Abstract:
There are two facets of a company: the formal, legally determined
one, which consists in firm’s management and the informal one, based on
mutual trust, which complements the formal structure and helps the
organization achieve prosperity. In this paper we focus on the informal
structure of the firm, identified with social capital, in order to explain how it
can influence the firm’s performance. Social capital can be defined as a
network structure, based on an informal association among the members of
the firm. The mutual trust and the obligations create an informal mechanism,
an instrument which allows the members of the firm to better and easier
achieve their goals. Social capital is considered to be a stable mechanism,
which supports the growth of an organization, by its feedback role: creating
a sustainable development framework. Horizontal association and vertical
integration obtain this framework, which help reaching a consensus in
ranking a company’s priorities. Within a company, social capital usually has
three functions. The first one is to obtain information through networks of
personal contacts maintained by the firm’s owner or managers. They do this
in order to identify and contact clients, to access market information, to
access inputs, and to obtain technical and financial assistance. The second
function is to reduce uncertainty and to better control costs by transacting
with trusted individuals and organizations. Finally, the third function relates
to collective action. Social capital may help companies engage in mutually
beneficial collective actions (such as joint development of a new product,
technology or know-how sharing etc.). We conclude that an efficient
management of the social capital may help a company develop a better
understanding of its competitive environment and improve its motivation and
ability to undertake numerous and complex strategic actions. These
capabilities are essential to long term competitiveness and sustainable
growth.
