Developing Social Capital through Online Social Networks: Framework for Strategic Business Networks.

Submitted by Kilonzo Daniel Muthama

To Strathmore University as a project dissertation in partial fulfillment of the requirements of the degree of Master of Science in Information Technology (MSc.IT) February 2010

Table of Contents
List of Abbreviations ............................................................................................................................ 4 List of Figures........................................................................................................................................ 5 List of Tables ......................................................................................................................................... 6 Declaration............................................................................................................................................. 7 Abstract.................................................................................................................................................. 8 Acknowledgment ................................................................................................................................... 9 Chapter 1: Introduction ..................................................................................................................... 10 1.1. 1.2. 1.3. 1.4. 1.5. 1.6. 1.7. 1.8. 1.8.1. 1.8.2. 2.1 2.2 2.3 3.1 Background ........................................................................................................................... 10 An overview of Facebook ............................................................................................. 12 Problem statement ................................................................................................................. 15 Purpose of study .................................................................................................................... 16 Research Objectives .............................................................................................................. 16 Research Questions ............................................................................................................... 16 Hypothesis............................................................................................................................. 17 Project Justification ............................................................................................................... 17 Project Scope and Limitations .............................................................................................. 17 Scope ................................................................................................................................. 17 Limitations ........................................................................................................................ 18 Social capital ......................................................................................................................... 19 Existing Research on Online Social Networks, the Internet and Social Capital ................... 20 Social Network Analysis....................................................................................................... 22 Limitations and boundaries of the paper ............................................................................... 25 1.1.1.

Chapter 2: Literature Review ............................................................................................................ 19

Chapter 3: Aims and Objectives ........................................................................................................ 25 Chapter 4: Design and Methodology................................................................................................. 27 4. 1 Design ........................................................................................................................................ 27 4.2 Population ................................................................................................................................... 27 4.3 Sampling Design ......................................................................................................................... 27 4.4 Data Collection Methods ............................................................................................................ 28 4.5 Data Analysis Methods ............................................................................................................... 29 Chapter 5: Findings ............................................................................................................................ 30 5.1 Overview ..................................................................................................................................... 30 5.2 Survey Findings .......................................................................................................................... 31 5.3 What Do Kenyans Do Online?.................................................................................................... 33 Chapter 6: Data Presentation and Analysis ..................................................................................... 42 6.1 Introduction ................................................................................................................................. 42 2

6.2 Qualitative Methods that Contribute to the Study of Social Capital ........................................... 42 6.3 Comparative advantage of qualitative and quantitative approaches ........................................... 44 Chapter 7: Discussion ........................................................................................................................ 48 Developing Social Capital through Online Social Networks ........................................................... 48 7.1 Social Capital ........................................................................................................................ 48 Social Capital Background............................................................................................ 48 Analyzing Social Capital .............................................................................................. 49 Benefits of Social Capital ............................................................................................. 51 Online Social Networking Background ........................................................................ 52 Online Social Networking Analysis .............................................................................. 53 Benefits of Online Social Networking .......................................................................... 54 Does Online Social Networking Increase Social Capital? ............................................ 56 Does Online Social Networking Decrease Social Capital? ........................................... 57 Does the Internet Supplement Social Capital? .............................................................. 59 The enterprise‘s internal social capital .......................................................................... 61 The firm‘s production-related social capital ................................................................. 64 The firm‘s environment-related social capital .............................................................. 65 Market-related social capital ......................................................................................... 68 7.1.1 7.1.2 7.1.3 7.2 7.2.1 7.2.2 7.2.3 7.3 7.3.1 7.3.2 7.3.3 7.4 7.4.1 7.4.2 7.4.3 7.4.4 7.5 7.6 7.7

Social Networking ................................................................................................................ 52

How Online Social Networking affects Social Capital ......................................................... 55

Enterprise-related social capital ............................................................................................ 60

Business implications of ―third sector‖ activities ................................................................. 69 Social capital in the knowledge economy ............................................................................. 84 A Framework for Strategic Business Networks. ................................................................... 88

Putting it all together ...................................................................................................................... 89 Chapter 8: Recommendation and Conclusion.................................................................................. 91 Appendices ........................................................................................................................................... 94 Appendix 1: Survey Questionnaire ................................................................................................... 94 Bibliography ........................................................................................................................................ 99

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Social Networking Potential TLD – Top Level Domain MOO – MUD.Peer to Peer PC – Personal Computer PDA – Personal Device Assistant SNP .Multi-User Dungeon SQL –Structured Query Language 4 .Bulletin Board System ICT .List of Abbreviations BBS . Object Oriented MUD .Information Communication & Technology ISP – Internet Service Provider P2P.

3. 7.2: Males Vs.1: Schematic depiction of juridical forms of society's production according to degree 12.3.2. Figure 5. 13.1: Findings Overview 2. Figure 5. Figure 7.3: Distribution of Sweden's approximately 600 000 business firms 1996.1: A Framework for Strategic Business Networks 5 .2. Figure 7.6: Personal Information Figure 5. Figure 5.3: Kenya‘s Ranking 6.3. Figure 7. 8.5.3.3.List of Figures 1. 9.2. females on social network sites 5.3. 10.7. Figure 5.5: What Kenyans do Online Figure 5. Figure 5. Figure 5.1: Social network analysis 11.4: Internet Use Figure 5.1: Percentage of users across social networks 4. Figure 7.2: Internet Users Age Groups 3.3.7: Online and Offline life comparison.

Table 7.4. Table 5.3.2: Internet Users Age Groups 3. Table 7.4: Personal Information 6.1: An overview of the Kenyan Population 2.1: Kenyan Internet Stats 4.3.1: Social capital of the enterprise broken down into different component parts 8.3.6.3.2.2. Table 5. Table 5. 7. Table 5.1: Key attributes of the knowledge and industrial societies and of the mercantilist era 6 .2: Internet Use 5. Table 5. Table 5.List of Tables 1.5: Online and Offline life comparison.

DATE…………………………. DATE…………………………… Kilonzo Daniel Muthama MSc. I further certify that no material has previous been submitted and approved for the award of a degree by this or any other University. SIGNED ……………………………………..IT/050 691 This project report has been submitted for examination with my approval as the University Supervisor..Declaration I certify that this dissertation is my original work and all material in this dissertation which is not my own work has been identified. Dr.. Freddie Acosta Lecturer – Faculty of Information Technology Strathmore University 7 .. SIGNED………………………………………... . This dissertation is available for Library use on the understanding that it‘s a copyright material and that no quotation or implementation of the system from the dissertation may be developed or published without acknowledgment.

human resources. this study aims to guide organizations on how to harness the knowledge management power of networks be it in computer-supported cooperative work. This research is about the usefulness of an online social network approach to business. it is a social network. 8 . marketing or in more diffuse interactions over less bounded systems such as the Internet so as to achieve a strong business network strategy through increasing its social capital.Abstract When a computer network connects people or organizations. By reviewing some concepts of online social network and its utility. Yet the study of such computer-supported social networks has not received as much attention as studies of online person-to-person interaction and computer-supported communication within organizations.

who has the outlook and the essence of an intellect. and an enthusiasm in regard to his teaching I was encouraged to go out there and do my best no matter what. Dr. It was splendid because of the many people who were there for me every step of the way and for that I would like to express the deepest appreciation. Without these people‘s guidance and persistent help this venture would not have been possible. 9 .  My absolute gratitude to God for giving me the strength and aptitude to undertake this venture and successfully complete it without any major obstacles.  I can‘t forget my fellow Strathmore University students who not only made the experience a thrill but also gave me something to look forward to everyday when I lacked morale during the undertaking.Acknowledgment My graduate degree experience at Strathmore University was splendid. Through his continued support throughout and persuasive spirit of venture in regard to IT.  First to my lecturer.  In addition I thank my work colleagues for their support.  Next I would like to thank my family who have encouraged and helped me to believe in myself and this has helped me gain the energy needed to accomplish the undertaking. Freddie Acosta. help and patience during the undertaking.

(Wikipedia. financial exchange. dislike. these networks are rapidly migrating to the online world. casual acquaintance to close familiar bonds. Background Social capital is a sociological concept used in business. et al. human beings naturally form groups on affinities and expertise.Chapter 1: Introduction 1. sexual relationships. or relationships of beliefs. kinship. (Walther. Social Capital 2010) A social network on the other hand. 2008) 10 . political science.1." which are tied (connected) by one or more specific types of interdependency. economics. Though there are a variety of related definitions. Not surprisingly. mostly individuals or organizations. Just as a screwdriver (physical capital) or a college education (human capital) can increase productivity (both individual and collective). It indicates the ways in which people are connected through various social familiarities ranging from professional. such as friendship. We gravitate to others with whom we share interest. so do social contacts affect the productivity of individuals and groups". knowledge or prestige. they tend to share the core idea "that social networks have value. is a social structure made of individuals (or organizations) called "nodes. Social Network 2010) In both professional and personal life. (Wikipedia. Most of us belong to real world networks that formed organically. which have been described as "something of a cure-all" for the problems of modern society. An online social network is a description on a social structure between actors. public health and the social sciences in general to refer to connections within and between social networks. organizational behavior.

Online social networking has been around in various forms for nearly a decade, and has begun to achieve wide notice in the past few years. Online Social Networks take many forms, and are created for many reasons. Despite their differences, Online Social Networks do however, commonly exhibit the following concepts:

Profiles – Each member in a network has an online profile that serves as the individual‘s identity in the network. In the professional context, profiles often contain information regarding the individual‘s experience, education, interests and affiliations, as well as information about the individual‘s skills and resources.

Connections – Online Social Networks typically enable individuals to make connections with others in the network. In some cases, these connections are implicit, and derived from past actions (such as sending an email to another member of the network). In other cases, the connections are explicit, and are set up and created by the members themselves.

Deceptively simple, Online Social Networks contain greater power. They change the online space from one of static web pages and stale marketing messages to alive, vibrant network of connected individuals who share their abilities, expertise and interests. Ask any senior executive, politician, community leader or successful salesperson which one skill or habit helped them excel in their career – an overwhelming majority will respond with one simple word, Networking.

Networking is the single most powerful business tactic to accelerate and sustain success for any individual or organization. It is about making connections and building enduring, mutually beneficial relationships. It also serves as the catalyst to ensure you meet the‖ right‖ people to include in your network an d expand your sphere of influence. Ultimately it‘s not about who you know, but who knows you that will ensure your success because people do business with people they like and trust. 11

Personal relationships enable you to stand out and rise above the noise and networking provides the most productive, most proficient and most enduring tactic to build relationships, because to succeed you must continually meet new people. Build relationships and leverage your network. (Acquisti and Gross 2006, June) 1.1.1. An overview of Facebook

Facebook, MySpace, Orkut, Cyworld, Bebo and other social network sites are, perhaps the best examples of O‘Reilly‘s (2005) Web 2.0 environment, where audiences have become co-authors on interactive websites. In a similar fashion as blogs, Online Social Networks allow individuals to present themselves to other users using a variety of formats, including text and video. Just like chat services, Online Social Networks incorporate a list of other users with whom individuals share a connection. But unlike any other web service, Online Social Networks allow individuals to make visible their list of connections to others and to transverse their social networks. (Boyd and Rahn 1997)

Created in 2004, by 2007 Facebook was reported to have more than 21 million registered members generating 1.6 billion page views each day. The site is tightly integrated into the daily media practices of its users: The typical user spends about 20 minutes a day on the site, and two-thirds of users log in at least once a day. Capitalizing on its success among college students, Facebook launched a high school version in early September 2005. In 2006, the company introduced communities for commercial organizations; as of November 2006, almost 22,000 organizations had Facebook directories. In 2006, Facebook was used at over 2,000 United States colleges and was the seventh most popular site on the World Wide Web with respect to total page views. (The Benefits of Facebook "Friends:" Social Capital and College Students' Use of Online Social Network Sites 2007)

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Much of the existing academic research on Facebook has focused on identity presentation and privacy concerns. Looking at the amount of information Facebook participants provide about themselves, the relatively open nature of the information, and the lack of privacy controls enacted by the users, Gross and Acquisti argue that users may be putting themselves at risk both offline (e.g., stalking) and online (e.g., identify theft). Other recent Facebook research examines student perceptions of instructor presence and self-disclosure, temporal patterns of use, and the relationship between profile structure and friendship articulation. (The Benefits of Facebook "Friends:" Social Capital and College Students' Use of Online Social Network Sites 2007) 1.1.2 Facebook Quick Facts and Statistics

Company Figures
     

More than 400 million active users 50% of our active users log on to Facebook in any given day More than 35 million users update their status each day More than 60 million status updates posted each day More than 3 billion photos uploaded to the site each month More than 5 billion pieces of content (web links, news stories, blog posts, notes, photo albums, etc.) shared each week

    

More than 3.5 million events created each month More than 3 million active Pages on Facebook More than 1.5 million local businesses have active Pages on Facebook More than 20 million people become fans of Pages each day Pages have created more than 5.3 billion fans (Facebook 2010)

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more than 70% of Facebook users engage with Platform applications More than 500.000 active applications currently on Facebook Platform More than 250 applications have more than one million monthly active users More than 80.000 users helped translate the site through the translations application Platform      More than one million developers and entrepreneurs from more than 180 countries Every month.000 websites have implemented Facebook Connect since its general availability in December 2008  More than 60 million Facebook users engage with Facebook Connect on external websites every month 14 .Average User Figures         Average user has 130 friends on the site Average user sends 8 friend requests per month Average user spends more than 55 minutes per day on Facebook Average user clicks the Like button on 9 pieces of content each month Average user writes 25 comments on Facebook content each month Average user becomes a fan of 4 Pages each month Average user is invited to 3 events per month Average user is a member of 13 groups (Facebook 2010) International Growth    More than 70 translations available on the site About 70% of Facebook users are outside the United States Over 300.

0 the need to use Online Social Networks to develop a social capital is fast becoming a critical factor in helping organizations harness the internet‘s potential to achieve agility and competitiveness in today‘s market. Top 100 websites and half of comScore‘s Global Top 100 websites have implemented Facebook Connect (Facebook 2010) Mobile  There are more than 100 million active users currently accessing Facebook through their mobile devices.  People that use Facebook on their mobile devices are twice more active on Facebook than non-mobile users. establish usage and accountability policies. This requires a framework to help select suitable online social computing tools. like developing social capital and knowledge recourses for tapping into new and existing talent. This ―Skeptism and Hysteria‖ is the result of misplaced or uninformed concerns about the effects of online social networking in the workplace. customer support and expert project collaboration. Two-thirds of comScore‘s U. create monitoring and moderation processes and develop evaluation mechanisms to gauge the growth against the usefulness of Online Social Networks.S.  There are more than 200 mobile operators in 60 countries working to deploy and promote Facebook mobile products (Facebook 2010) 1.2. Problem statement Many chief executives are becoming hot under the collar as they perceive employees spend more time ―cyberslacking‖ than working. With the advent of web 2. Many organizations today are unaware of the potential benefits of Online Social Networks to business. marketing. 15 .

security. Research Questions      To what extent is social capital being developed in organizations? What added value do social networks bring into the firms? What part do social networks play in corporate agility? What capabilities of social networks will be most valuable? What are the possible risks associated with social networking? 16 .3. corporate liability.    Establish usage and accountability policies. Create monitoring and moderation processes and procedures Develop an education program and communications plan 1.5.1.4. employee privacy. corporate reputation. their capability and needs. Purpose of study The research project is geared to developing an online social network framework that:  Will help unravel the misconceptions on Online Social Networks and reveal the potential of in propelling business   Will help organizations harness social capital in their development Will help organizations strengthen their business strategy networks and bring about realization of the various application areas of Online Social Networks in business  Will contribute to the evolution of Online Social Networks for business application 1. data loss and system adoption. Research Objectives   Select suitable social computing tools based on the types of users. Identify possible risks on productivity and behavior.

 What Policies. new trends Facilitating win-win relationship between the clients and business e. The researcher will typically observe the usage of Facebook Business Application tool. its usage. customer support Establishing business contacts Finding subject matter experts and mobilizing colleagues to contribute to projects Develop knowledge resources Embarking on a specific project Marketing products/launching a new product Need to cultivate a social capital within organizations 1.8. The researcher will administer an online questionnaire to the stakeholders of 17 . growth and statistics. but will interview team members informally. Processes and Education Programs are required to successfully incorporate the use of social networks in firms? 1. Scope The researcher will develop a Facebook Business Application and engage in participant-observation over a two month period. 1. Project Justification  The purpose of this study is to evaluate the effectiveness of Online Social Networks as a tool to develop organizations in the following areas:         Learning dynamics within your industry i.1.e. as needed to clarify and provide insight to specific conversations.7.8. Hypothesis H1: The use of Online Social Networks in firms will have a positive socio-economic effect on business. The researcher will not schedule structured interviews.g. Project Scope and Limitations 1.6.

8.the system to gauge user satisfaction. 1. especially in my initial observation. Being an outsider may also limit what is revealed to the researcher and the motives of the research may be viewed with suspicion. Limitations Time constraints of the semester require less time than may be ideal for an in depth study. 18 . appreciation. The team members may be guarded in their conversations around me. system utilization and capability requirements after the research period.2.

Norms. (Portes 1998) The substantial disagreements on how to define. 1983) It may also be defined as the ability of actors to secure benefits by virtue of membership in social networks or other social structures‘. (Howard and Gilbert 2008) 19 . volunteering. 2002) But what exactly is social capital? A cursory review of the literature on the subject shows that it involves associations.1 Social capital There seems to be a consensus that social capital is an important feature of healthy. yet flexible theoretical framework. confidence in political institutions. civic and political arenas. also called social or generalized trust in others. is to integrate the different dimensions of the concepts into a single. The interpersonal dimension refers to trust among stakeholders. and trust that provide the means for organization stakeholders to resolve collective action problems. volunteering. 1995b) conceptualization of social capital as ―elements of social life as networks. The challenge. operationalize and measure social capital have led some researchers to discard the concept all together and work with more manageable variables. who were inspired by Putnam‘s (1993: 1995a. One such effort was conducted by Scheufele and Shah. The intrapersonal dimension is related to stakeholders‘ life satisfaction and personal well-being.‖ (Scheufele and Shah 2000) These authors distinguished three dimensions of social capital: intrapersonal.(Putnam and Goss. (Bourdieu. confidence in political participation. interpersonal and behavioral. An alternative path is to recognize that social capital is a multidimensional concept. life satisfaction and a variety of other concepts. effective organization.Chapter 2: Literature Review 2. The behavioral dimension incorporates stakeholders‘ active participation in the business. membership in groups and associations. in this case.

sustained interactions) a person may have.2 Existing Research on Online Social Networks.‖ (Fukuyama 1995) 2. pervasive characteristic: its network. Survey research by Nyland. In his view. as well as its ability to complete. Stenfield and Lampe 2007) Social networks sites can foster users‘ well-being and social capital does not mean that they always do. 2004) This proposition was empirically tested by Ellison. networks and network structure.Social capital theorists suggest that Online Social Networks facilitates associative behavior. infrequent. [bridging] online [and] offline connections. as opposed to meeting new people. Fukuyama went even further. Ellison and her colleagues found that use of Facebook had a strong association to maintaining or solidifying existing offline relationships. Applying Putnam‘s framework of ―bridging‖ and ―bonding‖ social capital..S.(Boyd & Ellison 2007) Donath and Boyd were among the first to hypothesize the Online Social Networks may not increase the number of ―strong ties‖ (i. Stenfield and Lampe using survey data from a small sample of firms in U.e. casual interactions) a person could form because the technology is suited to maintain these ties cheaply and easily.. ―an organization‘s well-being.‖ Of concern here is the potential of Online Social Networks to bridge (or create a gap) between online and offline connections – a key component of social capital theory. which fosters a strong business network strategy. but may increase the ―weak ties‖ (i. Marvez. (Ellison. long-term. is conditioned by a single. which makes individuals and organizations more responsive.e. and privacy issues. all of which is translated into success. Boyd and Ellison noted that ―the bulk of Online Social Networks research has focused on impression management and friendship performance. (Donath & Boyd. the Internet and Social Capital In their in-depth review of scholarship n social network sites. and Beck found that heavy users of MySpace felt less 20 .

This line of research echoes one of the most pervasive criticisms against Online Social Networks. reflects the larger issue of ―the Internet paradox.g.g. Internet use in general has been linked both to increases and decreases in social capital. as this study does. as opposed to maintaining or strengthening offline business relationships.. focusing on a population with total Internet access. Marvez and Beck 2007. where those that are psychologically better-of (e. can help uncover the true impact of social media. Tian. there is research that a‖ poor get richer‖ perspective. et al. On the other hand.socially involved with the community around them than light users. are more popular. have high self-esteem and life satisfaction. where those that are less better-off gain more from the Internet than those who are better-off. there are studies that support a ―rich get richer‖ perspective. Early adopters differ significantly from late adopters and thus the effects of using the Internet services are confounded with differences across segments of the population. have more offline contacts. which is that they lead to users‘ isolation (e. which might diminish their social capital. however. (Best and Dautrich 2003) 21 . 2003). Echoing Putnam‘s ―time displacement hypothesis‖ Nie argued that Internet use detracted individuals from face-to-face interactions.. this paradox is related to the diffusion of Internet.‖ (Kraut.g. (Nyland. fostering norms of trust and reciprocity.. including the use of purposive samples and asking about different platforms. February) Furthermore. later research has found that online communication has a positive role on individuals‘ participation in community life.2002) On one hand. (Nie 2001) However. etc. a substantial proportion of respondents were using this social network for entertainment. In this regard. Beyond social sites. (Stern and Dillman 2006) Certainly. Hodgkinson 2008) Several methodological problems may explain the contradictory findings of previous studies.) gain more from using Internet services (e. The mixed evidence about the impact of social network sites on users‘ attitudes.

It has also gained a significant following in anthropology. economics.g. Nicholas Mullins. Kathleen Carley. from interpersonal to international. ethnicity). In 1954. and has become a popular topic of speculation and study. Stephen Borgatti. we adopt the framework suggested by Scheufele and Shah to test the impact of Facebook on users‘ collaboration and social trust in business participation and operations. Linton Freeman. social psychology. Social Network 2010) People have used the idea of "social network" loosely for over a century to connote complex sets of relationships between members of social systems at all scales. David Knoke. (Scheufele and Shah 2000) 2.The evidence is far from conclusive. Barry Wellman. Scholars such as S. Martin Everett. organizational studies. and Harrison White expanded the use of systematic social network analysis. Barnes started using the term systematically to denote patterns of ties. (Wikipedia. gender. biology. Katherine Faust. communication studies.3 Social Network Analysis Social network analysis has emerged as a key technique in modern sociology. Stanley Wasserman. A. tribes. White.. Douglas R. geography. Berkowitz. and sociolinguistics.. but it is clear that the positive or negative effects of the Internet and specifically Online Social Networks on social capital are contingent upon the way this medium is used.D. Social Network 2010) 22 . Peter Marsden. families) and social categories (e. Anatol Rapoport. (Ji-Young 2006) In this study. David Krackhardt. (Wikipedia. Mark Granovetter.g. J. information science. Ronald Burt. encompassing concepts traditionally used by the public and those used by social scientists: bounded groups (e.

with its own theoretical statements. for groups such as companies. such as their "personal communities". from structure to relation to individual. all of the ties containing specified relations in a defined population. the ties that specified people have.Social network analysis has now moved from being a suggestive metaphor to an analytic approach to a paradigm. The hybrid network may be valuable for examining whole/complete networks that are expected to include important players beyond those who are formally identified. a method for examining hybrid networks has recently been developed in which egos in complete networks can nominate alters otherwise not listed who are then available for all subsequent egos to see. The distinction between whole/complete networks and personal/egocentric networks has depended largely on how analysts were able to gather data. Analysts reason from whole to part. Personal/egocentric studies were typically conducted when identities of egos were known. Tönnies argued that social groups can exist as personal and direct social ties that either link 23 . A snowball network refers to the idea that the alters identified in an egocentric survey then become egos themselves and are able in turn to nominate additional alters. That is. from behavior to attitude. For example. or personal networks (also known as egocentric networks). the analyst was expected to have complete information about who was in the network. schools. methods. and researchers. but not their alters. While there are severe logistic limits to conducting snowball network studies. employees of a company often work with non-company consultants who may be part of a network that cannot fully be defined prior to data collection. all participants being both potential egos and alters. Precursors of social networks in the late 1800s include Émile Durkheim and Ferdinand Tönnies. social network analysis software. These studies rely on the egos to provide information about the identities of alters and there is no expectation that the various egos or sets of alters will be tied to each other. or membership societies. They typically either study whole networks (also known as complete networks).

24 . He distinguished between a traditional society – "mechanical solidarity" – which prevails if individual differences are minimized. and instrumental social links (gesellschaft). formal. Durkheim gave a non-individualistic explanation of social facts arguing that social phenomena arise when interacting individuals constitute a reality that can no longer be accounted for in terms of the properties of individual actors. and the modern society – "organic solidarity" – that develops out of cooperation between differentiated individuals with independent roles.individuals who share values and belief (gemeinschaft) or impersonal.

 Efforts: A lot of input is required both from the researcher and the interviewee and in Kenya most people ‗mind their own businesses and don‘t like to be disturbed with questionnaires and the like. but it is hard to know what to make of it  Social relationships can be seen in isolation from the physical environment.Chapter 3: Aims and Objectives Apart from the objectives outlined at the beginning. leaving out emotional reasons  Literacy: Not many people are literate enough to use a computer let alone join an online community in Kenya. economy and other factors – as if social relationships were the only influence on development  The starting point of seeing social relationships as the basis for development can mean researchers underplay unsupportive or destructive social ties  Relationships can be seen in an unrealistically rational way that we wouldn‘t recognize in relation to our own relationships – as if people make and maintain connections purely for practical personal benefits. 3. Recognizing employees‘ attitude towards Social Capital and the topic itself. this study of analyzing how to develop Social Capital using the Online Social Network also aimed at:    Recognizing components of social capital associated organizational outcomes.1  Limitations and boundaries of the paper A lot of the research looks at the form of the networks more than their substance. 25 . you have an image of a network. Finding the association between social capital and both transaction costs and organizational outcomes.

 The terms social capital and social network analysis are pretty ‗dry‘ or hard to a non-expert and this caused a lot of stir trying to explain what the research is all about and how it can help the organization. online and other sources is reflecting the Western Social traits which might not be the case here in Africa. The internet use in Africa is still relatively young and most of the information available in books. 26 .

4. will educate and help develop Social Capital within organizations. Most users are familiar with online social utilities and this will cut back on time needed to train and educate users.e. 1 Design The research design chosen for this study will be the descriptive research and to be more specific the cross-sectional research design will be used whereby data will be collected from respondents only once. The researcher wishes to investigate developing social capital through Online Social Networks: 1. Descriptive: the study will explore a deeper understanding of Online Social Networks for knowledge management and Social Capital development. 27 . 4. In this case those who will be most helpful.3 Sampling Design The population will be sampled using the quota sampling whereby judgment is used to select the subjects or units from each segment based on a specified proportion.2 Population The population of interest consists of the stakeholders of two organizations but from different industries namely. Formulative: the researcher will propose a framework that if adopted. The main reasons for restricting this study of these institutions is: 1. A stratified approach will also be used to divide the population into strata in terms of the type of stakeholders i. Mr. 2.Chapter 4: Design and Methodology 4. Price Clothing Company and Hidalgo Stock Brokers Company. Guaranteed co-operation and availability of resources (Little or no red tape) 2.

The two subsets will then be correlated using Pearsons‘s product moment correlation coefficient. customers) e) Proportions of each stratum will then be calculated and sample determined. employees.a) By business function (e. Online questionnaires will be administered to employees using the Facebook Business Application with the aim of gathering data on their capability in using the system.g. their needs and requirements for the system. the research instruments will be standardized on the basis of the findings from the pilot study. Frequent informal interviews will be carried out from time to time. data will be gathered and analyzed. Other data collection methods that will be employed in this study include:     Website hits statistics Membership statistics (Entrants and Leavers from the group) Blogs and discussion board monitoring and growth Network growth monitoring 28 . 4. The split-half method will be used o establish the consistency of the instruments.4 Data Collection Methods To collect data both questionnaire and interview schedules will be used. sales. This involves splitting the statement (items) into two halves (odd and even) items. research) b) By region c) By business unit d) By relationship to your company (e.g. which is taken to be the estimate of reliability. In this study all odd numbered items will be placed in one subset while the even numbered items will be placed in another subset. their attitudes towards online social networks. The study will use the internal consistency method to test reliability. To ensure the pilot study. Each of the subsets will be treated separately and scored accordingly.

a person with high SNP. derived through algorithms to represent both the size of an individual‘s social network and their ability to influence that network. Descriptive statistics will be used in this study to create percentages. SNP coefficients have two primary functions i.4. In analyzing data. This data will be analyzed. the classification of individuals based on their Social Network Potential.e. textual comments will be made with direct reference to the statistical data provided in tables. 29 . frequency tables and graphs charts. descriptive statistics will be employed. An algorithm known as the Social Networking Potential (SNP) will also be used to analyze the data. ratios frequencies. and the weighting of respondents in quantitative market research studies. After data has been collected it will be checked and coded and analyzed using SPSS statistical package. and percentages. summarized and presented in tables using totals. Social Networking Potential is a numeric coefficient.5 Data Analysis Methods This study will combine quantitative and qualitative data. In regard to each issue. A close synonym is the Alpha User. This statistical tool will be used to condense and summarize description of units regard to innumerable or measurable characteristics.

corresponding to a penetration rate of 3. All the government‘s ministries are now accessible via the internet. with an estimated monthly growth of 300 new subscribers each month. Soon competition increased with the entry of three other ISPs. computers. English is the official language in Kenya. mainly in the major towns. All the ISPs would lease analogue or digital data lines from Kenya to the US to access the Internet backbone. The main users of the Internet in Kenya are Multinational corporations. The first commercial ISP. (Internet World Stats 2009) 30 .Chapter 5: Findings 5. Full Internet access was established in 1995. an NGO based in Nairobi. provide access to internet and email.1%. At present there are 72 licensed ISPs of which about half are operational.054. (Internet World Stats 2009) The latest estimate of Internet users for Kenya from the ITU is 1. internet shops. In 2000.900 people. Formnet began operating in 1995. or electricity. A major factor that may have influenced the use of ICT positively in Kenya is the use of the English language. international organizations and NGOs. known as cyber cafes. there were about 200. The African Regional Centre for Computing (ARCC).1 Overview The Internet first became available in Kenya during 1993. Since many people in Kenya do not have fixed phone lines. Currently the Communications Commission of Kenya (CCK) is considering conducting a comprehensive Internet Usage Study to confirm the real number of users in Kenya. and Information Technology (IT) services are largely based in English. so this has been an advantage. Kenya.000 Internet users in Kenya. became the first provider of web-based Internet service.

2 Survey Findings The questionnaire used for data collection ran online for a period of three weeks since 25th January 2010 till 19th January 2010. The table and bar graph below show the responders age brackets.5.1: An overview of the Kenyan Population Latest Population Estimate: 39.367 sq km The heaviest users of the Internet can be said to be between the ages of 20 to 30 years. http://www. Figure 5. A total of 364 people participated. and this section is an overview of the findings.1: Findings Overview Findings Overview Male Female 44% 56% Table 5. 31 . (US Census Bureau.gov/) Gross National Income: GNI per capita is US$ 770 ('08) (World Bank. 161 men and 203 females.2. http://www.2.002.census.worldbank.org) Country Area: 580.772 population for 2009.

30 31 .40 41 . others two (7%) while the largest number (87%) had more than two. 40% Social Sciences while 8% Other.2. Facebook 67%. At least 12% said they were interested in Science/Technology.Table 5.2: Internet Users Age Groups Age Under 18 18 . Some had created profiles in only one social network (5%).20 21 .2.50 51 .2: Internet Users Age Groups 80 70 60 50 40 30 20 10 0 Male Female Most of these users were Kenyans (at least 89%) while a few (6%) were from various countries across the globe and others ignored the question. 14% Arts & Humanities. Of all these responders at least 87% said that Facebook was their primary social networking site. 26% Business Disciplines. 32 .65 Above 66 Male 9 22 65 37 15 11 2 0 Female 15 37 77 41 20 8 4 1 Figure 5. MySpace users amounted to 5%.25 26 . Orkut 3% and 30% other social sites.

What do people do while they're on the Web? Specifically what do Kenyans do online? Figure 5.1: Percentage of users across social networks SOURCE: Social bookmarking statistics (2008) 33 . communication and networking taking up the bulk of most people's time online.2 compares male versus female on these social networks.5.1 shows the percentage of users across social networks while Figure 5. with commerce. Figure 5.3.3 What Do Kenyans Do Online? We all know that the Internet has evolved tremendously in the past decade.3.3.

5 million monthly internet users with over two million using Facebook (Facebook clicks a threat to Kenyan TV stations and Radio.3.). Online Booking and Shopping: Booking air ticket.c.2: Males Vs.d. Some of the key activities Kenyans involve in are:    Dating: Using web tools and services that are designed to find people online. exams or shopping for various items across several web-malls.t. e-books.  Socializing/Networking: Using Online Social Platforms like Facebook. 34 . Really? n. females on social network sites Some new research by Synovate indicates that Kenya has more than 3. audio tapes e.Figure 5. Downloading: Downloading free movies.

1: Kenyan Internet Stats Country code Hosts International Internet bandwidth > Mbps Internet Service Providers ISP Live-journal users Price basket for Internet > US$ per month Secure Internet servers TLD . Kenya‘s Internet usage is growing at a high rate.3.3. The diagram below shows the ranking of Kenya among other African countries: Figure 5.ke 35 . Looking for Jobs: Job seekers login to various site to upload their CVs and look for potential employers The tables below summarize the Internet statistics in Kenya and show Internet Usage respectively.376 105 Mbps 65 65 46 75.93 $/month 17 .3: Kenya’s Ranking Table 5.ke 27.

Newspapers.000 Table 5.2: Internet Use Internet Use Internet Activities Send/Receive Email Take Part in Mailing Lists Access Digital Libraries. MOOs. Magazines Take Online College Courses Purchase Products or Services Surf the Web Participate in Usenet Newsgroups Engage in Chats Visit MUDs.Users SOURCE : ITU (2009) 3. Other Multiuser Environments Play Multiuser Games Male 127 56 20 72 112 147 150 100 111 153 Female 172 121 89 126 197 165 76 212 201 50 Total 299 177 109 198 309 312 226 312 312 203 36 .000.3.

" "3.Strongly Agree).2)." "4. This question had seven (7) options ranging from one (1 . participants could answer: "1. Monthly. Factor analysis of these ten items revealed two distinct profiles of Internet use: synchronous and asynchronous (Table 5.3. Rarely. Most Kenyans use the Internet for Networking purposes." "2. For each item. four (4) being Neutral.2." and "5. Asked why they joined the social networks. Most (at least 67%) of those who use social site said that they use the sites to keep track of their friends‘ status. The following figure shows the results of this survey question: 37 .Strongly Disagree) to seven (7 . Daily". A Few Times a Week.Figure 5. Weekly.4: Internet Use 250 200 150 100 50 0 Male Female The survey contained 31 items where participants reported different aspects of their Internet use. the respondents had differing reasons.

3. The survey showed that most people. 9% to anyone while the rest were not sure. space or wall. 11% send a bulletin or group message to all of your friends. is often on social basis.Figure 5. 37% said they posted messages to a friend's page. Many people are still afraid of giving too much information online as cases of Internet fraud have hit a high in the recent past. 38 .3 shows what information people are willing to share publicly on their profile. 41% send private messages to a friend within the social networking system and 11% post comments to a friend's blog.3. at least 98% give their first name but hesitate to give out other personal details all too quickly. Most people feel the need to go online to keep track of their old friends using various Online Social Platforms. Figure 5. Responding to the survey question that asked the respondents how they communicated on the social site.2 would suggest.3. as Figure 5.5: What Kenyans do Online Internet usage in Kenya. at least 81% said they only allowed only friends. Asked how public the respondent‘s profile on their preferred social site was.

At least 47% of the respondents said they provide some false information about themselves in their profiles. Only 8% said they respond to ask the person to leave them alone. at least 77%.3.3.6: Personal Information The survey showed that many people. said they ignore requests from strangers while 21% try to find out more about the person requesting them. Most respondents. don‘t want to share personal information with people they‘ve just met online. 39 .4: Personal Information Information First Name Last Name Photos of friends Photos of yourself City or town Link to your blog University name IM screen name Email address Stream audio or MP3 files Videos Cell phone numbers % that sgree to share 98% 80% 55% 61% 44% 57% 69% 41% 43% 37% 21% 12% Figure 5.Table 5. 71%.

30 Above 30 Figure 5. most Internet users are college/university students between the age of 21-25. Most of the respondents. at least 56% have had an online social network profile for two to three years while 33% said they had the profile for about an year. Online social networks have helped many keep track of long lost friends and also make new friends.3. Life online and offline are two completely different tales as told by Figure 5.19 21 .19 21 . at least 87%.3.5: Online and Offline life comparison. mobile phones and wireless laptops to access their social network websites. As Figure 5. 140 120 100 80 60 40 20 0 1-4 5-9 10 . The respondents were asked how many friends they keep track of online and offline.2.30 Above 30 Offline Online 40 . use PDAs. Table 5.3. Offline Online 119 23 88 31 61 45 43 53 25 87 11 121 1-4 5-9 10 . Most of them.7: Online and Offline life comparison.3 indicated.4 below.A whopping 91% admitted they use their online social network to seek information on new/existing products.14 15 .14 15 .

This means that organizations can really take advantage of this and build their social capital among other cooperate things like their brand using these social sites. 41 . a user finds comfort in joining one or more of these groups because of that feeling of belonging. music. Online Social Networks do not only provide a networking platform but also bring groups with common interest or point of view together. social events and so on. Be it in politics. philosophy. This survey showed that Internet usage in Kenya is on the increase and social sites are getting more and more popular. religion.Keeping track of friends online or even creating a social network online is as easy as clicking a button. movies. personal hobbies. And that is why keeping up with 120 plus friends status offline is a problem but online is easy. The following chapters expound more on this and present a framework that corporations can use as a model to build their social capital. games.

1 Introduction Data presentation covered in the discussion chapter. Trust and solidarity.2 Qualitative Methods that Contribute to the Study of Social Capital This chapter covers concrete suggestions for using qualitative methods to explore six sometimes overlapping dimensions of social capital used in data presentation and analysis: (i) (ii) (iii) (iv) (v) (vi) Groups and networks. 42 .Chapter 6: Data Presentation and Analysis 6. The data herein is presented in a simple and clear way. Only the most important and relevant data is presented Most collected data is presented as follows:      Raw numbers Measures of central tendency Percentage Tables Graphic Presentations 6. Collective action and cooperation. covers the analysis and scrutiny of the findings and is presented in order to answer the study objectives. Social cohesion and inclusion. and Empowerment and political action. Information and communication.

however. 43 . Most social science researchers acknowledge the importance of using a range of methods to assess given phenomena. or who occupy key strategic positions in a network.These dimensions reflect two different ways of thinking about social capital. data that offers both context-specific ―depth‖ (usually obtained via qualitative methods) and generalizable ―breadth‖ (usually obtained via quantitative methods) is required (Bamberger 2000. Resources themselves. because their social relationships and position in these networks give them better access to and control over valued resources. meaning that social capital can function as a mechanism of exclusion as well as inclusion. Rao and Woolcock 2003). or small groups who have access to important resources. of course. plus limited time and resources. or small groups secure (or are denied) access to resources. households. Researchers in the field are thus encouraged to adopt the combination of qualitative and quantitative methods that best correspond to the specific nature of the issues under investigation. Implicit in this approach is the recognition that the distribution of social capital within any given community is unequal and often stratified. are said to have ―more‖ social capital than others. mean that only one approach tends to be adopted for a specific study. ―Social capital‖ is one such complex issue that benefits from the coherent integration of qualitative and quantitative approaches. households. the distinctive skill sets associated with each approach. since the issues under investigation are typically very complex.3 From this standpoint. While strongly supportive of integrated research methods. This practice is especially unfortunate in development. this guide focuses specifically on qualitative approaches. individuals. The first focuses on how social relationships act as a means through which individuals. In order to adequately understand development issues and establish a firm basis on which to draw project and policy recommendations. In practice. can be used for a variety of constructive or destructive purposes.

quantitative methods are intended to uphold empirically rigorous. the weaknesses of one approach can be compensated for by the strengths of the other.. comparable.6. foreign researchers) set the parameters of research. In addition. and generalizable to a wider population. also be weaknesses.e. however. Many important characteristics of people and communities (both rich and poor)—for example. Sampling allows the results to be considered representative. secondarily. which are identified through various forms of sampling (usually random sampling). The strengths of quantitative research can. identities. Indeed. Because ―outsiders‖ (i. perceptions. and by collecting and analyzing the data in numerical form. the respective strengths and weaknesses of qualitative and quantitative approaches are largely complementary—that is. Such data should allow others to validate original findings by independently replicating the analysis. By remaining several steps removed from the individuals from whom the data is obtained. most surveys are designed far from the places where they will be administered and thus tend to reflect the preconceptions and biases of the researcher. Given a set of identifying conditions. on its capacity to address the weaknesses of quantitative approaches. Quantitative methods characteristically refer to standardized questionnaires that are administered to individuals or households. Thus. and objective research standards. the questions used in such surveys are not usually developed on the basis of insights from the field. while pre-testing can identify and correct 44 . Although good surveys undergo several rounds of rigorous pre-testing. they are unlikely to be exposed to new discoveries and/or unexpected findings.3 Comparative advantage of qualitative and quantitative approaches The case for qualitative research rests on the unique and important insights that it brings in its own right and. quantitative data can help establish correlations between given variables and outcomes. impartial. and beliefs—cannot be meaningfully reduced to numbers or adequately understood without reference to the local context in which people live.

questions that are clearly ill suited to a given research objective. making them more relevant and specific. the limitations of context remain. Qualitative research can provide a context for such quantitative findings. interested parties might engage external researchers with little or no familiarity with a country (let alone a region or municipality) to analyze data from context-specific household surveys.g. Effective quantitative research usually requires a large sample size (sometimes several thousand households). allow for more in-depth analysis of social. Although such efforts may yield broad policy recommendations. These limitations can be mitigated by qualitative methods that incorporate insights from the field and leave room for unexpected findings. open-ended interviews. political. Studying poverty and other issues from the outside tends to favor technical expertise. Qualitative methods typically refer to a range of data collection and analysis techniques that use purposive sampling and semi-structured. Alternatively. lack of resources sometimes makes large-scale research of this kind impossible. However. which both produce and analyze textual data.. In many settings—particularly developing countries—interested parties (e. Qualitative methods both value and incorporate experiential knowledge into the analysis of development successes and failures. which may or may not include an appreciation of the context of various local situations. they rarely provide results that are useful to local program officials or project beneficiaries. public service providers) may lack the skills and especially the resources needed to conduct a thorough quantitative evaluation. 32) points out. governments. Hentschel 1999). As Chambers (1997. These techniques.‖ Qualitative methods and open-ended responses tilt the balance of power and expertise away from the researcher toward 45 . qualitative methods can be used with smaller samples to provide insights into a development question. and economic processes (Krishna and Shrader 2000. In such cases. ―power hinders learning. nongovernmental organizations.

Exploring issues from the perspective of different groups thus becomes important. Qualitative methods that allow researchers to explore the views of homogenous as well as diverse groups of people help unpack these differing perspectives within a community. by the research (Narayan 1995. Certain marginalized communities are small in number (e. but a driver of the process. qualitative methods can also be useful. victims of domestic abuse).g. In some cases. social capital can even be used and enhanced through focus group work.6 The processes involved in qualitative data collection and analysis can also build shared ownership of research and its results between researchers and the community. One issue of qualitative research is the question of whose voice is being heard. Open-ended questioning and focus group discussions are. the disabled. sex workers. institution mapping. and amplified. Various groups within a community may have overlapping or very different experiences of social norms and networks. and context.g. Because social capital is relational—it exists between people—asking a group of people to respond together to certain questions and hypothetical situations may yield information that is more nuanced than data derived from surveys. designed to allow respondents to identify and articulate their priorities and concerns free from researchers‘ restrictions and assumptions. In situations where governments are highly suspicious of quantitative surveys.respondents and community members. in fact. And although small samples are more 46 . widows) or difficult for outsiders to access (e. Estrella and Gaventa 1997). Chambers 1997.. qualitative work may be the only research option available for assessing social capital issues.. process. meaning that their views and experiences are unlikely to be captured in a survey based on random sampling. and priority rankings are particularly suitable for social capital research because social capital comes into play and can be observed during these exercises. In circumstances where a quantitative survey may be difficult to administer. Qualitative methods such as focus groups. which ceases to be simply the subject or respondent. Such methods are vital for examining complex issues of causality.

do qualitative methods. others simply require researchers to acknowledge the limits of the research design and make a good-faith effort to minimize them. too.g. and thus independently verify. Second. it is vital that qualitative data be cross-checked against quantitative findings. Just as quantitative approaches have their limitations. it is hard (but again. In the same way that quantitative data benefits from comparisons with qualitative data. because groups may be selected in an idiosyncratic manner (e. not impossible) to make compelling claims regarding causality on the basis of qualitative data alone. and two researchers looking at the same data may arrive at somewhat different conclusions. Third. it is relatively more difficult to extrapolate qualitative findings to the wider population. analysis of qualitative data demands interpretation of the research.. 47 . the results of qualitative research. so.frequent in qualitative research. by decision of the lead investigator) or on the recommendation of other participants (as in ―snowball‖ sampling procedures. it is possible to conduct larger-scale. Fourth. cross-country qualitative research (Narayan and Shah 1999). the limitations of both qualitative methods and quantitative methods are mitigated by triangulation. because qualitative data cannot control for other mitigating factors or establish the counterfactual. in which one respondent agrees to provide access to another respondent). it can be difficult to replicate.8 Using quantitative approaches can compensate for some of these weaknesses. Because the samples tend to be small and not selected randomly. To conclude.

J.1 Social Capital Background L.Chapter 7: Discussion Developing Social Capital through Online Social Networks 7. and the fellowship of his neighbors. mutual sympathy and social intercourse among a group of individuals and families who make up a social unit… If he may come into contact with his neighbor.1. there will be an accumulation of social capital. The community as a whole will benefit by the cooperation of all its parts. 2010) 7. organizational behavior. which may immediately satisfy his social needs and which may bear a social potentiality sufficient to the substantial improvement of living conditions in the whole community. or to personal property or to cold cash. (1916) 48 . the sympathy. but rather to that in life which tends to make these tangible substances count for most in the daily lives of people. economics. In defining the concept. while the individual will find in his associations the advantages of the help. (Wikipedia.J. public health and the social sciences in general to refer to connections within and between social networks. and they with other neighbors. Hanifan's 1916 article regarding local support for rural schools is one of the first occurrences of the term "social capital" in reference to social cohesion and personal investment in the community. political science. fellowship. L. goodwill. Hanifan contrasts social capital with material goods by defining it as: "I do not refer to real estate.1 Social Capital Social capital as defined earlier is a sociological concept used in business. namely.‖ (Hanifan.

Sociologist Pierre Bourdieu used the term in 1972 in his Outline of a Theory of Practice. However. serving as the focus of a World Bank research programme and the main subject of several mainstream books. his work tends to show how it can be used practically to produce or reproduce inequality. John Dewey may have made the first direct mainstream use of "social capital" in The School and Society in 1899. B. J. (Foley. & Edwards. 1972) Sociologists James Coleman. The concept that underlies social capital has a much longer history.2 Analyzing Social Capital Though Bourdieu might agree with Coleman that social capital in the abstract is a neutral resource.While various aspects of the concept have been approached by all social science fields. some trace the modern usage of the term to Jane Jacobs in the 1960s. W. demonstrating for instance how people gain access to powerful positions through the direct and indirect employment 49 . 2010) Political scientist Robert Salisbury advanced the term as a critical component of interest group formation in his 1969 article "An Exchange Theory of Interest Groups" in the Midwest Journal of Political Science. (Coleman. M.1. (Bourdieu. 1988). economic. including and Lewis Feldstein's book "Better Together". Barry Wellman and Scot Wortley adopted Glenn Loury's 1977 definition in developing and popularizing the concept. drawing on the work of earlier writers such as James Madison (The Federalist Papers) and Alexis de Tocqueville (Democracy in America) to integrate concepts of social cohesion and connectedness into the pluralist tradition in American political science. and symbolic capital. P.(Wikipedia. thinkers exploring the relation between associational life and democracy were using similar concepts regularly by the 19th century. In the late 1990s the concept gained popularity. though he did not offer a definition. she did not explicitly define a term social capital but used it in an article with a reference to the value of networks. 1997). and clarified the term some years later in contrast to cultural. 7.

This decline includes 50 . as editors of a special edition of the American Behavioural Scientist on "Social Capital. Second. Consensus implies ―shared interest‖ and agreement among various actors and stakeholders to induce collective action. First. (Wikipedia. Robert Putnam has documented a long-term decline since the 1960s in American civic involvement.(Wikipedia. social capital is not equally available to all. of course. How the Internet affects social capital is neither a trivial nor an obscure question. not all social capital is created equally. The value of a specific source of social capital depends in no small part on the socio-economic position of the source with society. Mahyar Arefi identifies consensus building as a direct positive indicator of social capital. He also transforms social capital from a resource possessed by individuals to an attribute of collectives. There is currently no research which identifies the negative consequences of "bridging" social capital when in balance with its necessary antecedent. pg. focusing on norms and trust as producers of social capital to the exclusion of networks. Portes has identified four negative consequences of social capital: exclusion of outsiders. 2010) Putnam has used the concept in a much more positive light: Though he was at first careful to argue that social capital was a neutral term. 2003.384) Edwards and Foley. On top of this. M. stating ―whether or not [the] shared are praiseworthy is. 2002). in much the same way that other forms of capital are differently available. 2010) Here it is important to note the distinction between "bonding" and "bridging".(Alessandrini. "bonding". excess claims on group members. (Arefi. Civil Society and Contemporary Democracy." raised two key issues in the study of social capital. his work on American society tends to frame social capital as a producer of "civic engagement" and also a broad societal measure of communal health. entirely another matter‖. restrictions on individual freedom. Collective action is thus an indicator of increased social capital.of social connections/networks. and downward leveling norms. Geographic and social isolation limit access to this resource. M.

and a sense of belonging. and workmates that significantly provide companionship. When people have a strong attitude toward community – have a motivated. 2001) Finally. (Wellman. information. and aggregate and articulate their demands and desires (a concept enshrined in the American heritage by Tocqueville. social capital is often linked to the success of democracy and political involvement.the lessened ability of citizens to articulate and organize requests for good government. neighbors.1. 1835). and increased psychological alienation. 7. 2001) A third dimension has since been added to this discussion which is: c) Community Commitment: Social capital consists of more than going through the motions of interpersonal interaction and organizational involvement. in his book Bowling Alone makes the argument that social capital is linked to the recent decline in American political participation.3 Benefits of Social Capital Social capital is charged with a range of potential beneficial effects including: facilitation of higher levels of. relatives. Robert Putnam. (Wellman. and growth in. lower levels of crime. et al. create joint accomplishments. facilitation of more efficient functioning of labor markets. et al. responsible sense of belonging – they will mobilize their social capital more willingly and effectively. goods and services. Putnam‘s evidence encompasses two forms of social capital: a) Network Capital: Relations with friends. and improvements in the effectiveness of institutions of 51 . gross domestic product (GDP). the movement away from community life. b) Participatory Capital: Involvement in politics and voluntary organizations that afford opportunities for people to bond. emotional aid.

Before the PC and before the Internet presence was felt people made business contacts and friends slowly unlike today where one can meet almost fifty ―friends‖ or business associates in a day online. integration and social cohesion. knowledge or prestige. and economic problems. or relationships of beliefs.government. public health. Long before the Internet became accessible to the general public. people were hosting BBS systems. and is also an important element in production.2 Social Networking A Social Network is a social structure made of individuals (or organizations) called "nodes. way before even the PC. such as friendship. dislike. This view is supported by Rothstein who stated that the real strength of social capital theory is the combination of macrosociological historical structures with micro-level causal mechanisms. (Claridge. community governance. sexual relationships. Some authors have emphasized the importance of social capital for problem solving and how only certain types of social capital contribute to this. (Claridge. The literature recognizes social capital as important to the efficient functioning of modern economies. and stable liberal democracy .2. a rare feature in the social sciences. One particularly prescient invention was FidoNet. (Wikipedia. kinship. 2010) 7." which are tied (connected) by one or more specific types of interdependency. Requena suggested that the importance of social capital lies in that it brings together several important sociological concepts such as social support. Social capital is an important variable in educational attainment. many of them focused on an interest group or local community. Economic and business performance at both the national and sub-national level is also affected by social capital. a 52 .1 Online Social Networking Background Social Networks have been around for several decades. 2004). 2004). 7. financial exchange.

and play a critical role in determining the way problems are solved. Research in a number of academic fields has shown that social networks operate on many levels. The resulting graph-based structures are often very complex. These concepts are often displayed in a social network diagram. cover much of the world. 2008) The Internet has revolutionized Social Networks and at this rate it‘s even hard to predict what the future holds in regard to Online Social Networks. There can be many kinds of ties between the nodes. where nodes are the points and ties are the lines. It grew to. from families up to the level of nations. Social Networking has been made easier by the Internet and this has inevitably changed the development of social capital. and was an entirely community-based effort. and the degree to which individuals succeed in achieving their goals. Nodes are the individual actors within the networks.2 Online Social Networking Analysis Social network analysis views social relationships in terms of network theory consisting of nodes and ties. Social Network 2010) 53 .) in bucket-brigade fashion to sites around the world. (Wikipedia.2.the value that an individual gets from the social network. The network can also be used to measure social capital -. and ties are the relationships between the actors. (Wikipedia 2010) In its simplest form. organizations are run. etc. at one point. a social network is a map of all of the relevant nodes between all the nodes being studied. files.network for BBSes that allowed systems to transfer data (messages. (The GigaOM Network. 7.

Advertising is impersonal: the ―one size fits all‖ concept does not seem to work anymore.Figure 7. A general rule of thumb is to offer your services. you can prescreen potential customers. (Mize 2007) b) Credibility and Trust Connecting with prospects on a personal level builds trust and credibility. at least to web site traffic generators. It is acceptable to promote your services 54 .1: Social network analysis Note: An example of a social network diagram.wikipedia. expertise or help before you ask for it.3 Benefits of Online Social Networking Social Networking of course is in its infancy. You learn what your prospects like and what they don‘t.2. so what are the so far under-penetrated benefits of social networking? (Mize 2007) a) Lower Costs It is significantly cheaper to employ online social networking strategies than to pay for advertising. When you social network.2. SOURCE: Wikipedia.org/wiki/Social_network 7. The node with the highest betweenness centrality is marked in yellow. ―Social Network‖ (2010) http://en. That personal relationship you gain when you connect with your potential customer is more valuable than what you would get had you advertised.

the effects of the Internet are not only positive: The heaviest users of the Internet are the least committed to online community. one of the first large-scale Web surveys. (Mize 2007) c) It’s Who You Know When you socialize. however. If you‘re not careful. et al. Further support for this effect is the positive association between offline and online participation in voluntary organizations and politics. or supplement interpersonal contact.211 visitors to the National Geographic Society Website. The authors find that people's interaction online supplements their face-to-face and telephone communication without increasing or decreasing it.3 How Online Social Networking affects Social Capital How does the Internet affect social capital? Do the communication possibilities of the Internet increase. companies are finding that their own customers are taking the initiative and starting the Facebook "fan" pages. In some cases. you meet others who know others. How are you going to meet the president of a large corporation? You start by talking to his friends. Most major brands have "fan" pages on the sites like Facebook. participation. (Wellman. (Fraser and Dutta July/August 2009) 7. However. wait for the opportunities to present themselves instead of forcing a situation. 2001) However. Taken 55 . to market themselves. and other social platforms like Twitter are being used as an effective way to vitally market products through "buzz" campaigns. your attempts could be considered spam. Instead. d) Branding and marketing Corporations and major brands do successfully use the more purely "social" networking sites. and community commitment? This evidence comes from a 1998 survey of 39. You ask your associates if they know someone who is connected with him and on and on.when asked. heavy Internet use is associated with increased participation in voluntary organizations and politics. decrease.

former neighbors. leading to new forms of community characterized by a mixture of online and offline interactions (e. Although a developing phenomenon worldwide. and mobilize collective action. not only does the Internet afford opportunities to contact friends and kin at low cost. et al. (Wellman. it has become clear that most relationships formed in cyberspace continue in physical space.. exchange songs. stimulate their relationships through more frequent contact. The Internet would restore community by providing a meeting space for people with common interests. (Wellman. this evidence suggests that the Internet is becoming normalized as it is incorporated into the routine practices of everyday life. In this view. Although early accounts focused on the formation of online ―virtual‖ communities (e. 2001) Those who see the Internet as playing an increasingly central role in everyday life would argue that it increases communication. (Wellman.together. pictures. and now computer networks. and where the many immigrants keep contact with friends and relatives in their homelands. and workmates are separated by many miles. 2001). 2001) 7. overcoming limitations of space and time. et al..g. 2001) Online communities would promote open. The Internet thus enhances the tendency for many ties to be nonlocal. offline as well as online. nonlocal community is probably most prevalent in North America where people move frequently and sometimes far-away. Rheingold. and make 56 . phones.3. where family. et al. democratic discourse. friends. planes. Rheingold. it enhances face-to-face and telephone communication as network members become aware of each others‘ needs.g. connected by cars. 1993). online interactions fill communication gaps between face to face meetings.1 Does Online Social Networking Increase Social Capital? Early – and continuing – excitement about the Online Social Networking saw it as stimulating positive change in people‘s lives by creating new forms of online interaction and enhancing offline relationships. allow for multiple perspectives. Moreover. and other files.

The plethora of information available on the web and the ease of using search engines and hyperlinks to find groups fitting one‘s interests should enable newcomers to find. provide intangible resources such as emotional support.3. Some researchers see a parallel in the impact of the Internet with the influence of television on North American life. Thus. 2) The Internet may compete for time with other activities in an inelastic 24-hour day. that the Internet is fostering a decline in social capital. The Internet can draw people's attention away from their immediate physical environments while they are online. (Wellman. and get involved in kindred organizations. then high Internet use should be accompanied by more offline interpersonal contact. and provide tangible material aid. if not better than old-fashioned door-to door (or rather faces-to-faces) networks‖ (personal email. if the Internet increases social capital. join.online arrangements to see and phone each other. organizational participation. The television had a similar absorptive effect that reduced social interaction in the home. et al. as 57 . Online ties may be less able than offline ties to foster complex friendship. As Robert Putnam once told Barry Wellman: ―I think you're a wild-eyed optimist to think that person-to-person networks are just as good as. 2001) 7. The Internet can also increase organizational involvement by facilitating the flow of information between face-to-face meetings and arranging these meetings themselves.2 Does Online Social Networking Decrease Social Capital? The second view argues for an inverse relationship. and commitment to community. The interrelated bases for the argument are that: 1) The Internet may be diverting people from ―true‖ community because online interactions are inherently inferior to face-to-face and even phone interactions. There are discrepant findings about whether online time sinks do or do not pull people away from other interactions inside and outside the household. January 10 2000).

perhaps bringing unwanted information. decides to answer. One longitudinal study of ―newbies‖ to the Internet found that as Internet use increases. and other activities. c) The vaunted ubiquitous connectivity of the Internet makes people more accessible to each other. seeking information or engaging in solitary recreations. The ease of working at home both reflects and reinforces the contemporary proliferation of ―knowledge workers. social contact offline decreases. reads the message. People bring work home.well as social and political involvement outside it. and depression and loneliness increase. delaying gratifying feedback until the recipient signs on. Moreover. b) Experienced users may have better coping techniques. But broadcast television is not a clear analogue to the socially interactive Internet. Active participants are more likely to be flawed and defamed. but their more complex uses of the Internet creates problems because programs often interact badly and much time is required to cope with computer failures. Contact with less-enjoyable people.‖ 58 . many social activities online such as email are asynchronous. How might the Internet be alienating? a) Newbies often experience stress and time pressures after getting computerized. friends. may depress and alienate. and attend to it rather than to their families. 4) Not all uses of the Internet are social. Much activity is web-oriented. 3) The Internet may be a stressor that depresses and alienates people from interaction. and the original sender eventually gets his answer. it simultaneously decreased stronger offline interactions. whether the recipients want it or not. 5) Computerization and the Internet can blur the home-work boundary. Although the Internet enhanced weak online ties.

more traditional technologies. the Internet provides an additional means of communication to telephone and face-to-face contact. For example. The value of weak ties is in their provision of new information and access to disparate networks. if the Internet decreases social capital. whereas strong ties bound to a community are characterized by commitment. 7. They often evolve around a specific interest such as soap operas or BMW cars. and commitment to community. one study finds the Internet to be ―a multidimensional technology used in a manner similar to other. it keeps people indoors.3. with life online viewed as an extension of offline activities. 7) Online ties may be more homogeneous in perspective. then high Internet use should be accompanied by less offline interpersonal contact. staring at their screens and neglecting local interactions at home and in the neighborhood. and exchange of resources such as emotional support. the supplement argument gives this new technology less of a central role in shaping social trends. organizational and political participation.6) Although the Internet can foster global interactions. 59 .3 Does the Internet Supplement Social Capital? Where the Increase and Decrease arguments privilege the Internet by seeing it as radically changing how people interact offline. friendship. Thus. It is integrated into rhythms of daily life. It presents the Internet as best understood in the context of a person‘s overall life. one that can be more convenient and affordable. This narrows perspectives and access to new information 8) The Internet may so foster contact with acquaintances as to tilt the balance between weak and strong ties.‖ Thus.

if the Internet supplements social capital. For example. and increase commitment to community. wiring Blacksburg Electronic Village did not produce large changes in interpersonal contact and community involvement. norms.4. like the telephone has been. The level of Internet involvement will not be associated with either more or less offline activity. if users have no interest in such matters.The supplement argument suggests that the Internet‘s effects on society will be important but evolutionary. Production-related Environment-related Market-related The enterprise‘s external social capital 60 . Table 7. continuing and intensifying the interpersonal transformation from ―door-to-door‖ to individualized ―place-to-place‖ and ―person-to-person‖ networks. they are complemented by the Internet‘s ease in connecting geographically dispersed people and organizations bonded by shared interests. Nor might the Internet lead to organizational and political participation. not affect organizational participation. the introduction of sophisticated information and communication systems in the business world has not demonstrably created social capital. then Internet use should supplement offline interpersonal interaction. Table 7 provides a schematic picture of the component parts of enterprise-based social capital. Although face-to-face and telephone contact continue. The Internet may be more useful for maintaining existing ties than for creating new ones. we mainly focus on the prime actor in business – the enterprise – and the social capital it invests in. Thus.4 Enterprise-related social capital As this paper deals with implications of social capital for business. Similarly.1: Social capital of the enterprise broken down into different component parts Social capital internal to the enterprise Links/relations filled with attitudes. 7.

Methods for codifying knowledge. (Lobby capacity. business administration and business sociology. partners in cooperation and development Links/relations to the local/regional environment. both the management and the employees.e. SOURCE: Westlund (2003) Links/relations to suppliers. Up to the beginning of the 30‘s the Swedish labor marked was characterized by hard class struggles that reached their climax with the shooting of five striking workers 1932. The agreement of the employee relations was a central agreement. One often cited historical example of the importance of employment relations is the Swedish ―Saltsjöbad Spirit‖. This became a signal for afterthought and both sides realized the need for a new strategy. although other terms than social capital has been used.Climate for cooperation . Mainly in the disciplines of management. product development. One important topic has been.1 The enterprise’s internal social capital The basic division in the figure is between the enterprise‘s internal and external social capital.Company spirit . It is of course not possible to claim that the peaceful employee relations were the one single factor behind 25 years of extraordinary growth. i. based on opinions on local level. etc.1970 was surpassed only by Japan. to political decision-makers etc. employee-employer relations.4. with exception of a communist dominated national strike among metal workers 1945. a growth that during the entire century 1870. etc. 61 . The years between 1945-70 was also characterized by very rapid growth in Sweden‘s economy.) Trademarks and other general customer relations 7. that are expressed in the form of: . and conflicts were solved by negotiating. It later became the model for basically every enterprise. the literature in these topics has expanded heavily. but no judge has denied their impact.traditions etc. form the internal social capital. conflict resolution. product users. named after the place where Sweden‘s central employers‘ association and bluecollar union signed an agreement 1937. All actors in the enterprise. Labor market relations in Sweden were peaceful until 1969.

Reciprocity hinges on balance. It can be generated through intimate ‗indwelling‘ (Polanyi 1966:17) within a relevant local domain. Another important topic in the literature related to enterprises‘ internal social capital is that of learning organizations and the development of methods to transform tacit knowledge to codified knowledge.Japan is the other country where employment relations have been highlighted as an important explanation to growth of firms and the economy in general up to around 1990. which can be used or tested by another actor than the one that formalized the information (if the actor has access to the information and the necessary competence to use it). or as personal knowledge through particular experiences and/or due to inherently personal qualities and competence. The explicit distinction between tacit and codified knowledge was made by Michael Polanyi (1958. methods. Fruin‘s (1992) description of the Japanese firm‘s employment relations after World War II could have been quoted from a description of the Swedish model around 1965 although emerged in another environment and context.‖ (Aoki 2001: 308). and means has been negotiated and renegotiated … and this accomplishment has depended on contributions and initiatives from both labor and management…. In particular during the 90‘s a growing share of literature has discussed the issue. equity. written or digitalized information. the post-war environment of industrial relations has evolved in the direction of a kind of organic solidarity between labor and management. these can be encouraged and enhanced but they cannot be mandated or legislated…. ―Tacit knowledge is defined as knowledge that cannot be obtained by a mere sum of codified (digitalized) information. Aoki uses the example of the knowledge needed by venture capitalists. which to a large extent is tacit 62 . Interdependencies bind the two‖ (Fruin 1992: 174-5). and fair recognition. 1966). Also Keynes has been quoted for saying that an economist always knows more than he can explain (Johnson & Lundvall 2001). therefore it cannot become immediately available in open markets. The observations that man knows more than he can tell have been made by many philosophers.: ―a veritable partnership in goals. Codified knowledge can be defined as formalized. stored.

―everybody‖ would be able to pick the winners and there would not be any need for venture capital. However. there is no doubt that an enterprise takes many intentional or unintentional steps that affects its internal social capital.institutionalized. codified knowledge can be regarded as an asset that the enterprise deliberately can use to increase its competitive power. but not as investments in new social capital in itself. In the knowledge economy. this means that codifying knowledge mainly should be considered as investments to be able to use parts of the existing social capital in an enterprise.g. In contrast to tacit knowledge. consultants and education enterprises. Not all tacit knowledge should be considered as social capital since some of the tacit knowledge is strictly personal. Being able to control the production of knowledge in an enterprise and the use of it in the production process gives the enterprise a competitive advantage and contributes to growth. e. There is a well- 63 . The literature in this field has almost entirely focused on enterprises‘ investments to commercialize the parts of their social capital that consist of tacit knowledge. most tacit knowledge must be regarded as created in social interactions. Among intentional arrangements we find those devoted to affecting the company‘s spirit.and non-codified.internal social capital is created. culture and cohesion. How a firm is organized has important effects on how it produces tacit knowledge and other components of social capital. The task is often formulated in terms of commercializing or capitalizing the tacit knowledge to a controlled input in the production process or a product of its own. In our terms the strivings to transform tacit knowledge to codified knowledge are attempts to institutionalize a capital that originally is social and non. Very little attention has been given to how new enterprise. Not less important are probably arrangements aiming at affecting the institutional capital of an enterprise. we also witness a rapid growth of firms that have codified knowledge as their main product. If codified knowledge would be enough. However. From the enterprise’s perspective. which makes it a part of the social capital.

Thus. are not an invention of the knowledge economy. There are however arguments saying that they have become more important in the knowledge economy: ‖In a knowledge-based economy the perhaps most significant rent originates from the way in which the easy exchange of knowledge.4. and exist only to fulfill the input and output services.known fact that knowledge-producing enterprises normally has a much more horizontal organization than traditional hierarchical industrial enterprises. especially relations between firms and their suppliers. social capital is a crucial factor in the internal governance of firms. According to this view.industrial age. Social networks.2 The firm’s production-related social capital A striking development in recent research is the discussion of social capital in interfirm relations. but that is not a correct description.‖ (Maskell 2000:116). 64 . the production-related networks of an enterprise are technical and economic. This stands in sharp contrast to the traditional perspective of economics in which the enterprise is a non-cooperative monolith that buys its input from suppliers and sells its output to customers. 7. This simplified view is today sometimes referred to as production relations of the ―Fordist‖ or manufacturing. This can be seen as an indication that enterprises in the knowledge economy need another internal social capital than enterprises of the industrial age (see below). Reducing your development to commercialization time is often worth virtually whatever you have to pay and social capital contributes by cutting the expenses and reducing the time needed to benefit from knowledge residing elsewhere. As innovative capabilities become increasingly important so does social capital. only partly understood. between and among a constantly changing configuration of firms within the community dramatically enhances their innovative capabilities. even the actors of production.

Therefore. They are probably also essential in the small. Feedback. These arguments could further be developed. Social. he explicitly connects social capital to firms‘ innovative capabilities. Moreover.3 The firm’s environment-related social capital The border between a firm‘s production relations and its environment-related networks is not entirely sharp. 65 . policy makers attempt to achieve similar results on macro level as when firms make arrangements for transforming tacit knowledge to codified knowledge on micro level. aimed at developing new products or production methods. These links of acquaintance and trust are of obvious importance in R&D-projects. we here delimit the firm‘s environment relations with other firms to relations not being mainly technical-economical. In a spatial context. increase the flows of knowledge and information between the firms. During the last decade a growing interest in formalizing these formerly mainly spontaneous technicaleconomic networks can be discerned. By institutionalizing innovation processes within innovation systems. His argument is that social capital cuts expenses and reduces time needed for knowledge exchange between firms. from the firm to its suppliers and to the firm from its customers. which constitute the base for new innovations. production relations in principle constitute a component of the environment relations as well. between a firm (and its co-workers) and firms with which it has production relations. invisible development processes that take place in firms everyday.4.Maskell connects social capital not only to the firm‘s internal knowledge production (as we did in the former section) but also to knowledge exchange between firms that temporarily or on a more longterm basis have some kind of production-related links. The issue of innovation has been brought up on every developed nations policy agenda.formalized links. non. is increased and speeded up. 7.

A firm‘s costs for. However.‖ Marshall‘s industrial districts were for generations of economists merely a queer marginal note in the classic textbook of microeconomics. These general.Even with this delimitation. inventions and improvements in machinery. it is taken up by others and combined with suggestions of their own. as he speaks about ―community‖. both concepts are connected to production relations as well as to more general relations to the firm‘s spatial environment. In the rapidly expanding cluster literature. Porter‘s (1990) book on clusters marked a new and growing interest in the spatial milieu of firms (even if Porter 1990 considered cluster as functional. As noted above. Marshall (1920: 271) described this vividly in his nowadays celebrated account of the positive external effects which come about in industrial districts: ‖The mysteries of the trade becomes no mysteries. This adds a spatial aspect on social capital. among other things. and thus it becomes the source of further new ideas. whereas industrial districts are defined as spatial agglomerations of SMEs in one or a few complementary industries. clusters are normally defined as spatially delimited industrial systems regardless the size of the enterprises. non-spatial concept as well). Good work is rightly appreciated. in processes and the general organization of the business have their merits promptly discussed: if one man starts a new idea. but are as it were in the air. Maskell‘s arguments concern the enterprise‘s environment as well. and children learn many of them unconsciously. spatially dependent networks consist in principle of:    Non-technical-economic links to other firm‘s Links to local/regional politically governed bodies Links to the citizens of the civic society and their organizations 66 . knowledge and information are influenced by social capital through the degree of trust and the climate of cooperation prevailing both in individual workplaces and between firms and actors in a region.

type of labor.The first of these network types contributes to explain agglomeration phenomena as that of the ITindustry in Silicon Valley. a social environment that the firm benefits from. potential partners and co-workers are there. etc. type of production. etc. Enterprises emerge there and choose to locate there because ―the air‖ is full of tacit knowledge and information (incl. among other things. gossip and rumors). the firm‘s size. It is in the interest of the firm to establish social relations with public decision-makers. the presence of all the other firms is a positive external effect. might see these networks as a confirmation of the public choice theory. To achieve favorable decisions. etc. the firm cannot restrict itself to let its individuals take part in the public debate and to vote in elections and referendums. 67 . is closely allied to the encouragement of entrepreneurship. The reasons may be twofold. local units of global firms engage in building good local public relations through sponsoring or giving grants to local non-profit organizations and other similar purposes. i. either directly or indirectly through branch organizations or lobbyist groups. low investments in space-bound capital and production for the world market have much smaller incentives. Those who wish. The third and last network type is an expression of a firm‘s needs of being embedded in a local social context. the competitors are there and it is easier to watch and learn from them if you are near them. Even if the firm have business with only a little fraction of all the other enterprises in the region. to receive non-official information off. that politics does not work in accordance with its ideals. global firm with alternative locations.e. innovative spirit that characterize these agglomerations until they mature and eventually become petrified. This need of embeddedness varies depending on. The open. A big. The second of these network types is an expression of the firm‘s dependence on a predictable political. In general a small firm with spatially fixed capital and production for the local market have great incentives to build a strong social capital with the local environment. Still.institutional infrastructure and the needs of favorable political decisions also in a mediumterm and short-term perspective. space-bound capital. alternative locations.the-record. type of customer.

Increased consumer awareness about environmental. By creating relationships with customers in diverse ways (advertising. Some of these needs are often expressed in becoming an accepted and respected part of the local community. a trademark is seen as a component part of an enterprise‘s social capital that is created and maintained through marketing. which is also a sign that customer relations can no longer be confined to offering anonymous products at the best price. Another reason might be that both the firm‘s management and employees are individuals with social needs. servicing contracts.and market value . A global company not following the local informal rules of behavior might become worldwide news the next day. child labor and other such issues has caused many commercial firms to initiate reorganization of their production and distribution networks. It can build similar networks with suppliers. the trademark is a relational network to the anonymous mass of customers. etc. which perhaps have newer and more productive physical and human capital. Contributions to the local civic society and its organizations thus raise the status of both the firm and its employees and increase the experienced individual welfare. The connections to public choice theory are evident here as well. personal contact.First. to which the enterprise has no personal relations.) a firm attempts to shut out competitors from the network it has established. An established firm with strong customer and supplier networks can use these to shut out competitors. from the market. the established 68 . 7.of trademarks provides testimony that customer relations are being impinged on more and more by considerations which must be regarded as social. With this approach. a global company may be more dependent on a good reputation than a local one. It is no longer the product alone but also the customer relationship established by the trademark that constitutes a firm's market value. In this way. Generally speaking. the increased importance .4 Market-related social capital In Table 7. Here the competitive aspect of social capital is obvious.4.

or part of it. 7. A trademark is an asset which. The new enterprises have to find new. from local civic initiatives to international organizations as the Red Cross.firm might temporarily substitute renewal of its physical capital with investments in social capital. semi-public goods or club goods (see Buchanan 1965).governmental organizations. to a varying extent. While social capital in civil society is. The third sector covers a broad specter. can be bought and sold. However.5 Business implications of “third sector” activities Putnam (1993) stressed a certain kind of organizations as producers and bearers of the civil society‘s social capital: non. and can thus be directly valued on the market. is actually property that is not directly linked to a specific owner but can be bought and sold in the same way that enterprises are bought and sold. but they can of course be acquired since an enterprise. un-established market segments or else break down parts of the established firm‘s customer and supplier networks in order to force its own way into the market. The ―third sector‖ is one of the denominations of citizens‘ activities and organizations that neither takes place within the private profit-seeking sector nor the public sector. 69 . Most of these social networks cannot be separated from the enterprise‘s productive and/or financial activities. but that it is transformed. the trademark is an example of a type of social network that is not necessarily integrated with other activities of the enterprise. as opposed to other forms of social capital. This type of social capital is a private good. Including trademarks in the concept of social capital is not without objections. enterprise-related social capital consists of social networks that the enterprise has built up and may dispose of as it wishes. property in the legal sense of the term. it might be more correct to say that a trademark is based on a firm‘s social capital. Thus. institutionalized and commercialized in the same way as the case of tacit knowledge being transformed to codified knowledge. based on citizens‘ own activities.

savings banks and educational organizations. The best known of the French social economists was Charles Gide. not.for-profit sector. In the conflict between capitalism and socialism which characterized twentieth century Europe. He considered cooperation to be the principal instrument for attaining the social economy which was regarded as the alternative both to the crude free market economy and to state socialism. 2000. by Charles Dunoyer in his paper Nouveau traité d économie sociale. Other terms used are non-profit sector. often in a conservative. The advocates of social economy directed their attention towards measures for social peace and reduced class conflict. p 16). paternalistic spirit. The concepts have emerged in different national and cultural contexts. The definition of social economy selected by the EU confines it to four types of entrepreneurial and organizational forms. the social economy became a "third" way which never became dominant but did achieve a sufficiently important position in several Latin countries for it to be accorded official EU status. Besides cooperation. Belgium and other mainly catholic and Latin-speaking countries."Social economy" has been an official term in the European Union since 1989. an egalitarian socio. non-profit sector and third sector became the most common concept.liberal center and a left which leaned in the utopian socialistic and perhaps also anarcho-syndicalist direction". The concept of social economy seems to have been used for the first time in France 1830. However. The feature common to the adherents of social economy was a lively suspicion of the state as an economic actor. the UK and other West European countries. Mutuals. social economy became the established term. Associations and Foundations (CMAF). a special unit of the Commission's General Directorate Employment and Social Affairs being responsible for social economy-related issues. In France. the third sector being perhaps the best known. (Trädgårdh. alternative economy and third system. viz Cooperatives. social economy became something which firstly united "a catholic and conservative right. solidarity economy.g. In the United States. representing a more radical line. in the international debate on the social economy there are a number of different concepts which can be put on more or less the same footing as social economy. Profit-sharing was one of the methods advocated. the social economists worked for the growth of related organizations such as e. 70 . In France.

Malinovsky (1930). The same applies to the modern public sector. Even though the market dominates modern society. Monnier and Thiry. humanity's economic relations were subordinate to the social. the concept of social economy have been spread to new countries. with the enlargement of the European Union 1995. among which the Johns Hopkins Comparative Nonprofit Sector Project perhaps is the best well known (see e. In the concept‘s native countries. third sector and third system and defines them as ―cooperatives. whom endeavor to adapt the concept to their conditions. Thurnwald (1932). France and Belgium. however. 1991. associations and foundations which remunerate work‖ (CIRIEC.Saxon and other countries. 1994. mutual organizations as well as voluntary organizations. Gui. Salamon and Anheier. 1998). 71 . v). This discussion has partly coincided with increased research on the third sector in Anglo. Prior to the market revolution. CIRIEC (2000) has presented an overview of the ―third system‖ in the fifteen countries of the EU. viz reciprocity. the state. this still does not mean that the two other principles have disappeared. Simultaneously. 2000. redistribution and the market. p. Polanyi (1944) and others have told us that historically. The secular sovereign power.g. CIRIEC equals the concepts social economy.g. three principles of production and distribution. Mertens 1999). The social economy may be said to be a modern generic term for activities based on the reciprocity principle. side by side with family housekeeping.Among researchers there seems to be a basic. has been based on a redistribution principle throughout history. The market revolution has reversed this situation so that economic relations are now generally superior to social ones. common concordance about social economy being something between market capitalism and state economy. human society has developed. 1997. the relations between the Latin and Anglo-Saxon concepts were discussed during the 90s (see e.

but mutuality in economic transactions is no guarantee of reciprocity in social relations. customs or institutions have any influence. therefore. Reciprocity of social relations creates mutuality of economic relations.Reciprocity can be described in terms of give-and-take in a relationship between actors who to a certain extent are equals. However. It has to be underlined that even though this argument accords with a tradition in the disciplines of anthropology and economic history. The exchange would simply not take place were it not of benefit to both parties – even if the "benefit" for one of them only consists. neither power aspects. for example. Thus on this theoretical market. Another difference is the absence of legal means of coercion. of temporarily alleviating social need and getting food for the day. 72 . but on a striving to internalize wants and their satisfaction in networks with rights and duties. Mutuality is often used as a synonym for reciprocity. thus being the expression of an endeavor to make themselves less dependent on the market. But there are important differences between reciprocal power relations and those which characterize relations between state and citizen or between employer and worker. unequal relations. Nor are reciprocal relations based on supply and demand on the free market. it may be in conflict with other disciplines. From this perspective. This does not mean that reciprocal relations are wholly lacking in power aspects . Reciprocal relations are significantly more horizontal than those of hierarchical power systems. it may be argued that a sort of mutuality imbues all exchange. it is important to realize that this economic mutuality is a strictly theoretical economic concept.even activities in the social economy have governing boards and management groups. But the reciprocity discussed by Malinovsky. Thurnwald and Polanyi proceeds from social conditions and relations. and regards the economic exchange as a result of these. Basic economic micro theory is grounded on the assumption of balance and exchange between actors to the mutual advantage of both. norms. ignoring social conditions and relations.

There is another problem here. therefore. If the social economy is to be analyzed not only as a social but also as an economic phenomenon. which is not to be confused with the concepts above. viz interdependence. In this way the reciprocity criterion does form something of a theoretical basis for the social economy concept. the activities of the social economy consist in production in which human and material resources are processed and exchanged for the ultimate purpose of being consumed. Many actors in the social economy undoubtedly designate their work as social but hardly as economic. however. From an "economic" perspective. might possibly be described as follows. it is similarly possible to pay regard only to the monetary aspects of the social economy without realizing that the primary purposes of these activities are in fact social and not market-economic. moreover. the profit-maximizing market economy and the family economy. The relation between the social economy and other economies. for example: 73 . They do not describe their activities in terms of "production and distribution" or other economic concepts. in contradistinction to the "non-economic" activities in which they themselves are engaged and which do not strive for any return in market terms. To them the word "economic" is usually synonymous with market economics. Interdependence is an expression of the economy's character as a system in which one unit is mutually dependent upon other units. Like the publicly-managed economy. Economic profit does not constitute the primary purpose of their business but is more in the nature of a necessary evil to enable them to carry on their activities. there are good reasons to highlight the distinction between different types of economy and to describe the difference between the social and other types of economy in economic terms too. therefore. that in economics there is another mutuality concept. and changes in one unit are transmitted to the rest of the system.It may also be appropriate to point out.

 In many instances the public sector has objectives which are identical to those of the social economy. the social economy is based to a higher degree on the types of social capital which take the form of reciprocal social networks between people.  While the modern market economy and public sector economy are based chiefly on monetary principles. Reciprocity implies that networks in the social economy are considerably more horizontal in nature than networks in the other economic spheres. The activities of the other economies also have elements of social economy in them (social objectives for example). voluntary adherence and subscriptions . but these elements do not constitute the primary basis of their production. The public economy is based on an official and obligatory system of taxes and dues.although in certain respects social pressure may function as an unofficial form of coercion. the social economy's relations are not based on circumstances of marriage and kinship but on more open and changeable relationships. less destructive behavior. better care of children and the elderly. organizations. firms and the society at large. But whereas the public sector economy is based on official legislation and a system of official sanctions. Like the family economy. Unlike the family economy. activities in the social economy are based on the actors' unofficial commonality of interest and values. The social economy is based on reciprocal. non-monetary factors play a large role in the social economy. the social economy is based on a reciprocity principle. Solidarity with the local community. in the social economy these elements are mere constituents of a total return in which social factors play a crucial role.  Whereas the market economy and public sector are based primarily on material capital (money and plant) plus individual human capital. and diverse forms of social capital. however. a certain voluntary element. improved leisure activities. reduced human suffering. Whereas the pure cash economy attributes value only to wages and capital yield in monetary terms. job opportunities near to home: these are some examples of the social values yielded by activities in the social sector. 74 .

Even if the above definition has theoretical merits.The social economy defined in this way should consist of that portion of society's production which     is guided primarily by a principle of reciprocity is based on the types of social capital which take the form of reciprocal social networks is organizationally independent of the state power is not sold mainly on the official markets. it is in many cases difficult to operationalize. One alternative way of discussing the social economy can be based on the "model depiction" shown in Figure 2. 75 . The figure starts out from the assumption that all production carried out in a society (whether or not counted as part of the gross domestic product) can be graded on a scale showing respectively how "social" or "commercial" it is.

1: Schematic depiction of juridical forms of society's production according to degree SOURCE: Wellman. cost effectiveness. Blennberger. job opportunities. public health. on the other hand. mobilization of marginal groups. such as members' good and social good. A centre line in the 76 . inculcation of discipline. fresh ideas and innovation.Figure 7. defense of rights. and other particular qualities.5. (2001) The purpose of commercially-orientated activity can be described briefly and concisely as a rule: it is to earn money. may be regarded as combinations of social and commercial objectives. socioeconomic gain. may centre on the promotion of one or more of a number of different values. combinations which look different depending on level in society and target group. Jess and Olsson (1999) mention the following as examples of such values: euphoria and significance. et al. training in democracy. Other objectives which have been cited in the course of debate on social economy. The purpose of socially-orientated activity. social solidarity and integration. cultural diversity.

figure marks a boundary between socially dominated and commercially dominated activity. The instances in which activity is social throughout or commercial throughout really constitute extreme theoretical cases. In principle, all activities have elements of both objectives. Social activity cannot be carried on entirely without economic/commercial elements. Commercial activity cannot be conducted entirely in isolation from social norms and behavior.

The figure also describes where different juridical forms engaged in the nation's production are to be found on the commercialization scale. It should be pointed out here that the figure is a model depiction and does not purport to give any description to scale. The lower part of the figure consists of activities which have no formal juridical form. These thus include sundry activities such as production conducted within the household/family, informal economy between neighbors, relatives and friends, and also "black" economy and seriously criminal activities. Obviously a very broad span is covered by the degrees of commercialization featuring in all these various activities.

The majority of the juridical forms contain highly disparate activities with strongly varying degrees of commercialization. Public sector activity has social objectives to a large extent. But openly resultorientated activities with profit as the end in view are also carried on under public auspices.

The juridical forms reckoned as being organizationally within the social economy also extend in most cases over to the commercially dominated side. Among the largest group of non-profit associations, i.e. sports associations, the numerous small clubs kept afloat by voluntary work are of course predominant. But the same movement also contains large clubs, with turnovers in multi- millions of kronor, which are professional clubs in all but their organizational form. The neo-cooperative movement consists of a large number of small local economic associations in which work contributed by members themselves is essential to the activity.

77

The large established consumer and producer cooperative movements also operate via the same entrepreneurial form, viz the economic association. Their business extends far out into the international market and is carried on in competition with privately-owned firms and at the same level of commercialization as theirs. (Westlund 2003)

Figure2 also shows that by no means all of the business conducted within the framework of private firms or companies is to be found to the right of the centre line, where it constitutes commercially dominated activity. As Figure 3 shows, about 85% of Swedish firms are what may be called ―subsistence‖ enterprises, meaning that maximizing profit is not their primary objective but achieving a tolerable level of subsistence within a chosen lifestyle. As a proportion of employment the selfemployed share is obviously much lower, but even so it amounted to 9% in 1996 (Näringsdepartementet, (Ministry of Industry) 1999). The motives of the self-employed, exactly like those of other entrepreneurs, are varied and complex, but while the motive of very commercially focused enterprise may often be to change social environment, an important motive of the selfemployed may be to succeed in making a living within their established social milieu. Many small firms managed in company form probably also have similar aims. This group also includes employeeowned firms managed as companies. Thus it is a highly plausible supposition that for a certain proportion of the self-employed, commercial activity is a means of attaining social ends. (Westlund 2003)

78

Figure 7.3: Distribution of Sweden's approximately 600 000 business firms 1996.

The subsistence enterprises

Innovators of technology – want

to grow but are seldom able to

Those that start to grow – but falls back The established mediumsized and large enterprises The well-known successful growing enterprises

Source: Westlund (2003).

Firms quoted on the stock exchange are to be found to the right of the centre line in Figure 2. It is an indication that although the activities of quoted companies always have social aspects - employment for example - and perhaps even social purposes in some instances, quotation on the stock exchange is an important sign that the aims of the enterprise are primarily commercial. (Westlund 2003)

Of course it is not the case that activities conducted in social-economic forms automatically comply with all the social values mentioned above while those conducted in openly commercial forms comply only with purely commercial values. If the juridical form of the activities in a society were completely neutral with regard to degree of commercialization, the juridical forms would be evenly distributed 79

of course. Although activities with mainly social objectives predominate among the juridical forms categorized as social economy according to the semi-official EU definition.along the scale. Job opportunities are perhaps the most obvious example. however.hand side. the figure shows that the juridical form of activity is not capable of serving as any sort of boundary. Jess and Olsson (1999) believe can be created by social economy naturally arise in formally commercial activities as well to a varying extent. But viewed as a whole. it is probably not to be doubted that it is mainly the formally social-economic organizations and the enterprises on the left. (Westlund 2003) While underlining the problems of defining the concept of social economy in practical terms. An activity may be carried on in unaltered juridical form even though its degree of commercialization changes. not to say impossible. In principle it would require a judgment to be made as to the principal purpose of the activities of every single enterprise or organization. This is not so. such a balancing-out of the considerations involved is very difficult. Figure 3 does at the same time open the way to a more dynamic approach to changes in degree of commercialization and changes of juridical form.hand side of the figure that give priority to compliance with the social values cited. (Westlund 2003) From the standpoint represented by the figure. However. socially dominated side of the figure while commercial forms dominate the right.line between social and commercial economy either. Similarly. Social-economic forms preponderate on the left-hand. activities in which commercial purposes predominate do occur within these forms of organization as well. In practice. an activity may alter its 80 . Thus it is not possible to demarcate the social economy operationally on the basis of degree of commercialization. The social values which Blennberger. activities to the left of the centre line may be assigned to the social economy and activities to the right to the commercial economy.

During the 1990s the Föreningsbank has undergone conversion from a cooperative to a joint stock company. and by going over to commercially dominated activity. These Swedish examples have their similarities in other West European countries. (Westlund 2003) There are numerous historical examples of such commercialization processes in Sweden. the cooperative retailing arm. (Westlund 2003) Thus the figure may help to illustrate how voluntary.juridical form without its degree of commercialization being changed. and the cooperative ideology plays a very unobtrusive role in the marketing strategies of Konsum. longer shifts of position along the scale may be assumed to furnish an increased incentive to change juridical form. by growth within the social economy. However. spare-time and other activities serving mainly social purposes expand and create employment. Today these customer relations remain in being only among certain of the older generation. What is significant about both these examples is 81 . (Westlund 2003) The savings banks and the cooperative agricultural bank (the Föreningsbank) were built up as a people's alternative and supplement to the commercial banks. A large part of the activities of Kooperativa Förbundet (the wholesaling arm) . both by taking the step from unorganized to formally organized activity. amalgamated with a majority of the savings banks and taken its place on the Stockholm stock exchange. on the same terms and using the same methods as private trade.is conducted not in cooperative but in company form. During the building-up phase of the consumer cooperative movement the social and ideological aspect of the business was a very important foundation of the customer relations developed in competition with private trade. thus shifting itself to the outer margins of the commercially dominated side.including trade in everyday goods .

Many firms which made their appearance in this branch during the 1990s had their genesis in young people's leisure interests. In many instances the leisure activity seems to make the transition to commercially dominated activity in company form without passing through any intermediate phase in the shape of voluntary or economic association. activities and organizations summarized under the concept of social economy have historically played a certain role in Europe‘s economic dynamics in certain sectors. He has also shown that civil society‘s social capital is among the strongest in Montana and among the weakest in Los Angeles (Los Angeles 82 . However. certain of these activities can. In other cases company formation has been preceded by activity within a framework of voluntary or economic association. even if activities in the third sector originally aim at filling social and not economic needs. Commercial products and services have gradually evolved from the latter. (Westlund 2003) What is then the role of the third sector in creating a social capital that contributes to business development and economic growth? Putnam (2000) has shown that the civil society seems to have been weakened in America during several decades. develop and transform to ―real‖ enterprises. Current experiences in Sweden also seem to indicate that local associations are used as a ―first step‖ in business development. In 1999 (the only year for which statistics is available) 2% of the new founded limited and closely held companies had their origin in associations (ITPS. including downsizing of the work force. leading to the establishment of businesses. if they are competitive. (Westlund 2003) Other examples may be cited from the IT branch. the importance of associations in the creation of new enterprises is limited. (Westlund 2003) From the perspective outlined in this section. that the transition from social-economic to open commercial form takes place. unpublished statistics). Thus.that it is during a restructuring and rationalizing phase.

they found that the interaction effect of an entrepreneur‘s service to the community. and the communities. reciprocated by community support of the business. March 1. Using logistic regression.Times. who do not find traditional 83 . these results support the view that local initiatives in the civil society might contribute to creating a favorable local environment. Thus. whereas other. their business success and their embeddedness in their local environment – in which the third sector often is an important component. etc. Putnam‘s perspective is that of the political scientist and is concentrated on democracy issues. offer new networks for social interaction among young people. it is not the civic engagement. (Westlund 2003) However. new forms of social capital develop in the emerging (civil and business) knowledge society. (1999) that in an empirical test showed the significance of reciprocated community support in the success of over 800 small businesses in small towns of Iowa. (Westlund 2003) One explanation to this might be that Putnam‘s model does not include the actor where economic growth is created – the enterprise. Moreover. USA. 2001) – a fact that do not coincide with economic development in the areas concerned. the businesses. milieu or culture for business and entrepreneurship. Unfortunately there are very few studies on the relationship between enterprises. Cohen and Fields (2000) have concluded that whatever has caused the expansion of Silicon Valley. One interesting exception is a study by Kilkenny et al. mobile phones. was the single most significant determinant of business success among dozens of indicators and characteristics of the managers. These findings may be interpreted as a limited and/or decreasing importance of the civil society on local and regional business development. Some critics of Putnam underline that the Internet. an alternative interpretation is that Putnam is focusing on the social capital of the (civil) industrial society.

Table 7. (Westlund 2003) 7.industrial society. transportation Mainly national Nation-state democracy Use of non-muscle power. informal professional networks substitute organized civil networks. information and benefits Horizontal. Although ―knowledge society‖ or ―knowledge economy‖ are concepts used every day in debates on society. organize trade Landowners Liberty: business autonomy. it is not easy to find a concise summary of the characteristics of the concepts and how the knowledge society is distinguished from earlier societal forms.6. Another argument is that in the knowledge economy‘s career communities.organizations very exciting.1: Key attributes of the knowledge and industrial societies and of the mercantilist era Attribute Knowledge society Industrial society Physical capital. quoted above) have underlined the increased importance of social capital as society has transformed from a manufacturing.industrial economy to a knowledge economy. the individual‘s freedom from feudal restraint s Vertical Owners of decisive production factor Central conflict The individuals Access / rights to knowledge. division of labor Capitalists Justice: Division of social accumulation between labor and capital Vertical Mercantilist era Land and trading assets Mainly local Autocracy /oligarchy Key assets / production Labor with knowledge factors and information Market’s extension Polity Global ―Supra-state‖ organizations increase in importance Application of knowledge Central principle(s) Increase muscle power through population growth.6 Social capital in the knowledge economy Several scholars (like Maskell 2000. Figure 5 is an attempt to present some key attributes of the knowledge and industrial societies and of the mercantilist era of the pre. cooperative Management principles 84 .

market town Table 8 shows that the differences between the knowledge and industrial societies are at least as comprehensive as between the industrial society and the mercantilist era. During Sweden‘s industrialization. The local industrial community spirit thus became a term for the norms and 85 . Knowledge. etc) Adaptability Emerging emancipation Land transportation systems Industrial town Mutual collective dependencies between crown. This can be illustrated with a Swedish example.Dependency relations Organization/collective needs the individual who possesses knowledge The individual needs the organization / collective (enterprise. burghers and peasants Fidelity Patriarchal Waterways and ports Central individual qualification Gender relations Infrastructure Creativity Growing equality Digital nets. a ‖local industrial community spirit‖ was formed in these communities and subsequently this spirit also became a characteristic of communities with other manufacturing industries. nobility. (Westlund 2003) A presumption based on Figure 5 is that a social capital adapted to the needs of the industrial economy cannot fulfill much of the needs of the knowledge economy.industrial ironworks regions became the centers of the modern steel industry. Bruksandan. church. social infrastructure. trade union. airports. the individual bearers of it and their social infrastructures are some of the key elements of the knowledge society. rail Metropolitan region Central spatial units SOURCE: Westlund (2003) Agricultural region. roads. the pre. This makes new demands on the individual‘s qualifications and affects relations between the individual and the organizations as well as gender relations.

locally recruited group of workers with a strong trade union. Thereby. The actors that formed the local industrial community spirit – the factory and the trade union of the (mainly) male workers – opposed. to a large extent. and externally with customers and suppliers. (Westlund 2003) During Sweden‘s industrial era. during the structural adjustment of the last twenty.values that were created from the relations between a dominant local employer and a closely-knit. However. consciously or subconsciously. this spirit has proved to be a critical problem for these communities. When the context changed. The women had in principle two alternatives: become a housewife or move. the communities needed actors to renew the local economy and the local social capital. apart from the requisite local service businesses. On the other hand. in principle. When the markets eventually declined and the external links were weakened.five years. The spirit of common interest. (Westlund 2003) In the case of the local industrial communities. in many respects. There was. The consequence was that entrepreneurship and the establishment of new enterprises were not promoted by the norms and values of the local industrial community spirit. Education after primary school was not necessary for entering the industry. were potential competitors for the labor force and were regarded as unnecessary. the dominating parties had invested in very strong links both internally locally. the 86 . the local industrial community spirit has obstructed the emergence of actors of this type. a local employment guarantee for the male population of the community. resulted in the local factory assuming responsibility for the welfare of their employees and their families in exchange for the loyalty of the families to the local factory. during the industrial era. which was formed through demands and counter-demands. the local industrial community spirit was. Other enterprises. the emergence of new actors. the local foundation for the successful Swedish model. the strong internal links were an impediment that obstructed the development of new links to new external actors.

build up under the manufacturing. but after that this social capital. the 87 . Actors (nodes) form links to distribute and reproduce desirable norms. In earlier sections. The employer relations in existing industries were not of much use since growth was dependent on new industries in new sectors. It is highly probable that the good employer relations in Japan contributed to its continued industrial success until 1990. we referred to arguments saying that the enterprise-related social capital expressed in employer relations were among the factors contributing to the very rapid economic growth in Sweden (1945-1970) and Japan (1945-1990). Their industrial heritage has left these regions with obsolete networks and obsolete attitudes which constitute severe obstacles to a smooth and rapid transition to the knowledge economy. More than a generation after the emergence of the knowledge society. these regions are still in crisis with low growth and outmigration. When economic-structural changes happen. values and behavior which are in conformity with the economy‘s demand.industrial age. could not prevent the recession. which still are not solved in certain regions. The growth in Sweden has taken place in other regions.necessary importation of new ideas and values was prevented. mainly in the three metropolitan regions and the university centers. (Westlund 2003) The examples above might be viewed as a support to a hypothesis concerning the needs to transform the social capital in accordance with the economy‘s transformation: During stable growth phases the economy benefits from strong. particularly of young women. stable societal networks that are closely adapted to the needs of the economy. The industrial crisis of the 70‘s caused severe structural problems in Sweden. The Swedish local industrial community spirit is one example of the type of social capital that was formed in and by the industrial regions of Europe and North America.

they may retard or prevent the emergence of new actors. A few areas that organizations can implement this are:  A development organization wants to improve learning and knowledge management amongst their international offices. one might argue that there is a need for a ―creative destruction‖ of obsolete social capital. "how can we manage our projects". in order to facilitate the creation of new social capital. "what platform should we use". competing networks that distribute and reproduce norms. the existing networks are adapted to the earlier economic structure and do not necessarily support the restructuring of the economy and the emergence of new actors. like "how can we use web 2. beneficiaries.  A policy organization wants to draw upon a multitude of opinions and experiences. (Westlund 2003) 7. or 88 .  An advocacy organization wants to coordinate their activities across a global network of grassroots. "how can we write a document together". effective collaboration and learning of employees. new networks and economic restructuring. The starting point can be a very detailed question. autonomous member organizations. With Schumpeter‘s expression. The new actors need to build new. However. values and behavior in conformity with the new economic actors‘ demand. local staff. The transformation from industrial society to knowledge society is a huge-scale example of this economic restructuring and the needs of new economic and social networks to emerge.7 A Framework for Strategic Business Networks.  A campaigning organization wants to enable their constituency to self-organize activities that create both local change and global impact.economy needs new industries with new actors not to stagnate. and relevant experts. If the networks of the old economic structure are too strong. to draft a policy proposal to be submitted to decision-making processes. Organizations should embrace the online social networks in their attempt to increase social capital.0".

"how do we set up a knowledge management strategy". In between are the "process people" who work in the field. and the "technology people". The challenge is then to find a way to "make things flow" between all of them.1 is a framework that combines the "purpose. The organizations have control of their own strategy. who think in organizational strategies and communication impacts. technology" dimension with sphere of influence: how much control does the leading organization have in a specific area of their environment. increasing social capital which in turn can influence other strategies like marking. there is a gap between the "purpose people". team building e. both ends often in a more central role. and it can be approached from three perspectives:  "Purpose": what is the vision and mission of the organization. process. how are they partnering with other organizations. what tools are people using to perform their work. and who are the people they try to involve?  "Process": how do people work together. what policies and strategies are there. and what communities exist already?  "Technology": what platforms can be used.t. Putting it all together Figure 7. 89 .g. and how does it link with the rest of the internet and ICT in general? More often than not. who manage the tools. There is a deeper question behind this project. they can concentrate on a specific part of the model e.c.7.

Figure 7. strategy business plan  Advertising Communication Partnership  Periphery   strategic networking "movement as network"   Community processes and roles  community of practice  life cycle identity  design brand mantra  common story User experience pyramid of engagement  Information communication architecture matrix  Usability tool selection  Visual design Social capital    technology roadmap tool configuration Networking    Internet Social network analysis Social sites usage Team building    Social Sites Benchmarking metrics Network Advertising 90 .mission.7.1: A Framework for Strategic Business Networks Purpose Business  Core  Process Intervention  knowledge managemen t strategy monitoring and evaluation Engagement  Technology/Tools Marketing    Market research Competitive analysis Vision .

The more people are on the Internet. This is one of the few situations in the social sciences where a lack of association is meaningful. The findings suggest that the Internet is particularly useful for keeping contact among friends who are socially and geographically dispersed. Moreover. We cannot make any inferences about how Internet activity 91 . Friends usually interact as either two people or two couples. unlike the predictions of either the utopians or dystopians. the Internet is used as a tool for solitary activities that keep people from engaging with their kin and in their communities. Internet use increases participatory capital. organizational and political participation. People might read newspapers or search for information regardless of whether they do this online or offline. nor do they visit and phone more often. the research results show that Internet use is not a uniform activity: People engage in both social and asocial activities when online. The time people save because they shop online may be spent in offline socializing with family and friends. Yet these long-distance ties use the Internet for a higher proportion of their overall contact. (Wellman 2003) These results suggest that the effects of the Internet on social contact are supplementary.Chapter 8: Recommendation and Conclusion Does the Internet affect social capital in terms of social network contact. the more they are involved in offline organizational and political activity. Most Internet contact is with people who live within an hour's drive. while kin and neighbors are likely to be in densely knit social networks. On the other hand. Heavy Internet users neither use email as a substitute for face-to-face visits and telephone calls. and community commitment? Extensive research results indicate that Internet use supplements network capital by extending existing levels of face-to-face and telephone contact. not all online activities compete with offline interactions. The Internet is especially used to maintain ties with friends. and the more they are involved in online organizational and political activity. On the one hand. People who live further apart have less overall contact.

Although researchers have shown that the Internet affects social capital. 1999. 92 . the research results suggest that the Internet is increasing interpersonal connectivity and organizational involvement.influences political participation. the mechanisms are unclear. (Wellman 2003) It is time for more differentiated analyses of the Internet. Knowing that people have been using the Internet for more than two years or that they are online for three hours per day. researchers suspect that high Internet use has led to bad experiences that have led to low levels of commitment. People now go through the day. People already participating online will get more involved in-person with organizations and politics. does not provide a clear picture of the activities in which they are engaged. However. week and month in a variety of narrowly-defined relationships with changing sets of network members. The security and social control of encompassing communities have given way to the opportunity and vulnerability of networked individualism. Because the association is limited to online community. socially-controlling communities to individualized. offline as well as online. there has been a move from all-encompassing. 2001). this increased connectivity and involvement not only can expose people to more contact and more information. (Wellman 2003) Internet use is associated with decreased commitment to online community. People already participating offline will use the Internet to augment and extend their participation. we suspect a positive feedback effect. fragmented personal communities (Wellman. which embeds it in everyday life. Even before the advent of the Internet. Rather than distinct online and offline spheres. it can reduce commitment to community. people are using whatever means are appropriate and available at the moment to participate in organizations and politics. Although future research will have to specify the causal sequence. Taken together. and analyses.

and explore how these fit into the complexity of everyday life.near and far . the Internet fills needs for additional interpersonal contact that supplement in-person and telephone contact. relatives. organizational and political involvement. Yet. then even more than television. This suggests that future examination of Internet use might identify what affects the quality as well as the quantity of online social interaction – for both weak and strong ties. such as email and chatting that promote interactions. At a time of declining organizational participation. extensive involvement with the Internet apparently exposes participants to situations that weaken their sense of community online. In general. b) asocial activities such as web-surfing and reading the news. When the Internet engages people primarily in asocial activities. at a time when networked individualism reduces group social cohesion. the activities fall into two categories: a) social activities. focus on the types of activities performed online.then it is a tool for building and maintaining social capital. 93 . In this era of spatially-dispersed community. when people use the Internet to communicate and coordinate with friends. By contrast. and domestic life.Future analyses need to examine in more detail the effects of the Internet. and organizations . the Internet provides tools for those already involved to increase their participation. its immersiveness can turn people away from community.

What is your major focus: Science/Technology [ ] Business Disciplines [ ] Arts & Humanities [ ] Social Sciences [ ] Other _____________________ 4. like MySpace.Age:Under18[] 18-20[]21-25[]26-30[]31-40[]41-50[]51-65[]66orover[] 3. 94 . Be brief and precise.O. BOX 647 Tala. Instructions This questionnaire will take at most 10 minutes of your time to fill. Facebook. read the instructions provided for each question. please proceed. For clarifications regarding any aspect of the questionnaire. Information Technology student at Strathmore University undertaking a project on Online Social Networks and how they can be used to develop social capital for corporate agility. In cases where you are required to write down your response(s) or comments. please send an e-mail to danielkilonzo@gmail. or Orkut? Yes [ ] No[ ] DO NOT GO ON if you answered NO to question 6. Nationality: 5. 1. Country currently residing in: 6. A number of questions only require you to indicate your response(s) by marking an X in the boxes provided. Please. Gender: Male [ ] Female [ ] 2. If you answered Yes. Have you created a profile on a social networking website. write them in the spaces immediately after the questions.Appendices Appendix 1: Survey Questionnaire I am a Master of Science.com or post mail to P.

[ ] I use online social networking because it helps me find new friends and network [ ] I go to online social networking sites because they help me keep in contact with my school friends [ ] The online social networking site I choose to use the most is because most of my friends are also members of that site. [ ] I often use social networking sites to collaborate on projects [ ] Using online social networking sites is easy for me. What are the different ways you use social networking sites? Do you ever use those sites to…? 95 . [ ] I am often afraid that I give too much information to people I do not know. [ ] I like to ask personal questions to the people I meet online. 1 Disagree2 3 4 5 6 7 -Agree I use a social networking site because people whose opinions I respect think I should use it [ ] I use online social networking because it is fun for me. [ ] I find my favorite online social networking site is also the easiest for me to navigate in [ ] I often think of ways that my favorite social networking site could be made easier to use.7. How public is your profile? How public is your profile? visible to anyone [ ] visible only to friends [ ] don't know to whom it's visible [ ] 14. How many social networking websites have you created profiles on? 1 [ ] 2 [ ]3 [ ] 4 [ ] 5 or more [ ] 8. [ ] I consider whether an online social networking site is easy to use more than any other criteria[ ] Signing up for my favorite social networking site was confusing [ ] For your primary social networking website: 13. About how often do you visit social networking sites? Several times a day [ ] About once a day [ ] 3 to 5days a week[ ] 1 to 2days a week[ ] Every few weeks [ ] Less often [ ] 15. [ ] I use online social networking because it makes me happy. In this next section. What is your primary social networking website? ____________________________ 9. please check the number that best indicates your level of agreement with each statement.

. Please tell me if you think it is okay to share the following information with someone you just met on the Internet: First name Yes [ ] No[ ] Last name Yes [ ] No[ ] Photos of friends Yes [ ] No[ ] Photos of yourselves Yes [ ] No[ ] City or town Yes[]No[] Link to your blog Yes [ ] No[ ] University name Yes [ ] No[ ] IM screen name Yes [ ] No[ ] email address Yes [ ] No[ ] stream audio or MP3 files Yes [ ] No[ ] videos Yes [ ] No[ ] cell phone numbers Yes [ ] No[ ] 19. You can just tell me yes or no. Have you used your online social network to seek information on new/ existing products? Yes [ ] No[ ] 21. . Do you provide any false information about yourself on your profile? Yes [ ] No[ ] 20. Thinking about the last time you were contacted online by someone who was a complete stranger to you. or not. space or wall Yes [ ] No[ ] send a bulletin or group message to all of your friends Yes [ ] No[ ] send private messages to a friend within the social networking system Yes [ ] No[ ] post comments to a friend's blog Yes [ ] No[ ] 17. We would like to know if the following kinds of information are posted to your profile. On your profile.Make new friends Stay in touch friends you see a lot Yes [ ] No[ ] Stay in touch with friends you rarely see in person Yes [ ] No[ ] Make plans with your friends Yes [ ] No[ ] Stay in touch with family members Yes [ ] No[ ] 16. We'd like to know the specific ways you communicate with your friends using social networking sites. do you provide. ? First name Yes [ ] No[ ] Last name Yes [ ] No[ ] Photos of friends Yes [ ] No[ ] Photos of yourselves Yes [ ] No[ ] City or town Yes[]No[] Link to your blog Yes [ ] No[ ] University name Yes [ ] No[ ] IM screen name Yes [ ] No[ ] email address Yes [ ] No[ ] stream audio or MP3 files Yes [ ] No[ ] videos Yes [ ] No[ ] cell phone numbers Yes [ ] No[ ] 18. Do you ever…? post messages to a friend's page. how did you respond? 96 .

1 to 4[ ] 5 to 9[ ] 10 to 14 [ ] 15 to 19 [ ] 20 to 29 [ ] 30 or more [ ] Don't know [ ] 26. In your off-line life. . Just your best guess is fine. . About how long have you had a profile on your primary social networking website? Within the last six months [ ] A year ago [ ] Two or three years ago [ ] More than three years ago [ ] don't know [ ] 23. About how many friends do you keep in touch with on a regular basis on your social networking website. 1 to 4[ ] 5 to 9[ ] 10 to 14 [ ] 15 to 19 [ ] 20 to 29 [ ] 30 or more [ ] 28. . Just your best guess is fine. cell phone. From where do you access your social networking website most often? From where do you access your social networking website most often? Home [] Workplace [ ] Someplace else_____________ 25. meaning you communicate with them at least once a week. 1 to 4[ ] 5 to 9[ ] 10 to 14 [ ] 15 to 19 [ ] 20 to 29 [ ] 30 or more [ ] 27. . meaning you communicate with them at least once a week. meaning you communicate with them at least once a week. meaning you see them or talk with them at least once a week. .Just ignored it [ ] Responded so I could find out more about the person[ ] Responded and told them to leave me alone[ ] 22. About how many friends do you keep in touch with on a regular basis on your social networking website who you have never met in person. Just your best guess is fine. . Just your best guess is fine. Do you ever access your social networking website using a wireless device like a PDA. . about how many friends do you keep in touch with on a regular basis. 1 to 4[ ] 5 to 9[ ] 10 to 14 [ ] 15 to 19 [ ] 20 to 29 [ ] 30 or more [ ] 97 . or wireless laptop? Yes [ ] No[ ] 24. . About how many friends do you keep in touch with on a regular basis on your social networking website who are from other nationalities.

) Politics [ ] Religion/Spirituality [ ] Personal Hobbies[ ] Music [ ] Movies/TV [ ] Games [ ] Other entertainment (besides music. movies/TV. What blogs do you read? Only read blogs of people I know [ ] Only read blogs of people I don‗t know [ ] Both equally [ ] Never read blogs [ ] Don't know or don‗t care to answer [ ] 98 . and games) [ ] Social events/parties [ ] Sports [ ] Sports Yes [ ] Jobs/Work [ ] Friendships [ ] Shopping [ ] Fashion [ ] Travel/Vacations [ ] 30. What content do you publish or communicate about on your social networking website? (Mark all that apply.29. How often do you read the web diaries or blogs of strangers? Several times a day [ ] About once a day [ ] 3-5 days a week [ ] 1-2 days a week [ ] Every few weeks [ ] Less often [ ] Never [ ] Don't know or don't care to answer [ ] 31.

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