Social Capital in Organizations - A Conceptual Frame Work

Abstract

The business scenario world-wide, be it competitive or monopolistic, demands everyone in the business to formulate the strategies for their sustainability. One of the most accepted views of experts for sustainability of the business is creating the customer base, by creating a kind of trust and strong network for the business. A business organisation can create a trust and strong network relationship with suppliers, customers, and other organisations and the relationship is habitual and characterised by trust, open communication, and joint problem solving. The key ingredient in every case of successful business is something less tangible, less blatant, but more powerful than the market factors such as high barriers to entry, non-substitutable products, a large market share, buyers with low bargaining power, suppliers with low bargaining power, rivalry among competitors. The potential of the firm to create competitive advantage depends not solely on its own resources but also on its relationship with other firms. Hence, successful external relationship is increasingly recognised to be critical to the survival and success of organisations. Social capital is a catalyst which nurtures the successful external relationship. This paper further explores the concept of social capital and the ways in which it can be developed in organizations.