The Reach and Influence of Social Capital for Career Advancement and Firm Development: Elite Managers and Russia's Exit from Socialism

Abstract

The initiation of market liberalization resulted in a sharp decline in economic output and market disorganization across the former Soviet Union. Inadequate physical, financial, and human capital are among the explanations for the slow pace of enterprise restructuring and market development. The role of social networks, however, is less understood. Using survey data from a management‐training programme in Russia, we examine the effects of entrepreneurial networks on both individual's professional advancement and firm's business development. We find that their participation in work‐ and association‐based social networks varied and differentially affected outcomes at the individual and firm levels. We conclude that active participation in social capital networks catalyses returns on investments in human capital. Implications of this study for research on Chinese social networks are discussed.