Journal of Management Policies and Practices

Patching the Wrong Eye? Balancing the Role of Social and Human Capital in Firm Strategic Renewal
Ramin Vandaie

Abstract
Research on the dark side of social capital has gained momentum in recent years and several studies have begun to explore the nature, antecedents, and consequences of the potentially harmful effects of social capital in organizations. This study highlights a previously ignored potentially negative effect of social capital in firm strategies, i.e. the substitution of social capital for human capital, or extensive reliance on social capital in developing and renewing key organizational capabilities at the expense of adequate attention to the commensurate development of human capital when attempting strategic renewal. Such substitution manifests itself as an increased ratio of external access of capabilities (by deploying the firm‘s social capital) to internal capability development (by developing and deploying the firm‘s human capital). This paper explores the antecedents of such strategy and builds a link between its adoption and long-term firm performance. Specifically, the argument is made that adopting the substitution strategy, though seemingly harmless in the short run, hurts the firm in the long run by contributing to the firm‘s growing inability to create and capture value from externally-sourced capabilities.

Full Text: PDF     DOI: 10.15640/jmpp.v8n1a4