Recruiting and Deploying Social Capital in Organizations: Theory and Evidence

The paper advances the argument that social capital operates on both the supply and demand sides of the labor market. Organizations have significant needs for employees with social capital capacity and skills as they do with human capital. We articulate a theory on why organizations have such needs and how social capital may be differentially and strategically deployed to different positions. Specifically, three types of positions (the top positions, the edge positions, and the exchange-oriented positions) are identified with such needs. We formulated two hypotheses derived from the theoretical articulation: (1) the deploying hypothesis – organizations are expected to strategically recruit and deploy workers with social capital capacity and skills to such key internal and edge positions and (2) the institutional contingency hypothesis – organizations in the more competitive environment (e.g., the private sector) are more likely to show such differential deployment than those in the less competitive environment (e.g., the state sector). The hypotheses were subjected to an empirical examination with a set of firm data from China. Both hypotheses were confirmed. Further, we also found evidence for differential deployment of human capital (education and experience) and hierarchical capital (statuses of prior positions and organizations) in different sectors. We discuss the implications of the theory and findings for future research on organizations in different economic sectors beyond China and how a theory of deploying various types of capital – social capital, human capital, and hierarchical capital – in different economic sectors may be developed.