The Dark Side of Social Capital

Abstract

Research on social capital has stressed the advantages that networks can bring to managers and other economic actors. The enthusiasm with this ‘bright side’ of social capital, however, neglects the fact that social bonds may at times have detrimental effects for a manager and produce social liability, rather than social capital. This chapter tries to correct the optimistic bias by looking at the ‘dark side’ of social capital. Continuing benefits from social capital require that managers can adapt the composition of their social networks to the shifting demands of their task environment. This often implies the ability to create new ties while lessening the salience of some of the old bonds—if not severing them altogether. Available evidence, however, suggests that this ability may be encumbered by the same relationships purportedly responsible for the prior success of the manager. When and how this may happen is the central question we address in this chapter. We argue that strong ties to cohesive contacts limit a manager’s ability keep control on the composition of his network and jeopardize his adaptability to changing task environments, which damage the corporate social capital of the organization. We test our ideas with data on managers working for a special unit of a high-technology firm operating in Europe.