Building Social Capital In A Company Commerce Essay

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Many definitions of social capital have been offered by different researchers over the years. Here are three popularly referenced once:

"the ability of actors to secure benefits by virtue of membership in social networks or other social structures" (Portes, 1998)

"features of social organization such as networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit" (Putnam, 1995)

"the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit. Social capital thus comprises both the network and the assets that may be mobilized through that network" (Nahapiet and Ghoshal, 1998)

All of these offer a concept based on relationships through social networks and how to extract value from this. Adler and Kwon (2002) contribute with a deeper insight into these three definitions by categorizing their focus into external, internal and both. This categorization would put the first definition by Portes into an external focus meaning it assumes the point of view of one individual and the relationships this individual have with others. This is also called bridging form of social capital. The second definition by Putnam have a focus on the relationships in an organization as a whole. This makes it an internal type of social capital, also called bonding social capital. The third category have a broader scope and is neutral in terms of focus. This is said to take in account both bridging and bonding social capital. Nahapiet and Ghoshal (1998) whose definition of social capital is available above (3) identifies three alternative types of social capital: structural, relational and cognitive. Structural social capital refers to the way the network is structured with network ties, network configurations, and appropriable organisation. Relational on the other hand describes the relations between individuals in terms of trust, norms, obligations, and identification. These two types are much like bridging (structural) and bondning (relational) as discussed above. The cognitive social capital is an additional construct which refers to the resources used to build and maintain relationships such as shared codes and language, and shared narratives.

For their own research Adler and Kwon use the following definition:

"Social capital is the goodwill available to individuals or groups. Its source lies in the structure and content of the actor's social relations. Its effects flow from the information, influence, and solidarity it makes available to the actor."

Hence going for a definition including both the external, bridging and the internal, bonding kind of social capital. This definition also gives a hint to what the benefits are for an organisation in building and keeping social capital. The big benefits are, according to Adler and Kwon (2002): Information, influence and solidarity. More social capital means improvements to information quality, information relevance and information timing for the actors in the organisation. Power and influence can be accessed and activated via social capital and hence contribute to socio-political interactions in the company's processes. Lastly solidarity can be achieved in the organisation through norms and beliefs that are encouraged and practiced within the social networks of the company. Additionally solidarity can be achieved through weak ties as well by building relationship (bridging) groups otherwise not connected. (Adler and Kwon, 2002)

The properties of social capital in an organisation

Glaeser, Laibson and Sacerdote (2002) writes that a company have both internal and external social capital. The internal is basically the company itself, which in a sense is a social network. Further the external social capital comes from the fact that employees can have associations outside of the company that contribute to the social capital within the organization. They also argue that maintaining social capital could be a way of earning the organisation value. Furthermore, new employees can bring social capital into the company by working on keeping social capital from previous work relationships. Gaining social capital however comes at a cost. Like everything else it is a trade-off. In order to investigate if social capital investment is profitable to the company the total income or value generation must be put in relation to how much it costs. Adler and Kwon (2002) have the same argument for investment into social capital adding that like investments into physical capital, money spent is irreversible and inconvertible. Similarly Nahapiet and Ghosal (1998) add that social capital, unlike other forms of capital, will not deteriorate with use but rather decrease if it is not being used and efforts is not made to keep it.

Building social capital is not without risk. Adler and Kwon (2002) report on the findings of Morten T. Hansen in his 1998 paper "Combining network centrality and related knowledge: Explaining effective knowledge sharing in multiunit firms". In this paper Hansen comes to the conclusion that even though strong ties existed between project teams and those ties meant information benefits, they were not economically viable. The information benefit didn't outweigh the high cost needed to maintain the ties. In this regard Hansen sees weak ties as more effective than strong ones. Further a strong in-group solidarity, as is one of the benefits of building social capital as discussed above, may also create immunity towards positive external influences. This means a danger for decreased creativity and higher risk for groupthink.

Building social capital

Sander and Lowney (2006) have developed a manual for ways of building social capital. They argue, like others (Glaeser, Laibson and Sacerdote, 2002), that measuring social capital while building it is important. This because levels of social capital will vary strongly between communities and organisations and it is important to get a sense of efficiency of the methods used. Sander and Lowney reasons that, unless the organisation is really small, it is not viable to measure this to exact numbers. Instead the suggest looking at factors correlating with social capital (for example social trust), making surveys on a smaller population and make conclusions for the entire organisation, or use a tool mixing these two techniques developed by the authors themselves.

For ways of building social capital Sander and Lowney (2006) draws a matrix with trust on one axis and group size on the other, filling it with examples of social capital building activities. They hence argue that appropriate ways of building social capital will be dependant on what level of trust the community have to begin with as well as how big the community is. This also means that as the amount of social capital in the company grows, the methods used for generating it must change. The unique settings of companies will also entail custom solutions in every company. However, when considering this, Sander and Lowney give two simple parameters to consider when trying to build social capital: motivations and opportunities. Motivations means looking at the individual's incentives to generate, strengthen and uphold social capital. As also mentioned by Glaeser, Laibson and Sacerdote (2002) - individuals will build social capital when there are private gains from doing so.

Sander and Lowney (2006) goes on to list three circumstances under which individuals feel motivated to build social capital: When performing an activity they highly enjoy with others, when craving social contact as a way of feeling better, and when there is a pressing issue in a community the individual belong to. When the employees in an organisation feel the motivation they also needs to be provided with an opportunity to build social capital. In this endeavour providing forums, venues and activities as stages where employees can socialize and communicate are important building blocks. Conversation is another fundamental component in creation of relationships and hence in generating social capital. It is in conversation where conversing parties can bond over similar interests and inter-relationships that relationships are founded. (Sander and Lowney, 2006)

Taylor (2007) explores possibilities and barriers of creating social capital in a multinational company and how to overcome them. She uses the dimensions of Nahapiet and Ghoshal: structural, relational and cognitive social capital. Her suggestions on how to build social capital is divided in these dimensions. The base to generating social capital is employees she identifies as High value boundary spanners (HVBSs). These are highly contributing employees in terms of creation, knowledge sharing and coordination. They also work in several different domains within the company; geographic, cultural or both.

For building structural and relational capital she proposes that establishing relationships between networks of different characteristics will be more difficult than between more homogenous networks. Heterogeneous in this case refers to individualistic or collective societies, specific or diffuse cultures, and low status identity or high status identity cultures. Building cognitive capital she propose would not have as much of these barriers but still being easier between homogenous organisations in terms of individualistic or collectivistic culture. (Taylor, 2007)

SNSs  in an organisation

SNSs are communication and collaboration tools within the organisation and communication and marketing tools outside of the organisation to reach out current and potential customers. Marketing industrials are more looking into online social media and organisations are demanded to implement online advertisement due to market trend. Today products advertising are not like traditional one and there is no more time for organization to sit back, relax and see result. They need to be more initiative and interactive with customer such as creating chat session with customer, replaying or giving comments on the customer feedback and so on (Webb, 2007). SNSs are the best place to listen consumers' expectation, feedback, suggestion and dissatisfaction. (Trusov, M., Bucklin, R., & Pauwels, K., 2009).

Collaboration and cooperation are important factors in the organisations and that will be a big challenge if the organisation is big and has many branches in different geographical locations, for example, IBM. In this situation, SNSs are the best tools to implement for collaboration and cooperation of employee. Employee from different branches can work on the same project by using different social networking tools. Moreover, to learn new skill sets, employee can read posts from company blog or he/she just need to watch a video demonstration on YouTube uploaded by company. Hence, online training are become the most cost effectiveness and easiest way for organisation which has multiple branches, and required to have multiple training sessions for new technologies and products. Now a day, most of the employee are using smart phones and they are always on the social medias, therefore, information and messages can be disseminated faster and easier among employee by using SNSs like IM, Facebook Chat, Twitter and corporate IM (Lester, J., & Perini, M., 2010). Problem solving can be done more quickly by having brain-storming session on company's blog.

Organisations and its employees have to be extra careful when dealing with social media to avoid unnecessary outcomes. Amy Cheong case is the best example here; Amy Cheong who was an assistant director of NTUC (National Trades Union Congress) had given a racist comment on her Facebook wall and her comment was exploded across social media within a few hours. Later, NTUC sacked her to prevent future damages on the organisation. By seeing this example, employee need to understand accountability matter on social media even status/comment is personal. Depending on the nature of business, organisation should have clear guideline and policies to avoid security and privacy risk. Hence, organisations should have different SNSs with different purpose in order to control information and data safeguard (D.Sandy Staples, 2011). IBM's Beehive is an example of SNS for internal information and knowledge sharing, and Dell's IdeaStorm is an example of SNS for information and knowledge sharing between company's staff and consumer.

Proposed Theoretical Framework

In building social capital, using SNSs and tools will give more opportunities and benefits to organisations in term of cost, time and effort. With the help of SNSs and tools, organisations, which have several branches at different geographical locations, can easily create single social capital for the whole organization and improve the level of collaboration and cooperation among the employee. SNS makes keep in touch and always connected to social capital member. Building social capital in organisation is building trust among employee and colleague. This trust will drive employee to share their knowledge and experience with their colleague and that trust will make more effectiveness in collaboration, cooperation and coordination among employee. SNSs allow users to determine other users' behaviour and intentions which is important in trusting each other. By examining other user/member attributes from their profile pages, user can determine whether a person should be trusted or not. It will be harmful for organization's social capital, if users are not able to view or get to know each other attributes. Moreover, in such situation, level of uncertainty degree among users will be increased and it will leads to failure of creating social capital (Valenzuela, Park, Kee, 2009).

SNS helps users to create and maintain their social capital easily, and it helps user to build their social network without having "face time" or teambuilding session. (Valenzuela, Park, Kee, 2009).  With the technical advancement, user can connect larger network scale which will be weak ties network that gives different information sources with different perspective. At the same time SNS will help user to maintain strong ties network which are more likely to be friends and families.  Steinfield et al. (2009), claimed that weak ties network will give bridging social capital ability which gives different information and opportunities such as job vacancy information, and strong ties network has ability to give bonding social capital which more likely to give a kind of family matter supports such as emotional support and financial support. When we see to organizational aspect, social capital are more weight on exchange of knowledge between employee, and SNS will give ease of access on those individual to create social capital, locate information, draw information and in contribution.

Research done by Huy and Shipilove (2012), pointed out that having good SNS and tools crowd are not strength enough when creating successful social capital in the organization. According to their research finding, there are many factors are also need to count in to become a successful social capital such as community leader in the social capital who can give emotional support and generate spirit to the member. A research has done on two companies which used same SNS and found that one company was failed due to the lack consideration in value added factors. According to Huy and Shipilove (2012), when creating social capital with the help of social networking tools in organization, planning is crucial. According to to Huy and Shipilove (2012) suggestion, at first, organisation needs to identify the leader of the community who has reputation and gained trust from employee. Without the leader of community in SNS, it will be underutilized and the plan will not be accomplished as lack of support, courage, moral and spirit. Second, familiarized with social networking tools to employee before officially deploy. Employee can gain general knowledge and idea of the online social networking by using free social networking tools like Facebook and Twitter. Encouraging and motivating are significantly important at this stage. Third, encourage employee to build social capital on SNSs that gives knowledge, fun and entertainment to them. Then, starts deploy corporate social networking tools in the organisation with step by step approach. Simple and easy one comes first, for instance, wikis and podcasts implement first and followed by more complicated tools. At last, when employees are used to with the tools, organisation can perform value adding, for example, creating information exchange culture within organisation.

Implementation of external and internal Social Networking Sites

Under this section we will expand on the work with using Social Networking Sites (SNS) to build social capital by examining how it is done in two cases. The first one will depict an internal SNS used at IBM called IBM Beehive. The second case will be of external character SNS used by Dell called IdeaStorm

In the next section we will compare the procedures used in the cases with the theoretical framework.


In the 90's IBM started an initiative to provide their employees with an easier way of connecting with their colleagues. The first implementation of this was a yellow pages application where people could search and find the contact numbers of people within the company. The software was named Blue Pages (BP) as a flirt with the commonly used nickname "Big Blue". From 1998 to 2006 this software grew from its initial state of a static phonebook into something that could qualify as an internal SNS. The development of the site was influenced by many of the public Web 2.0 SNS-initiatives that popped up during the time of development. (Riemer and Richter, 2009)

The site was very well received and had a percentually big user base. Riemer and Richter (2009) contributes this partly to how it evolved in the company. That an already widely used function (phone book) was complemented with the functionality the workers wanted. They define this way the system was being developed, along with its use, co-evolution. The system was mainly used for three purposes: searching for experts, putting colleagues in a personal context and nurturing existing relationships by keeping communication channels open. (Riemer and Richter, 2009)

IBM Beehive

Strengthen by the success of BP IBM launched a fully fledged SNS, IBM Beehive, in 2007. Much like the popular public alternatives like facebook and twitter, Beehive allows for its users to create a customized profile page and connect with other users. The user is allowed to post both personal and professional content as well as communicating with others through various ways of direct or indirect postings. Two years after launch, in 2009, 15,000 users had registered for an account which could be translated to about 15% of the company. (Steinfield et al., 2009).


The site was designed with sites like facebook and MySpace as models. The goal was letting employees communicate with colleagues both actively by direct and contact and passively by their profile page. The profile page is one way for a user to express him-/herself. This includes: profile photo, status message, contact and work details (linked to BP), connections made, shared content, lists with different customizable topics and personal details. The user can also communicate with other users via instant messaging services, by commenting on content posted by the user or by posting messages on the users profile page. Similarly to other popular public SNS's privacy settings can be made to limit who sees what of the users profile page. The user can see recent buzz among his/hers connections and will receive notifications when someone interacts or posts content related to the user. (DiMicco et al., 2009)


The usage of the site spanned posting both personal and professional content. In this way it was used both to communicate their personal interests and promote their professional projects. The site is also used to connect people previously unknown, similar to the way expertise search was conducted in BP. Additionally, like with BP, the site is used to build a personal context between users who already have an existing relationship but which might be limited by for example geographical distance. (DiMicco et al., 2008; DiMicco et al., 2009) In addition to the way employees used BP, Beehive is also used to browse the network and bond with people over similar interests. (Steinfield et al., 2009)

Steinfield et al. (2009) come to some useful conclusion about what the usage of Beehive leads to in terms of social capital. At IBM employees who use Beehive more intensively develop stronger ties to their network compared to those who use it less or not at all. Also the weak ties of these power-users become more accessible and active. Furthermore Beehive have greater positive effect on social capital for those with a network disadvantage. That is those who lack it, young and new employees as well as those geographically separated from the company headquarters. The research team also suggest that a request sent via the SNS is more likely to be considered than sending the same message via for example e-mail. They contribute this to the personal context and the common connections which the message sent via e-mail more likely will lack.

DiMicco et al. (2008) identified three different motivations for sharing content on Beehive and labeled them caring, climbing and campaigning. Caring is related to employees enjoying to socialize with their colleagues on a personal level. Climbing is the motivation to share in order to advance one's career. This is done by promoting oneself on the profile page or in other ways as well as establishing strategic connections. The research team note however that some employees feel that the use of the SNS could also hurt their career. The final cause, campaigning, is the use of the SNS to promote the internal projects the user is involved in. Using Beehive to do so help employees drive traffic to their project page and gain support for their ideas among peers as well as managers.

A short introduction to IBM

Clarify why Beehive qualifies as an internal SNS.

Information can be posted on the network without censorship since it's internal. (Steinfield et al., 2009)

Keeping information up to date was a problem that Beehive tried to solve (DiMicco et al., 2008)

SNS at Dell

Dell Social Media Evolution

Dell Inc. is multinational computer and IT product manufacturing organisation which founded by Michael Dell in 1984 to provide custom built PCs for consumer. Now a day, Dell has millions of customer around the world. Along the road, Dell has learnt a lot on social media and understood the role of social media in business. In the past, Dell had been suffered because of the social media and lessons learn from those experiences, Dell has become a successful business organization which uses social media as their business tool.  

In June 2005, author and journalist Jeff Jarvis posted negative experience on customer service of Dell. The incident was travelled months without any resolution. In August 2005, Jarvis posted an open letter for Dell's CEO Michael Dell and suggested to listen and response on all negative voices from social media and press. He also pointed out that how important of regular and direct communication to the customer. Because of these consequences, they had started looking into social media.

First corporate social networking blog, Direst2Dell was launched in 2006 with the idea of to create stronger network tie between company and customer by sharing knowledge, idea and vision of the company.

In 2007, Dell started stepping in to the online social capital world by creating IdeaStorm, ( The idea is to bring in all sorts of people who want to improve Dell's products and services, and to create a social capital with them by sharing knowledge and idea.

In June 2007, Dell introduced a twitter account, @DellOutlet as an alternative shopping place for Dell Outlet products and services.  In mid-2009, the sale was reached to three million from twitter alone and at the year-end six million was counted from all Dell outlets.

Between 2008 and 2010, Dell has launched several channels on social networking sites such as PartnerDIRECT page on LinkedIn and @DellChannel on twitter to cater information about Dell PartnerDirect's programmes. Moreover, Dell had created @DellCares and @DellCaresPro as social media outreach team on Twitter to provide proactive customer support and minimize wide spreading of bad voicing on social media.

In December 2010, Dell's Social Media Listening Command Centre was launched to monitor every Dell-related topic posts across the social networking sites.

Social Media to Social Capital

As we have seen above, Dell has created social capitals on different social media platforms. Because of these networks, Dell can cooperates and collaborates with its vendors and customers, knowledge and experience can be shared easily within the organization and company's insight, mission, happening are possible to express everyone in the world. By seeing this, Dell has built strong network with its consumers which is the most important business requirement for modern business era.


The IdeaStorm is a SNS from Dell which is the most important social media for Dell when creating social capital with the customer. Although there are many social media are implemented in Dell, IdeaStorm is more focused on the collaboration with customer whereas the rest are more associated with internal collaboration, social media response and customer support.

The idea of the IdeaStorm is to collaborate between customer and Dell. IdeaStorm is the place where customer can voice out their ideas and suggestions. And also, they can brainstorm to improve one another idea and work together to create an idea or suggestion.  By observing the expectation of the customer, Dell can improve in implementation of new products and services.

Everyone who interested to share experience, who interested to give suggestion and idea, and who want to tell their expectation on Dell products and services can join to IdeaStorm. In another way, IdeaStorm is an open SNS from Dell. The same with other SNSs, registration is compulsory to become a member of IdeaStorm. After registration was finished, user can start share his/her ideas by posting articles on the site. The post will be status as "Acknowledge" after reviewed by IdeaStorm team and if it was passed terms of use. "Under Review and Implemented" status will be indicated at the post accordingly when the post was review by respective business team and idea was implemented for business use. "Already Offer" status will be shown if the idea was already offer in the market place and "Not Plan" status will be shown if the idea is not line with business plan of Dell. The post will be taken off to archive from the site if the post is not received any of above status within six months. However, the archive posts will be still accessible by IdeaStorm member for future evaluation. During the period, from the submitting of a post until it was implemented or archived, there are many collaboration works between members and employee can be seen to mob up the ideas. Employees are usually joined the conversations, through the comments. Managers and executives are monitoring IdeaStorm and they are also guiding and encouraging their employees to join suitable discussion sessions. The ideas of members can be improved by collaboration with other members, such as voting and giving comments to improve these ideas. The "Storm Sessions" was introduced on IdeaStorm in 2009, where Dell creates topics and asks customers to give ideas and suggestions. Storm Sessions will open only on limited time to make all the ideas to be more relevant and targeted. In 2012, Dell has included "Extensions" feature in IdeaStorm. "Extensions" is that an Idea poster can promote comments from his/her post as a consideration part of the idea for mopping up. Moreover, Dell ranked all the posts based on the number suggestions that they receive on a particular idea. To date, Dell implemented almost 600 ideas from 1800 submitted ideas.

According to Bourdieu and Wacquant (1992), and Coleman (1990), social capital is the result of social structure and the result of collaboration from individual level and collective level to get positive outcomes. IdeaStorm creating positive outcomes for Dell products and services through the collaboration work of customers and members. IdeaStorm is a SNS that creating social capital between Dell and its customers. This social capital will help to promote Dell image and customer trust around the globe.


How does the framework and the case studies match?

What additional lessons can we draw from the cases?

As proposed by Riemer and Richter (2009) the success of BP can attributed to its history in the company.


Key findings