Social capital and is leadership: a conceptual framework.
Warner, Janis
INTRODUCTION
The 2007 economic downturn initiated multiple waves of change for
IT management with cost cutting and IT investment scrutiny pushing
companies into the mode of doing more with less. Additional challenges
are seen in 2009 with "mindsets ... shifting away from how to cut
IT costs to how to help the business grow" (Bednarz, 2010, p. 14).
With the decrease in IT investments coupled with higher strategic
advantage expectations for the IT investments being made, it becomes
increasingly critical to be able to explain why and how certain
information technology (IT) investments are competitively successful and
others are not. One explanation is linked to the use of superior IT
managerial skills (Bharadwaj, 2000; Mata, Fuerst & Barney, 1995).
These skills comprise one form of human capital, i.e. the category of
capital that deals with the skills and capabilities of individuals in an
organization that are used to enable individuals to act in new ways
(Coleman, 1988). Even though IT managerial skills have been identified
as important assets for firms in their pursuit of successful
competition, those skills may not translate into successful action for
the organization without the appropriate communication network. Burt
(1997) pointed out "while human capital is surely necessary to
success, it is useless without the social capital of opportunities in
which to apply it" (p.339).
Although social capital has always been a part of the fabric of
organizational life, until recently the term "social capital"
has been associated with and used to explore individuals and social
groups such as communities and nations. Cohen and Prusak (2001)
attributed this focus to the mechanistic nature of organizations which
hid the social aspects. Social capital research has grown since its
introduction, encompassing such dependent variables as career success
(Seibert, Kraimer & Liden, 2001), employment practices, creation of
human capital (Coleman, 1988) and occupational status (Flap &
DeGraaf, 1989). While its application in the information systems (IS)
research area has touched on portions of the social capital concept such
as (social) networking and power (Applegate & Elam, 1992) and
partnering relationships between IT and business unit relationships
(Ross, Beath & Goodhue, 1996), it has not been studied as the
comprehensive, specific conceptualization envisaged by contemporary
social science researchers, such as Cohen and Prusak (2001), Coleman
(1988), and Lin (2001).
An obvious question is, if social capital has always been a part of
organizations, why is it important to pay explicit attention to it now?
"What in the past could be taken for granted and sometimes even
minimized can no longer be ignored or left to chance. This is true in
part because organizations in a changing highly competitive global
economy need to make the most of their assets, of which social capital
is key" (Cohen & Prusak, 2001, p.16). This imperative leads to
the proposal that utilizing the concept of social capital to analyze the
impact of IS leaders on their organizations would lend valuable insight
into how IT is effectively managed in organizations.
Researchers and practitioners continue to debate the value of IT in
today's organization (e.g. Carr, 2003), trying to find antecedents
for successful IT investments. One of those antecedents might be the
social capital the IS leader creates which could enable the IS human
capital to be more effective and productive.
THERETICAL BACKGROUND: SOCIAL CAPITAL
Basic Concept
There are many definitions of social capital and an equally diverse
group of benefits (see Table 1). While they all have their foundation in
social relations, different views develop from the different
perspectives and levels of analysis followed. It is proposed that there
is no one right approach when analyzing social capital relative to IT
investment success. Thus, an overview of the concept including the main
approaches is appropriate.
Social capital can be defined as that part of social structure that
adds value and facilitates the actions of the individuals within that
structure (Coleman, 1988). This concept parallels the concepts of
physical capital facilitating production and human capital facilitating
an individual's effectiveness through changes to their individual
skills and capabilities (Coleman, 1988) Cohen and Prusak (2001) looked
to an organizational setting context, particularly to explore
investments in and returns from social capital:
Social capital consists of the stock of active connections among
people: the trust, mutual understanding, and shared values and behaviors
that bind the members of human networks and communities and make
cooperative action possible. (p.4)
Thus, investments in and returns from social capital can be seen as
separate and distinct from other capital investments. While social
capital is distinct from human capital, it has been recognized as being
contextually complementary. Social capital predicts that human capital
investments such as intelligence and seniority, and their returns depend
to some degree on the location of the person in a particular
hierarchy's social structure (Burt, 1997). Relating this definition
to the IS leader role and context the goal of cooperative action is the
focus of this paper. Like a chief executive officer (CEO), the top IS
leader has responsibility of successfully enabling processes across
functions, departments and geography. However, unlike the CEO, the top
IS leader might not have direct authority over the management involved
with using the information technology. Therefore, strengthening and
maintaining the social capital that makes cooperative action possible
becomes important.
Origins of Social Capital
There have been multiple origins of social capital presented in
literature. Portes (1998) provides one view of history in his discussion
of the origins of social capital and its applications in the field of
sociology. Portes (1998) credits Bourdieu (1985) with the first
systematic contemporary approach and makes mention of Loury (1977, 1981)
as a second source that was extended by Coleman (1988). Bourdieu (1985)
defines the concept as "the aggregate of the actual or potential
resources which are linked to possession of a durable network of more or
less institutionalized relationships of mutual acquaintance or
recognition" (p. 248). This approach to social capital is based on
the social relationship that gives individuals access to resources which
other individuals possess and acknowledges differentials in the quantity
and quality of those resources (Portes, 1998).
Loury (1977, 1981) applied the term social capital as part of his
critique of racial income inequality as a basis for explaining the lack
of network and information about job opportunities for a young black
workers in the labor market which helped to perpetuate racial inequality
(Portes, 1998). According to Portes (1998), Coleman (1988) extended
Loury's brief acknowledgment of social capital, explicating the
role of social capital in the creation of human capital.
Coleman's conceptualization of social capital started with
Granovetter's (1973) strength of weak tie (SWT) theory. Granovetter
presented the concept of a distinction between the strong ties of a
social clique and the weak ties of acquaintances or contacts that reach
outside one's close social network. He showed that in a job search
better information came from the weak ties than the strong ties. This
was due to the differences in information sharing processes between the
two groups. Strong tie groups are dense, making it more likely that new
information is shared quickly and information redundancy is highly
likely, whereas weak ties are interconnections between the strong tie
groups which provide intermittent unique information. This view
introduced the importance of networking to produce relevant, perhaps
critical resources in the form of new, sometimes unique information.
Another approach to social capital is Burt's (1997) structural
hole theory which "describes how social capital is a function of
brokerage opportunities in a network" (p.339). The theory is based
on the concept that some people act as brokers of information as they
are connected to individuals that others are not connected to. Between
the people that are not connected there is a hole in the social
structure. The people that can bridge the hole act as brokers. The
position of the people that act as brokers can be an asset in and of
itself, called social capital. Here, social capital is defined "in
terms of the information and control advantages of being the broker in
relations between people otherwise disconnected in social structure ...
[and] an opportunity to ... control the form of projects that bring
together people from opposite sides of the hole" (Burt, 1997,
p.340).
A third major theoretical origin of social capital is known as the
social resources theory (Lin et al., 1981) which focused on the social
resources that are part of the individual's network. They defined
social resources as "the wealth, status, power as well as social
ties of those persons who are directly or indirectly linked to the
individual" (Lin et al., 1981). Two components of social resources
are identified. They are social relations, which are delineated by
social control processes as defined by Goode (1978) such as friendship,
love, affection, and the resources embedded in positions reached through
the social relations. The emphasis here is on the resources that can be
reached through the social ties such that the individual is more likely
to reach someone with the resources needed to obtain a particular
objective (Seibert et al., 2001).
Focus of Conceptualization
There are two opposing, yet complementary foci underlying social
capital--internal versus external. The internal focus is primarily
concerned with the relationships that an individual maintains with other
individuals and the resources available within the network established.
With the internal focus density is a key attribute of the network.
Coleman (1990) exemplifies this view, emphasizing the collectivity of
the network that will facilitate the collective goals, which has been
termed the "bonding: forms of social capital (Adler & Kwon,
2002). The external focus illuminates the span of relations in the
network, looking at those resources that an individual would not be able
to reach by themselves without a "bridge", i. e. another
individual with the connection to those resources (Adler & Kwon,
2002). Following the external focus Burt (1997), Bourdieu (1985), and
Lin (1981, 2001) look to outward access of resources through a social
network. Since these foci are not mutually exclusive and to a large
degree dependent on the perspective and level of analysis, there are
approaches that utilize both views (Adler & Kwon, 2002). Nahapiet
and Goshal (1998) approach social capital utilizing this duality to
develop a theory of social capital creation and its impact on
intellectual capital development.
Levels of Analysis
In addition to the many theoretical approaches to social capital
there is the dimension of level of analysis that varies among models.
Social capital has been used to describe worldwide strategy application,
organizational or collective application and individual level
application. In a worldwide application social capital has been
leveraged and used for a poverty reduction strategy (Grootaert & Van
Bastelaer, 2002). In organizational use social capital may focus on
concerns such as employment practices (Leana and Van Buren III, 1999),
intrafirm resource exchange (Tsai & Goshal, 1998), or the creation
of intellectual capital (Nahapiet & Goshal, 1998). Applying social
capital concepts at the individual level has included career success
(Podolny & Baron, 1997; Seibert et al., 2001), workers finding jobs
(Granovetter, 1973), and executive compensation (Belliveau,
O'Reilly, & Wade, 1996). Leana and Van Buren III (1999) note
that the multilevel nature of social capital has lead to two patterns
emerging, public goods and private goods. When the focus is on public
goods researchers concentrate on the macro level and the micro or
individual level is secondary. Thus, social capital is considered more
of a social unit attribute whereby the benefits and costs accrue to the
social unit and the individual is only indirectly involved. When the
private goods focus is used the benefits and costs become individual
advantages, leading to such outcomes as higher career success. Although
social capital is multilevel, it is considered to be a resource that is
jointly owned and therefore some models, such as the organizational
social capital model, may include both the public good and private good
perspective (Leana & Van Buren III, 1999). Interestingly, it has
been noted recently that there is an imbalance in the social capital
research for information and communication technologies relative to
levels of analysis with the majority of research being at the collective
level (Yang, Lee & Kurnia, 2009). This paper's focus on the IT
leadership provides an individual level of analysis framework that has
been neglected to date.
Benefits of Social Capital
Like the concept of social capital, there are multiple perspectives
of its benefits. In this model the goal is to have success with IT
investments, therefore both foci--internal and external--are included.
Social capital, as defined by Coleman (1990), is internally
focused, standing for any part of a social structure that creates value
and facilitates the actions of the individuals within that social
structure. Its elementary foundation includes the creation of
obligations and expectations, potential for enhanced information
acquisition and the transfer of authority or rights of control (Coleman,
1990). In particular, the transfer of authority or rights of control to
an IS leader could help to span the organizational hierarchy when
dealing with the IT investment in various functions outside their formal
line of authority.
Burt (1997) utilizes an external focus identifying three benefits
of information exchange for a manager--access, timing and referrals.
Access refers to the information through the network that could not be
otherwise gained because the source of the information is beyond the
direct reach of a manager. Timing is the advantage of receiving the
information earlier through a network than a manager would receive
through a direct contact. Referrals deal with the benefit of
legitimizing the interests of a manager as the information is presented
"in a positive light, at the right time, and in the right
places" (p. 340). The action of legitimizing through social capital
is particularly important for the IS leader as they are frequently
responsible for IT throughout the corporation (Applegate & Elam,
1992), but typically do not have authoritative control throughout the
corporation. This dimension echoes the benefits derived from the
transfer of authority or rights of control identified by Coleman (1990),
as previously discussed.
Social capital is like the more tangible financial and physical
capital in that it can be "demonstrated, analyzed, invested in,
worked with and made to yield benefits" (Cohen & Prusak, 2001,
p.9). Like the other forms of capital it "accumulates when used
productively" (Fountain, 1998). Unlike the other intangible forms
of capital known as human capital and intellectual capital, social
capital may have an advantage in the way it accumulates. Lin (2001)
posits that social capital is accumulated exponentially, whereas human
capital is considered to be additive. This occurs because social capital
is derived through relational ties with another individual would give
access to the other individual's ties in addition to the direct
relation. In addition to specific advantages of social capital, Adler
and Kwon (2002) propose the benefits to include: 1. Enhanced access to
information and improved information quality, relevance, and timeliness;
2. Increased influence, control and power; and 3. Solidarity of the
social network. These benefits could be used to support the goal of
leveraging the IT investments. Understanding the structures of the
social capital investment in relationship to IT would provide a
foundation for working with and developing the benefits of social
capital.
IS Leadership and Social Capital
When the term Chief Information Officer (CIO) was first introduced
by Synott and Gruber (1981) it was recognized that "the role of the
information systems manager has evolved in twenty years from that of a
technician managing a relatively unimportant service function into that
of a vice presidential-level, general manager whose department can
substantially impact the entire organization" (Ives & Olson,
1981, p. 49). That role continues to evolve and grow as the needs of
businesses change. One view of the CIO's function is as a bridge
over the gap between an organization's strategy and its use of IT
(Stephens, Ledbetter, Mitra & Ford, 1992). Acting as a bridge
between IT, the functional areas and external areas (Stephens et al.,
1992) exemplifies the social capital brokerage function that is the
foundation of Burt's (1997) structural hole theory. The function is
fulfilled, in part, when the CIO is an active participant in the
organization's strategy planning (Stephens et al., 1992).
For an IS leader to be effective, it has been suggested that they
must be very aggressive in establishing and maintaining a large network
of resources (Applegate & Elam, 1992). Success factors for IT have
been proposed to include relationship building and partnering with
business users (Applegate & Elam, 1992; Willcocks & Stykes,
2000; Bharadwaj, 2000; Ross et al., 1996), communication with top
management, functional managers and end users (Passino & Severance,
1988), managerial IT skills including the ability to work with
functional managers, suppliers, and customers (Mata et al., 1995), the
Chief Information Officer's (CIO's) participation in the top
management team (Armstrong & Sambamurthy,1999) and the "system
of knowing" for the Chief Financial Officer (CFO) and top
management team (Armstrong & Sambamurthy, 1999). These success
factors are all based on social relations, i.e. the creation of social
capital.
Mata et al. (1995) elaborated on the specifics of important IT
managerial skills as the ability to understand and appreciate, work
with, support and anticipate the future needs of functional managers,
suppliers and customers. "That these managerial skills are valuable
is almost self-evident. Without them, the full potential of IT for a
firm will almost certainly not be realized" (Mata et al., 1995).
Armstrong and Sambamurthy (1999) proposed that the quality of senior
leadership, including the Chief Information Officer (CIO) the Chief
Executive Officer (CEO), the Chief Operating Officer (COO), and the
Chief Financial Officer (CFO), and their interactions were the
fundamental factors influencing the IT assimilation form of IT success.
Armstrong and Sambamurthy (1999) operationalized quality for the CIO as
their level of business knowledge, IT knowledge and "systems of
knowing". The "systems of knowing" refers to the
structures of interaction among team members. The structures of
interaction may take the form of hierarchical distance of the CIO from
the CEO (Feeny, Edwards & Simpson, 1992; Watson, 1990) or the extent
of the CIO's participation in the senior management team (Watson,
1990). Keen (1991) suggested that "dialogue is needed most right at
the top of the firm. It is no exaggeration to say nothing will
contribute more to a firm's ability to take charge of change
related to or fueled by IT than to have the firm's business and IS
leaders make the issues of economics and integration a mutual
priority" (p. 219). Similarly, Nahapiet and Goshal (1998) propose
that social capital facilitates the creation of new intellectual capital
which leads to an organizational advantage of firms over markets.
The very nature of IT as a potentially boundariless resource acting
as a conduit for information to flow between functions and levels in an
organization makes its leading manager a unique and significant user of
the social capital asset. The significance comes from the ubiquity of IT
(Carr, 2003), the uniqueness comes from the cross-functional nature of
the IT asset and its management. Both of these dimensions pose issues
for the IT leader to overcome. For example, if territorial senior
executives perceive a threat from IT in their domain, they may become
obstacles for innovation (Feeny et al., 1992). Lind and Zmud (1991)
discovered that rich interaction among technical and managerial
personnel counteracted obstacles to innovation. Thus, it appears social
interaction, i.e. creation of social capital, is a significant enabler
for the IT leader to successfully traverse the organizational landscape.
As IT has changed from a support data processing function to a
critical component for achieving corporate strategic objectives, the
role of the IS leader has changed. The IS leader, who was traditionally
weak in establishing networks, is being called upon to understand their
organization's strategic objectives and to effectively interact
with corporate/business management to ensure that IT investments are
aligned appropriately (Applegate & Elam, 1992).
PROPOSED FRAMEWORK AND PROPOSITIONS
Seibert, Kraimer & Liden (2001) introduced a model for social
capital theory of career success that looked at the effects of social
resources and network benefits on the outcome of career success with the
social resources antecedents of network structure dimensions (See Figure
1). The model suggests that the outcome of the success of information
technology can be looked at as career success for an organization's
IS leader. Thus, application of the model, with modifications for the
specifics of the research areas of interest is proposed (see Figure 2).
[FIGURE 1 OMITTED]
[FIGURE 2 OMITTED]
Successful IS Leader Characteristics
In the 'information era' of the 1990s [and beyond], a new
and expanded set of responsibilities demands that the executive
responsible for IT throughout the corporation also possess strong
leadership skill, power, and business expertise" (Applegate &
Elam, 1992). IT has grown in power and ubiquity, causing many companies
to view it as more critical than ever regarding their success (Carr,
2003). While investments in IT have grown significantly, there is still
a wide range of outcomes for how successful firms are at leveraging the
business value of IT, making the impact of the top IS leader's
business and IT knowledge more evident than ever before. "CIOs with
high levels of business and IT knowledge will be perceived as valuable
players and be more easily accepted by the top management team"
(Armstrong & Sambamurthy, 1999, p.308). The CIO has been considered
to be the bridge in the organizational structure with participation in
the strategic planning meetings being a key establishing and maintaining
that bridge (Stephens et al., 1992). The operationalization of the
quality of IS leadership has included measures of their IT and business
level knowledge, the informal interactions of the CIO with the senior
management (Armstrong & Sambamurthy, 1999), and the extent of
participation in top management including strategic planning meetings
(Armstrong & Sambamurthy, 1999; Stephens et al., 1992).
The recognition of the top IS leader's integral importance in
the firm and the strategic importance of the success of IT initiatives
leads to the following proposition.
P1: The leadership characteristics exhibited by the top IS leader
in an organization will have a significant impact on the development of
the leader's social capital.
Hierarchical Positioning
"Hierarchy is an important dimension of social structure that
indirectly influences social capital by shaping the structure of social
relations" (Adler & Kwon, 2002). These social relations come in
the form of interaction, formal and informal, and knowledge sharing.
Interaction between the top IS leader, often named the chief information
officer (CIO), and senior business executives resulting in strong
partnerships have been found to positively affect key IT project success
processes such as IT assimilation (Armstrong and Sambamurthy, 1999).
Various leadership styles, such as transactional and transformational,
are viewed as relying on the leader's authority or position of
power. The importance of the relationship is based on the argument that
"IT successes generally reflect an effective relationship between
business managers and Information Services managers and their
staffs" (Keen, 1991, p.215). Knowledge sharing can be accomplished
objective knowledge which describes explicit knowledge that each
individual team member has and systems of knowing that describe the
shared perspectives and sharing of understanding (Nahapiet & Goshal,
1998). It is the systems of knowing that are related to the hierarchical
positioning of the CIO in terms of the distance from the CEO in the
hierarchy and the amount of the CIO's participation in the top
management team (Watson, 1990). The strong partnership between the CEO
and CIO in terms of interaction was found to enable the sharing of ideas
and understanding of strategic business and IT issues (Armstrong &
Sambamurthy, 1999), contribute to increased levels of IT innovativeness
(Lind & Zmud, 1991) and influence the firms' use of IT
(Jarvenpaa & Ives, 1991). The hierarchical structure, as related to
the social structure, is also important in terms of access to valuable
resources, since "the higher positions have more information about
the locations of valued resources in the hierarchy--where specific types
and amounts of resources are embedded" (Lin, 2001).
Top management or senior leadership has been defined as "the
CEO, COO, CIO and other senior business executives who are formal
members of the top management team" (Armstrong & Sambamurthy,
1999). An individual's vertical location in the authority hierarchy
will determine their access to valued resources and define their
relative rank ordering in the overall chain of command (Lin, 2001). The
importance of the partnership between the CIO and the top management
team in terms of access to information and strategic success of IT
investments leads to the following propositions.
P2a: The CIO's system of knowing in terms of the extent of
their participation in the top management team will have a positive
relationship with the CIO's development of social capital.
P2b: The CIO's system of knowing in terms of their
hierarchical position within an organization will have a significant
effect on the CIO's development of social capital.
Outcomes of Social Capital Influences
As previously reviewed, the structural hole theory proposes that
there are three information benefits from social capital: access to
information and resources, advantageous timing to that information
and/or resource and referrals (Burt, 1997). Lin (2001) defined a simple
formal structure as "a hierarchical structure consisting of a set
of positions linked in authority (legitimately coercive) relations
(command chains) over the control and use of certain valued
resources" (p.35). Thus, it is proposed that linking the two
concepts results in the following propositions.
P3a: The amount of social capital available to the CIO based on the
position of the CIO relative to the top management team will
significantly affect the CIO's access to valued information and
resources.
P3b: The amount of social capital available to the CIO based on the
position of the CIO relative to the top management team will
significantly affect the CIO's referral network.
P3c: The amount of social capital available to the CIO based on the
position of the CIO relative to the top management team will
significantly affect the CIO's timing of valued information.
CONCLUSION
IT managerial skills and a strong partnership between the IS leader
and top management are two factors that have been identified as
contributing to the success of an organization. The implied importance
of these factors suggest value in understanding how they contribute to
success so that academics can understand and practitioners can know how
to leverage the IT investment. Social capital is a relatively new, yet
recognizably important concept in the social science disciplines (Adler
& Kwon, 2002) and a potentially critical component in the
explanation of why some organizations are successful at implementing and
leveraging their IT investments and others are not.
This research contributes to theory with the proposal of a
framework for studying social capital at an individual level, a level
which is recognized as a significant but under researched view (Yang et
al., 2009).
The implications of this research for practice are threefold.
First, the identification of specific characteristics of successful IS
leaders provides organizational management insight into what areas to
support to maximize IS effectiveness. Second, organizations can use the
framework to compare candidates for the CIO position knowing specific
areas that contribute to organizational success. Finally, a framework
for the intangible asset social capital gives practitioners a foundation
for developing metrics to quantify the asset.
Future research with this model is planned using a survey
instrument that is being developed. Other avenues of research being
investigated include using secondary data to analyze the constructs and
their relationships. An example of such an approach can be found in
recent social capital research (e.g. Pil & Leana, 2009).
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Janis Warner, Sam Houston State University
Table 1: Definitions and Benefits of Social Capital
Origin Definition Key Benefits Focus
Coleman "Social capital is Enhanced information
(1988) defined by its acquisition
function. It is Transfer of authority
not a single or rights of control Internal
entity, but a
variety of
different entities
having two
characteristics in
common: They all
consist of some
aspect of social
structure, and
they facilitate
certain actions of
individuals who
are within the
structure""
(p.302).
Bourdieu "the aggregate of Access to resources
(1985) the actual or
potential External
resources which
are linked to
possessions of a
durable network of
more or less
institutionalized
relationships of
mutual
acquaintance or
recognition"
(p.248).
Burt (1997) "A function of Access to information
brokerage Timing of information External
opportunities in a acquisition
network" (p.339) Referrals
Lin (2001) "investment in Access to Resources External
social relations
with expected
returns in the
marketplace"
(p.19)
Nahapiet & "the sum of the Access to Resources
Goshal actual and Both
(1998) potential
resources embedded
within, available
through, and
derived from the
network of
relationships
possessed by an
individual or
social unit" (p.
243)
Adler & "The goodwill Enhanced access to
Kwon (2002) available to information
individuals or Improved information Both
groups. Its source quality, relevance
lies in the timeliness
structure and Increased influence,
content of the control, power
actor's social Solidarity of the
relations. Its social network
effects flow from
the information,
influence and
solidarity it
makes available to
others" (p. 23).
