Building organizational advantage: social capital in multinational enterprises

Abstract

Purpose

This paper aims to advance the authors' understanding about the functioning of intra‐organizational social connections in creating organizational advantage and operational efficiency in multinational enterprises (MNEs). The focus is on the structural dimension of social capital.

Design/methodology/approach

The study is an empirically grounded case research with three internationally operating manufacturing companies. Each company had set a strategic initiative to exploit customer knowledge more effectively and increase global sales. The study has been conducted in close collaboration with the participating companies. The data comprise interviews and social network surveys.

Findings

The study shows that the structure of relationships constituting social capital consists of not only ties of knowledge transfer but also of sociability and trust. High level of social capital provides for solving complex customer problems, combining expert knowledge, and creation of novel innovations. Trust is needed to build shared understanding and sense of ownership in the subunits. Highly centralized social structure does not allow for solving complex problems and creating new knowledge across organizational boundaries.

Practical implications

For the managers, this study offers insight into the functioning of the social networks as an integral part of operational efficiency in MNEs.

Originality/value

Focusing on the behaviour of the entire network allows for discussing the impact of social structure on the knowledge flows within the firm. The study contributes to the call for empirical work at the systemic level of analysis on knowledge flows in MNEs.

Citation

Lehtimäki, H. and Karintaus, K. (2013), "Building organizational advantage: social capital in multinational enterprises", Competitiveness Review, Vol. 23 No. 4/5, pp. 314-329. https://doi.org/10.1108/CR-03-2013-0025