Playing Well Together: Creating Corporate Social Capital in Strategic Alliance Networks

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Playing Well TogetherCreating Corporate Social
Capital in Strategic Alliance Networks
David Knoke University of Minnesota
Presented at Social Capital and Social Networks
Bridging Boundaries Ohio State University, June
20-21, 2005
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The longest meeting I have with Time Warner
CEO Dick Parsons is when we sit down once a year
and talk about human resources, says Turner
chief Phil Kent. It may not seem like the best
use of a CEOs time, but it turns out to be a
very big deal. All those synergies? Well, you
dont get them if units dont play well with one
another. Parsons may achieve what his
predecessors failed to do dismantle Time
Warners fiefdoms. Division heads say theyre
now encouraged to work together, and they often
do so in ways that give them advantages over the
competition. Stephanie N. Metha. 2006. Will
Wall Street Ever Trust Time Warner? Fortune
15111 May 3084.
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SOCIAL CAPITAL
Social Capital Resources accruing to an ego
actor through direct indirect relations with
its alters that facilitate egos attainment of
its expressive or instrumental goals
Diverse conceptualizations of an actors social
capital

• inheres in the structure of relations between
  persons and among persons (Coleman 1990302)
• at once the resources contacts hold and the
  structure of contacts in the network (Burt
  199212)

• resources embedded in a social structure which
  are accessed and/or mobilized in purposive
  action (Lin 200112)

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Mobilizing Social Capital
Job-seekers, entrepreneurs, work teams try to
deploy their network ties to acquire the use of
resources held by their alters. But, they may
not always succeed in gaining access. Johnson
Knoke (2005) argued that volume of social capital
to which ego actually has access is the aggregate
of resources that ego could probably mobilize
from its alters
SCi ego is social capital from the J alters in
its ego-network pji egos perceived probability
of access to use alter js resources Rj total
resources controlled by alter j that could be
useful to ego i

• Find a simultaneous equation solution for all J
  actors in the system
• Create plausible quantitative measures of the
  two variables
• Identify network and environmental conditions
  that change the probabilities of resources
  flowing across the links from alters to ego

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How much SocCap could EGO mobilize?
R14
p1.8
p4.5
R46
p1.5
p4.8
R27
EGO
p1.2
R53
p1.2
R35
p1.8
R69
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Corporate Social Capital
Corporate Social Capital (CSC) Social relations
embedded in work-related organizational roles
(e.g., workers, teams, executives, owners), not
in their personal networks.
Corporate social capital, then, refers to The
set of resources, tangible or virtual, that
accrue to a corporate player through the players
social relationships, facilitating the attainment
of goals. (Leenders Gabbay 19993)
Social liability incurred as transaction-cost
opportunism (self-interest with guile) A
managers dark side of social capital might
also limit his ability to change the composition
of this network as required by his task
environment (Gargiulo Benassi 1999299).

• Youre obliged to reciprocate a sponsors
  assistance and advice
• - Your friendship with an inept team leader
  blocks your promotion
• - Your mentor insists that you build paint his
  boat dock
• - Attending the boss soirée thwarts your plans
  to watch the Big Game

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Strategic Alliance Networks
Corporate social capital relations span multiple
levels of analysis from individuals, to
workteams, to firms, and organizational field
network (Kenis Knoke 2002). At the IOR level,
repeated alliances generate a strategic alliance
network form of CSC.
Strategic alliance at least two partner firms
that (1) remain legally independent (2) share
benefits, managerial control over performance of
assigned tasks (3) make contributions in
strategic areas, e.g., technology or products
(Yoshino Rangan 1995).
Strategic alliance network the set of orgs
connected through their overlapping partnerships
in different strategic alliances (Knoke
2001128 Todeva Knoke 2002). Firms are
closely tied to one another through many direct
alliances or many indirect ties through third
firms (i.e., partners-of-partners).
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CSC through SANs
A firms ties to organizations in a strategic
alliance network increases its probability of
accessing and using the valuable resources held
by the firms partners, including their

• Financial resources, credit extensions
• Knowledge, information, technologies/patents
• Marketing expertise, country/culture penetration
• Orgl status, corporate/brand reputations
• Trustworthiness and low risk (moral hazards)

Organizations aware of such CSC advantages may
act strategically in pursuing new alliances,
partnering with firms that maximize its CSC
portfolio. At the field-net level, an evolving
strategic alliance network comprises a collective
CSC structure which simultaneously facilitates
and constrains the opportunities for its member
firms.
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Global Information Sector
Basic CSC concepts could help to explain the
evolution of the strategic alliance network in
the Global Information Sector (GIS). This sector
increased collaborative agreements exponentially
1990-2000, creating a complex web of overlapping
partnerships.

• Five NAICS info subsectors (publishing motion
  pictures sound recording broadcasting
  telecomms info services data processing) plus
  computer, telecomm, semiconductor manufacturing
  industries
• 145 multinational corporations 66 USA, 16
  Europe, 15 Asia
• Alliance venture announcements in news media
  from 1989 to 2000
• Total of 3,569 alliances involving two or more
  GIS organizations

Next two figures show mean strategic alliances
among 30 most-active firms MDS
distances/clusters on dyads of annual
partnerships. Altho Japanese firms have higher
probability of mobilizing resources from
compatriots, what corporate social capital
difficulties are they creating for themselves by
concentrating strategic alliances so heavily on
other Japanese partners?
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References
Burt, Ronald S. 1992. Structural Holes The
Social Structure of Competition. Cambridge, MA
Harvard University Press. Coleman, James S.
1990. Social Capital. Pp. 300-321 in
Foundations of Social Theory. Cambridge, MA
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Mario Benassi. 1999. The Dark Side of Social
Capital. Pp. 298-322 in Corporate Social Capital
and Liability, edited by Roger Leenders and Shaul
Gabbay. Boston Kluwer. Johnson, LuAnne R. and
David Knoke. 2005. Skonk Works Here
Activating Network Social Capital in Complex
Collaborations. Advances in Interdisciplinary
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and David Knoke. 2002. How Organizational Field
Networks Shape Interorganizational Tie-Formation
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David Knoke. 2002. Strategische Allianzen und
Sozialkapital von Unternehmen. (Strategic
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Zeitschrift für Sociologie und Sozialpsychologie.
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U. Srinivasa Rangan. 1995. Strategic Alliances
An Entrepreneurial Approach to Globalization.
Cambridge, MA Harvard University Press.