Social Capital in Technology-Based Firms

Background

To improve their innovation capacity, technology-based firms search constantly for new ideas and unexploited opportunities. The innovation literature argues that firms can benefit from the knowledge possessed by external actors such as users, suppliers, universities, and competitors (Arora, Fosfuri, & Gambardella, 2001; Rosenkopf & Nerkar, 2001; Shan, Walker, & Kogut, 1994; von Hippel, 1988).

This chapter adopts a social capital perspective to explore the interactions among the actors involved in the innovation process, to analyze the assets that inform those interactions such as trust, social norms, obligations, and shared communication codes. Following Lin (1999), I build on the concept of individual social capital defined as the product of individual investment in a network of relationships, which allows access to heterogeneous knowledge domains. Lin (1999:9) adopts a private-good view of social capital, and highlights that social capital is the ‘investment in social relations by individuals through which they gain access to embedded resources to enhance expected returns of instrumental or expressive actions’. Individual social capital therefore, is a resource linked to social networks and group membership. More specifically, as suggested by Bourdieu (1986:p. 249) ‘the volume of social capital possessed by a given agent depends on the size of the network of connections that he can effectively mobilize’. Bourdieu (1980) claims that the relationships one individual has with others represent a specific form of capital: the social resources inherent in these relationships may be used by the individual to pursue economic ends. Nahapiet and Ghoshal (1998) identify three dimensions of social capital: the structural dimension, i.e. the social ties and connections between actors; the relational dimension, i.e. the nature and the quality of these connections (social interactions); and the cognitive dimension, i.e. the representations, interpretations, and systems that actors share and which result in durable connections.