaviour. These trigger strategies of current partners provide incentives for cooperation. Secondly, norms strengthen reputation mechanisms that encourage cooperation. In contrast to the previous case, not only the current partners but also other potential partners are assumed to participate in rewards and punishments. Hence, norms entail beliefs of collective punishment of opportunistic behaviour: all potential partners refuse transactions with those who lost their reputation. Values firstly provide intrinsic motivation to comply with implicit agreements. If people would break implicit agreements, they would loose their self-respect. Secondly, extrinsic motivation follows from values in the form of social preferences. People value their social reputation, they dislike losing the approval of others. Again, that encourages cooperative behaviour. Frequently, norms manifest themselves in actual behaviour through reciprocity.3 In response to fair and friendly treatments, people react more nicely and are more inclined to cooperation than pure selfish behaviour of a rational utility maximizer would indicate. They react in a friendly way, even if that does not yield any direct current or future gains. Fehr and Gächter (2000) characterize this by ‘positive reciprocity’, Ostrom (2000) talks about ‘conditional cooperators’. Conversely, people react more strongly to unfair treatment than can be expected from someone aimed at pure self interest. Some people make costs or run risks in order to punish an anonymous offender of norms or laws, who has not personally done them any injustice and who they will never meet again. These are examples of ‘negative reciprocity’ or ‘willing punishers’. Hence, reciprocity differs from pure self-interest and from altruism, which stands for unconditional care for other people. 3 Both real world experiences and experiments provide evidence of the existence of reciprocity. See Fehr en Gächter (2000), Ostrom (2000), Clark en Sefton (2001) and Fehr en Falk (2002). Bowles and Gintis (2002) regard reciprocity as the basis of social relationships and thus as the main behavioural characteristic of social capital.
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In this way values and norms support cooperation and create trust. People themselves are more trustworthy and to a larger extent trust both other people and formal institutions. That fascilitates complex and risky transactions on a broad range of areas, such as exchange of products with unknown quality attributes, largely incomplete labour agreements for highskilled employees, international trade or innovation. In addition it reduces the transaction costs to maintain formal institutions. If people’s values and norms motivate them to respect contracts or laws, society needs less legal procedures or police protection. 2
Networks
Networks have two main functions: to discipline and to inform. Disciplining operates through reputation: future transactions are at risk if many people in a network learn about opportunistic behaviour. In addition, information and knowledge spread via networks. Members of a network with a large amount of social capital will more easily share knowledge and build up knowledge together. Sociological theory distinguishes between two types of networks: bonding and bridging. Bonding or strong-ties networks consist of a closely knit set of connections within a specific group of people, who are well aware of each others behaviour and reputation. These connections generally exist for a long period of time. An example is a group of Chinese entrepreneurs, but the definition also applies to the mafia. Bridging or weak-ties networks are much ‘thinner’. Contacts last shorter but extend to a larger group of people. People in bridging networks more easily connect with outsiders. Because of the two types of networks, also two kinds of social capital exist. The middle column of table 1 describes bonding social capital. In a relatively homogeneous community with a large degree of commitment among its members, common values and norms increase intrinsic motivation to cooperate. Moreover, social control (extrinsic motivation) is large: everybody knows each other and participates in punishing opportunistic behaviour. Exchange of knowledge and learning take place within the group. Bonding social capital can be found in industrial clusters in Northern Italy, where the social ties stem from the Middle-Ages (Putnam et al., 1993). Table 1
Two kinds of social capital Bonding
Bridging
Characteristics
cooperation through Social ties Relationships Networks
Awareness of reputation Social control Strong, social engagement Long term Stable, long history
Dissemination of reputation Contracts Weak, individualistic Short / medium term Fluid
Within group Economies of scale Solidarity within group
With outsiders Scope, diversity Incentives
Outcomes
Specific investments Scale and scope Uncertainty
Network relationships in Silicon Valley are an example of bridging social capital (Cohen and Fields, 2000). In Silicon Valley homogeneity and strong social ties are hardly present, on the contrary people come from all over the world and individualism runs rampant. However, social capital, extensive networks and trust exist in Silicon Valley. Cooperative relationships are mainly based on fast dissemination of reputation. Frequent job changes and varying alliances enable a fast exchange of information on competencies and behaviour of 3
people in companies. The transitivity of reputation and trust plays an important role (Fountain, 1997). Suppose A trusts B and B trust C. Then A is inclined to trust C on the basis of B’s reputation. In that way trust arises in networks, without all members having to meet personally. Table 1 also presents some differences in outcomes between bonding and bridging social capital. Within groups with bonding social capital relatively low transaction costs apply to build relationship-specific investments and it is relatively easy to guarantee confidentiality. That creates economies of scale: information asymmetry is low and it requires less effort for people to get acquainted with each other. Moreover, confidentiality increases solidarity within the group. Members of a group may help each other in cases of bad luck and in that way provide a kind of insurance. There is, however, also a downside to bonding social capital. Strong antagonisms can arise between insiders and outsiders, group-think can endanger creativity or suspicion can damage norms in a group (Olsen, 1982, Nooteboom, 2000, Platteau, 2000). Conversely, within bridging social capital trust more rapidly extends to people from other places or other cultures or to people with other ideas (Cohen and Fields, 2000). That increases the flexibility in building relationship-specific investments, generates diversity and scope and reinforces incentives for innovation and entrepreneurship. These strong points can be attractive in rapidly changing surroundings (Nooteboom, 2000). 3
Trends: shift from bonding to bridging social capital
On the whole, long term trends appear to bring about a shift from bonding to bridging social capital. Focused on the role of knowledge and social capital in companies, particularly technological, organisational and social trends are important. Information and communication technology (ICT) ICT has all the characteristics of a general purpose technology (Lipsey et. al, 1998; CPB, 2000) and thus intensifies the process of creative destruction. New opportunities arise, but often are hard to realise. The current shake-out under Internet-companies is a clear example. Also within companies a general purpose technology creates a form of creative destruction. Learning is necessary, because existing knowledge loses its value, work processes undergo a transfiguration, and organisational changes take place. The process of creative destruction fits in better with relationships based on bridging instead of bonding social capital (see table 2). Bridging social capital is more receptive to flexibility and external contacts. Table 2 Trend
Impact of trends on the importance of bonding and bridging social capital Bonding Bridging social capital social capital
ICT: - creative destruction - importance of reputation Organisation: - intertask learning Social: - individualisation and heterogeneity - more negotiations in relationships
+ +/–
+/–
+ – +
+ +
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In addition, ICT affects social capital through its impact on the reputation of companies. However, here the impact of ICT is indeterminate: both positive and negative influences exist. On the one hand it is more difficult to uphold norms-based relationships in a process of creative destruction (Bovenberg, 2002). More intense dynamics raise the possibility that the relationship finishes early. Then, reputation plays a smaller role. Parties tend to invest less in their reputation and the temptation for opportunistic behaviour increases. On the other hand ICT increases the importance of reputation in markets. Participants in users- and newsgroups on the Internet can very rapidly exchange information on the behaviour of companies and on their experiences with suppliers. Internet makes collective rewards and punishments more easily, because a group of consumers can be mobilised more rapidly. This supports norms aimed at cooperation and social capital. Moreover, ICT enhances communication within networks and thus facilitates the advancement of bridging social capital. Organisation A number of recent trends, among which ICT, cause fundamental changes in the organisation of companies. Lindbeck and Snower (2000) summarise this in a shift from ‘intratask’ to ‘intertask’ learning. Where formerly employees specialised themselves increasingly further on a fixed job and on-the-job learned to carry out their task as well and as efficiently as possible (intratask), nowadays employees are more widely employable. Knowledge and experience gained on one job are more at use on other jobs or for other tasks (intertask). Because of this, differences between jobs diminish. At the same time job rotation, teamwork and decentralisation within the organisation increase. Throughout the company employees share knowledge and learn from each other. Employees have to become more all-round and selfsupporting. In addition, demand rises for employees with not only professional skills, but also with skills in the field of communication and cooperation, with initiative and with creativity. Intertask learning thrives in surroundings with bridging social capital (table 2). As tasks become more complex and input becomes more difficult to measure and to attribute to individuals, reputation and norms increasingly support cooperation. This raises the importance of social capital, where particularly bridging social capital stimulates exchange of knowledge and intertask learning. Social trends Individualisation and more heterogeneity form important social trends. Schnabel (2000: 22) states: ‘Individualisation is the still continuing process of reduced dependence of the individual on one or a few persons in its direct surroundings and of increasing freedom of choice with respect to her personal way of life’. Increasing heterogeneity manifests itself not only in cultural diversity, but also in stronger diverging individual preferences. Partly this results from the trend towards individualisation and partly from a higher level of prosperity (Gelauff and Vijlbrief, 2000: 31). Social trends reinforce bridging social capital. Individualisation goes hand in hand with less social control (Schnabel, 2000: 22). Hence, bonding social capital decreases in strength. Heterogeneity makes it also difficult to maintain bonding social capital. Demand for diversity increases (Pomp, 2000: 83), which fits in better with competition and bridging social capital. Individualisation enhances the degree of negotiation in relationships. Common activities require agreement of all participants involved. This ‘increasingly asks for control of behaviour and a high degree of civilisation in mutual contacts’ (Schnabel, 2000: 21). The more this process takes shape in society, the more it raises the ability to found knowledge relationships on social capital. 5
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Knowledge
To relate social capital to knowledge first requires some exploration of the ways in which knowledge manifests itself in firms. Knowledge is one of the core capabilities that distinguishes the firm from the market, next to, for instance, the internal organisation or the firm’s culture (see Penrose, 1959; Kay, 2000 for this resource-based view on the firm). A firm consists of a collection of characteristic assets and capabilities that are very hard to replicate by others. With these core capabilities a firm can create more value than a separate collection of its constituent parts could on the market. Tacit and codified knowledge In particular ‘tacit’ knowledge is hard replicate, in contrast to ‘codified’ knowledge. Tacit knowledge pertains to skills, abilities, experiences and practices that can only be made explicit and transferred to others at high costs. Tacit knowledge resides in people, organisations and clusters. Transfer of tacit knowledge mainly takes place through learning processes or interaction between persons. Codified knowledge is stored on data carriers such as books, CD-roms or internet page’s. As such, this knowledge is easily transmissible, however understanding it and applying it is something completely different. That may well require complementary tacit knowledge. Someone can easily buy a book about physics, yet it may take years of study to understand what is in it. In that case tacit and codified knowledge are complementary: one form cannot be meaningfully applied without the other form. Main kinds of knowledge OECD (2000) distinguishes four kinds of knowledge: know-what, know-why, know-how and know-who (see table 3). Know-what stands for knowledge about facts or information. How is large is GDP of the Netherlands? What do the symbols in the formula E=mc2 mean? One can relatively easily codify this type of knowledge and distribute it electronically, as the vast amount of information on the Internet or on CD-Roms makes clear. Know-why closely resembles fundamental or basic knowledge. It concerns ‘knowledge about principles and law of motion in nature, in the human mind and in society’ (OECD, 2000: 14). There is a big difference between knowing that the symbols in E=mc2 stand for energy, mass and light speed respectively, and understanding and explaining the theoretical background of this equation. Scientific research lays the foundation of know-why. This kind of knowledge is also largely codified, for within science strong incentives exist to publish knowledge (Stephan, 1996; CPB, 1997: 386, 387). Know-why underlies innovations in science-based sectors, such as chemistry, electronics or bio-engineering. Know-how pertains to skills, the ability to realise something. It varies from the skills of the craftsman in the construction industry to those of the employer who holds a job interview, or of the scientist who performs research. People obtain know-how from learning or gaining experience. Hence, it is largely tacit: it cannot be separated from a person or an organisation. As such, know-how forms a crucial element of the core capability of a company or a research group. A top-manager of an American steel company has no problem to give competitors a guided tour of his factory and show them everything, because they cannot take the essence of the company back with them (Leonard-Barton, 1995). Know-how diffuses via networks between firms or researchers, via job rotation of experienced employees or via mergers or acquisitions of companies.
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Table 3
Main kinds of knowledge Know-what Know-why Contents facts principles Source books, CD-roms, books Internet Type codified codified
Know-how skills experience, learning tacit
Know-who people Internet, personal network codified / tacit
Know-who concerns knowledge of ‘who knows what and who knows what to do’ (OECD, 2000: 15). Know-who is not only of interest in bilateral relationships, but also as a way to obtain relevant knowledge. Everybody who regularly uses an Internet search engine, knows that this may be a lengthy and tedious way to retrieve relevant information. In such cases it may be very helpful to use personal networks to find relevant knowledge. Know-who consists of partly codified and partly tacit knowledge. The personal relationships and the social skills to maintain these relationships constitute an element of tacit know-who. 5
Knowledge relationships and social capital
Communities of practice link knowledge to social capital. Knowledge flows best and fastest in communities of practice (Brown and Duguid, 1998, 2000a and b). In these communities people work together in close groups, in which they build up common skills and exchange knowledge. Sharing of practical experience generates a collective knowledge basis within a community of practice. A research team is an obvious example, but also a group of servicemen or a group of managers in a firm can form such a community. A company consists of a collection of different communities of practice with their own jargon and customs. For instance, employees of the marketing division have a different perception of the company’s products than engineers from the product development division. The success of a product on the market asks for cooperation between development, design, marketing, service and management. Hence, the challenge for a company is to align these communities of practice and to attune their different approaches (Brown and Duguid, 2000b). Here social capital plays a role. Social capital supports knowledge flows within communities of practice. Cooperation is essential to support knowledge creation and knowledge diffusion within a community of practice. In particular concerning tacit kinds of knowledge (know-how and know-who), cooperative relationships have a strongly implicit character. Therefore, rules or regulations are not sufficient to enforce cooperation. In those cases, social capital may establish cooperation within communities of practice, because it encompasses norms that promote cooperation and create trust. In the absence of a sufficient degree of trust, knowledge increasingly becomes a factor that group members may use to their personal advantage. Then knowledge becomes power and sharing power is far from self-evident. Social capital can also be useful to support knowledge flows between communities of practice in a company. Members of a community must trust others for not abusing their willingness to share knowledge. Social capital can create that trust. It also helps when a sufficient degree of reciprocity is present among the various communities. Someone is only willing to exchange knowledge with someone else, if that other person has something to offer in return. However, bonding social capital can put up barriers between communities of practice. Bonding social capital within a particular community of practice makes it difficult to share knowledge with other communities of practice in a company. Members do not receive signals from other communities or do not recognize or even reject suggestions from outside. This 7
hampers innovation. Figure 1A shows that managers, researchers and marketing employees form bonding networks amongst themselves, which, however, results in limited knowledge flows between these groups. For instance, tight groups of researchers are only interested in the scientific or technical challenge of their innovation. They largely ignore signals from marketing employees that the product also has to be sold on the market. Or managers without any technological knowledge do not communicate sufficiently well with researchers, or promise their clients more than researchers are ever able to create. In those cases capabilities turn into rigidities.
Figure 1 Social capital and knowledge flows between communities of practice in a company
Bridging social capital in communities of practice may reduce this risk. It makes members of a community of practice look outward and supports reputation mechanisms that challenge an overly inward looking attitude. Figure 1B shows that stronger knowledge flows may result between these communities of practice in a company (vertically). A shift from bonding to bridging social capital in each of the communities of practice can contribute to a closer alignment of the activities and perceptions of different communities of practice. However, this may also have a drawback: the risk of knowledge spillovers to outside competitors. Communities of practice can have intense knowledge exchanges with comparable groups outside the company. Members are part of informal networks of people with the same profession.4 For instance, researchers in a pharmaceutical company may have intense professional contacts with researchers in other companies or with scientists that work in the same field. In particular bridging social capital supports fast diffusion of knowledge in these networks. In such a way, a company learns from knowledge that is available elsewhere. 4 The difference between these networks and communities of practice is that participants in a network do not completely work together, but communicate via news letters, Internet, conferences, etcetera. (Brown and Duguid, 2000b).
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However, it also raises the risk that crucial knowledge becomes available for competitors. Not only knowledge flows between communities of practice are sizeable in figure 1B, but also knowledge flows via external networks (horizontally). The incentives to invest in knowledge fall when spillovers limit knowledge rents for a company. The risk of knowledge spillovers is smaller if little know-how flows through external networks. Hence, the challenge for a company is to link social capital to tacit types of knowledge, such as know-how and know-who. Figure 1C illustrates that internal exchange of skills (know-how) stimulates knowledge diffusion within the company, whereas the connections with external networks have another form. Via these networks researchers exchange basic knowledge (know-why) and managers or marketing employees exchange factual knowledge (know-what). If bridging social capital stimulates the exchange of knowhow and know-who between communities of practice, a firm can create knowledge based core capabilities, that enable it to react decisively on signals from the market on which it operates. Reputation mechanisms can stimulate cooperative behaviour of employees in the firm. In relevant external networks employees can exchange know-why and know-what, without a large risk that knowledge that is crucial for the firm’s core capabilities spills over to competitors. 6
Conclusion
In these times of individualisation, of increasing (international) competition and of governments that privatise and enhance the operation of markets, companies should take care not to underestimate the role of values, norms and social capital. The increasing importance of knowledge as a core capability of companies, makes it increasingly difficult to found mutual relationships on formal contracts. In many cases implicit contracts replace formal contracts. At the same time, the increasing complexities of the knowledge economy demand that to a larger extent companies combine their capabilities and learn from each other. Then, values, norms and social capital may offer a solution. Through intrinsic motivation and reinforcement of the reputation mechanism they encourage parties to respect largely implicit contracts. Hence, besides physical, financial and human capital, social capital may also constitute an important type of investment in the knowledge economy. Still, investing in social capital does not always concur with building bonding social capital in the form of homogeneous internally oriented communities of practice in a company. Bridging social capital forms an alternative. Bridging social capital consists of norms and networks, in which the fast transfer of reputation among people supports implicit contracts. It offers more room to engage in relationships with outsiders and is more individualistic then bonding social capital. Trends, such as ICT, intertask learning and individualisation, emphasise the importance of bridging social capital. With respect to knowledge, companies may face the challenge to find a proper balance between types of social capital and types of knowledge. Bridging social capital is attractive: it increases knowledge flows between the different communities of practice in the company. For instance, researchers may take advantage of the experience that sales representatives obtain about the way a product performs in practice. However, it also entails the risk that crucial knowledge spills over to competitors through external networks. Then an option may be to relate bridging social capital inside the company to the exchange of skills and to mutual learning. This type of knowledge (know-how) cannot be separated from people or organisations, so that the risk of spillovers is lower. In that case factual knowledge (knowwhat) and fundamental knowledge (know-why) may flow in outside networks. Exchange of facts and principles entails few risks, because application of these types of knowledge requires skills (know-how) that are hard to transmit. 9
By consequence, the main challenge is to exchange tacit instead of codified knowledge within a company. Registering knowledge fields of employees on an intranet or extensive documentation of projects with the objective to exchange knowledge, may offer limited possibilities to strengthen knowledge capabilities in a company. It may be more effective to create meeting points within the company (the famous knowledge exchange at the coffee machine), to stimulate brainstorming, presentations and discussions among members of various communities of practice, and to enhance cooperation in varying teams. This may concur with norms that stimulate and protect an open and vulnerable attitude towards colleague’s (in particular from other units or other communities of practice). Moreover, this not only applies to companies, but just as well to organisations in the public sector or to social organisations. This paper only provides an exploration of the possible links between social capital and different types of knowledge in companies. Empirical testing of these interactions and relationships may be an interesting topic for future research. However, gathering the relevant data is no simple task. Firm-level datasets generally contain no data on communities of practice or types of knowledge. Therefore, generating case study evidence probably is the most useful way to proceed. A survey of the management literature on these topics may give a first impression as to what extent relevant empirical information already is available. A next step may be to perform some pilot case studies in several companies with diverging cultural characteristics and varying knowledge intensity. Pilots may provide information to set-up more general case studies or questionnaires, with the purpose to gather data on a broader scale. That may yield an interesting research program on knowledge and social capital. References Beugelsdijk, S. and T. van Schaik (2001), Social capital and regional economic growth, Center Discussion Paper, 2001-102. Bovenberg, A.L. (2002), ‘Norms, values and technological change’, De Economist 150, p 521 – 553. Bowles, S. and H. Gintis (2002), Social capital and community governance, Economic Journal, F419 – F436. Brown, J.S. and P. Duguid (1998), ‘Organizing Knowledge’, California Management Review, 40(1), p 90-111. Brown, J.S. and P. Duguid (2000a), The social life of information, Harvard Business School Press, Boston. Brown, J.S. and P. Duguid (2000b), ‘Mysteries of the region: knowledge dynamics in Silicon Valley’, in C.-M. Lee, W.F. Millar, M. Gong Hancock and H.S. Rowen (eds), The Silicon Valley edge: a habitat for innovation and entrepreneurship, Stanford University Press. Clark, K., and M. Sefton (2001), ‘The sequential prisoner’s dilemma: evidence on reciprocation’, Economic Journal 111, p 51-68. Cohen, S.S., and G. Fields (2000), ‘Social capital and capital gains in Silicon Valley’, in E.L. Lesser (ed), Knowledge and social capital, Butterworth-Heinemann, p179-200. CPB (1997), Challenging neighbours: rethinking German and Dutch economic institutions, Springer Verlag, Berlin, Heidelberg. CPB (2000), ‘De vernieuwende economie’, Centraal Economisch Plan 2000, SdU, Den Haag, p162181. Fehr, E., and S. Gächter (2000), Fairness and retaliation: the economics of reciprocity’, Journal of Economic Perspectives 14, p158-181. Fehr, E., and A. Falk (2002), ‘Psychological foundations of incentives’, European Economic Review 46, p 687-724. Fountain, J.E. (1997), ‘Social capital: a key enabler of innovation in science and technology’, in L.M. Branscomb and J. Keller (eds), Investing in innovation: toward a consensus strategy for federal technology policy, MIT Press, Cambridge.
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