Social Capital in the Asia Pacific

Examples from the Services Industry

Yuliani Suseno, Chris Rowley

• Publisher: Routledge
• Year: 2020
• Topic: Business
• eBook ISBN:
  9780429785092
• Subtopic: Business General
• Index: Business

Social capital is broadly conceptualised as consisting of resources and network ties embedded in the social structures and relationships that facilitate beneficial outcomes for the actors within those structures. Despite the number of research studies on social capital, there have been fewer attempts to examine social capital in the context of service-oriented firms, particularly in the Asia Pacific. This is surprising as the service industry plays an important role in the global services trade transactions and business activities. Social capital enables and maintains social relations for business transformation for service-oriented firms. Indeed, it would be unimaginable for any economic activity, particularly in service-oriented firms, to occur without social capital.

This examination of social capital in the Asia Pacific region provides the context for recognising the cultural, social and economic opportunities and challenges of several Asia Pacific countries that can potentially enrich our knowledge and understanding of the region. Contributions are drawn from cases based in Thailand, Indonesia, South Korea, China and Australia, for relevant application in the areas of social capital and service-oriented firms in the Asia Pacific.

This book was originally published as a special issue of the Asia Pacific Business Review.

Spilling the social capital beans: a comparative case study of coffee service enterprises within Asia-Pacific

Aaron Tham, David Fleischman and Peter Jenner

ABSTRACT

Despite the importance of social capital to organizational performance, there is scant insight within service contexts. Accordingly, this research explores social capital in two Asia-Pacific service enterprise cases – a Thai coffee franchise and a Coffee Roasters Guild in Australia. In the Thai case, social capital in the service experience emerged from norms common in Thai society and manifested via social enterprise initiatives. Findings from Australia indicate social capital helps form a strong organizational identity leading to better economic and social outcomes and an enhanced service experience, benefiting numerous stakeholders. The study demonstrates varying patterns of social capital in Asia-Pacific service enterprises, contributing to theory and practice.

Introduction

Social capital theory (SCT) emerged from the work of sociologists and political scientists (Bourdieu 1986; Coleman 1988; Putnam 1993). With its focus upon social relationships, SCT has evolved into ‘a whole field of research’ and increasingly found application in business (Kwon and Adler 2014, p. 412). Hence, the understanding of social capital as an ‘organisational advantage has received considerable theoretical attention over recent years’ (Lee 2009, p. 248). As a valuable asset inhered in social relations and their associated networks (Nahapiet and Ghoshal 1998; Lin 1999), social capital helps organizations access important resources, influence and support, representing a potential source of competitive advantage (Adler and Kwon 2002). Research has identified social capital as advantageous to organizations in a variety of contexts (Li, Barner-Rasmussen, and Bjorkman 2007; Lee 2009 ). For example, research demonstrates benefits in organizational areas such as entrepreneurial opportunity (Martinez and Aldrich 2011; McKeever, Anderson, and Jack 2014), information sharing and knowledge transfer (Levin and Cross 2004; Maurer, Bartsch, and Ebers 2011), innovation and the development of new practices (Gilsing and Nooteboom 2005; Huggins and Johnston 2010), resource exchange and lower transaction costs (Tsai and Ghoshal 1998; Uzzi 1999), collaboration (Brunetto and Farr-Wharton 2007), the performance of SMEs (BarNir and Smith 2002), social businesses (Jenner and Oprescu 2016) and the internationalization of firms (Pinho and Prange 2016). However, Petrou and Daskalopoulou (2013) note the knowledge and application of social capital within service contexts remains under-researched.

In Asia-Pacific, one area of limited social capital scope is the coffee service context. Over the last thirty years, the coffee industry has undergone significant change. The rise of democratically controlled cooperatives have provided small farmers and communities with better organizational capital, economies of scale and more control over their livelihoods (Simpson and Rapone 2000). Likewise, Pine and Gilmore (1999) argue the consumption of coffee has transformed an agrarian commodity to one that is a manifestation of an experience economy. The experience economy has emerged for various reasons, including consumer literacy and a quest to know how food has been produced (Xie, Bagozzi, and Troye 2008; Antonio 2015). Consequently, consumers want and require a consumption experience, and are often thought of as ‘prosumers’ actively involved in service experiences (Humphries and Grayson 2008; Ritzer and Jurgenson 2010). The coffee service experience is illustrative of that desired experience.

Given the trends reflecting the sophistication of coffee cultures and consumers in the experience economy, recent literature has focused on coffee production and consumption as a tool for achieving economic and social development goals – often under guises like ‘fair trade’ (Simpson and Rapone 2000; Utting 2009; Ruben and Fort 2012). In fact, social capital plays an important role in the development of organizations with combined social and economic objectives (Meyskens, Carsrud, and Cardozo 2010). Thus, social capital is likely fundamental in the evolution and operation of the coffee service experience, but how it is developed and appropriated by such enterprises remains under-researched (Elder, Zerriffi, and Le Billon 2012; Ruben and Heras 2012).

To address this gap, a comparative case study approach is utilized to examine how two Asia-Pacific coffee service enterprises adopt social capital to enhance their coffee service experience. Resultantly, the study makes two main contributions. First, the study contributes to theory by building on existing social capital frameworks. In particular, the cross-comparative cases in the study offer insight to additional components that may be adapted in existing social capital frameworks, providing better theoretical understanding of social capital in varying service enterprise types and differing Asia-Pacific regions. Second, the study reveals how social capital manifests within the coffee service experience. This contributes practical insight for various types of service enterprises operating within Asia-Pacific to foster and apply social capital for the benefit of all stakeholders.

The study progresses as follows. The SCT literature is overviewed before the coffee service experience in the Asia-Pacific region is considered. Next, the method is detailed, followed by the findings of two coffee service enterprises, highlighting the development and application of social capital in each case. A discussion of the cases follows, resulting in adaptations to existing social capital frameworks. Contributions, future research directions and limitations conclude the study.

Background literature

Social capital

Social capital is an asset emanating from the interactions, networks, norms and trust of social relations (Coleman 1988; Bourdieu 1986; Putnam 1993 ). Representing ‘the goodwill that is engendered by the fabric of social relations’, social capital delivers beneficial access to ‘information, influence and solidarity’ (Adler and Kwon 2002, pp. 17–18). Such benefits may accrue at individual (Lin 1999), organizational, (Nahapiet and Ghoshal 1998) or communal network levels (Kwon and Adler 2014).

For an organization, social networks deliver a range of benefits. These include: collaboration (Brunetto and Farr-Wharton 2007), access and exchange of resources (Burt 1992, 1997; Tsai and Ghoshal 1998), access to information (Adler and Kwon 2002), knowledge transfer (Levin and Cross 2004; Maurer, Bartsch, and Ebers 2011), new business practices and innovation (Gilsing and Nooteboom 2005; Huggins and Johnston 2010), reduced transaction costs (Coleman 1988; Uzzi 1999), development of entrepreneurial opportunities (McKeever, Anderson, and Jack 2014) and the internationalization of firms (Pinho and Prange 2016). Accordingly, Kwon and Adler (2014, p. 412) state, ‘there is no longer much need to refine and demonstrate the value of the overarching concept, but research can usefully continue to expand on specific aspects and mechanisms of social capital as they are relevant to specific disciplines and topics’. So, while organizational benefits of social capital are widely understood at the macro-level, there remains an absence of research examining how social capital is developed and appropriated in service contexts, such as the coffee service experience, hence the point of this study.

The development of social capital

Net works are pivotal in the mobilization of social capital. They provide access to the value inherent within relationships (Granovetter 1973; Bourdieu 1986; Adler and Kwon 2002 ). The intrinsic value of any network is therefore dependent on the relative strength and quality of its connections (Granovetter 1983). This has led to two important conceptualizations. First, closed or ‘bonding’ networks can eventuate from strong connections and bind members of a group or community (Coleman 1988; Putnam 1993; Woolcock 1998). Such networks typically display a high degree of homogeneity resulting from shared values, beliefs and norms leading to a prominent degree of trust and reciprocity (Coleman 1988; Portes 2000). Thus, strong closed networks provide opportunity for information sharing, support and cooperation (Woolcock 1998; Adler and Kwon 2002; Kwon and Adler 2014), and are advantageous for community development (Putnam 1993). They also fortify cooperation amongst a group due to group obligations of trust, and the potential of sanctions for un-cooperative members (Coleman 1988). Weaker network connections are also important and can lead to more open or ‘bridging’ networks (Burt 1992, 1997; Putnam 1993). These networks are comprised of heterogonous relationships and offer greater access to diverse information and influence (Burt 1992, 1997; Adler and Kwon 2002).

Both bonding and bridging networks offer advantages and disadvantages (Lin 1999; Gilsing and Nooteboom 2005), which vary depending on strength of connection and context (Granovetter 1983; Levin and Cross 2004). For example, strong homogenous (bonding) networks may suffer from a lack of new information and innovation, stifling economic activity (Uzzi 1999). Whereas weaker heterogeneous (bridging) networks provide avenues for new information, but may lack strong collective values (Granovetter 1983; Burt 1992, 1997). The most effective networks typically possess and balance strong (bonding) and weak (bridging) connections (Hoang and Antoncic 2003).

Moving beyond a predominant focus on the relational aspects of networks (i.e. bridging and bonding), Adler and Kwon (2002) developed a conceptual framework (Figure 1) of social capital addressing the reality of organizational networks. They argue other contingent factors, also impact the value of the social capital for organizations. They posit contingent factors as: (1) the opportunity provided by the network structure for interaction and transaction; (2) the inherent norms and values within the network, of which trust is a key element, providing the motivational force within network interactions; and (3) individual stakeholders’ ability to access and utilize capabilities and resources within networks (Adler and Kwon 2002; Kwon and Adler 2014).

The framework illustrates the importance of the contingent factors of opportunity, motivation via trust, and stakeholder ability, along with external hierarchical and market forces that influence and moderate social capital development in organizations. For this study, the framework offers a foundation to consider the development and application of social capital in different industries, such as services.

Extant literature demonstrates support for these contingent factors and others. For example, an individual’s personality characteristics and skills, such as the ability to network with relevant stakeholders, are vital in the creation and maintenance of relationships (Adler and Kwon 2002; De Koning 2003), making social skills important (Baron and Markman 2000). Moreover, the ability to utilize network connections to access beneficial resources also influences the effectiveness of a network (Adler and Kwon 2002; De Koning 2003). Thus, the strategic ability of an organizational leader is also salient, given enterprises make a range of decisions in attaining goals through the strategic utilization of their relationships (Burt 1997; Adler and Kwon 2002; Jenner and Oprescu 2016). Lack of expertise in leveraging existing network relationships may dilute social capital benefits, despite an individual’s motivation (Adler and Kwon 2002).

Figure 1. A conceptual model of social capital. Source: Adler and Kwon (2002).

Motivation is another important antecedent to social capital development (Lin 1999 Adler and Kwon 2002). The source of motivation emanates from shared values, norms and trust of a group (Coleman 1988; Putnam 1993; Leana and Van Buren 1999). When present, such motivation is akin to notions of collective social capital (Portes 2000), and may lead to beneficial sharing of resources and support to other network members (Adler and Kwon 2002). In the context of an enterprise with economic and social goals, such as a coffee guild or socially driven coffee franchise, motivation is likely influenced by collective values, goals and associated trust in relation to the community (Jenner and Oprescu 2016).

Trust is a central tenet to the development and value social capital represents to an organization. Trust emanates from a willingness to be vulnerable and rely on others (Nahapiet and Ghoshal 1998; Brunetto and Farr-Wharton 2007). It underpins the collaboration, support and reciprocity associated with strong networks (Putnam 1993; Woolcock 1998). Trust also influences the complexity and level of exchanges within relationships (Gilsing and Nooteboom 2005). When trust is established, it enhances stakeholder benefits in networks (Adler and Kwon 2002; Nahapiet and Ghoshal 1998). Stakeholders are more likely to collaborate and undertake mutual exchange of resources (e.g. knowledge, skills) when trust is strong, which are critical for developing and supporting social capital (Nahapiet, Gratton, and Rocha 2005).

Overall, SCT is mature area of study with the critical elements well established in several areas of organizational research (Kwon and Adler 2014). For example, research has investigated broad organizational operations (Burt 1997; Nahapiet and Ghoshal 1998; Andrews 2010; Maurer, Bartsch, and Ebers 2011), entrepreneurial activity (Martinez and Aldrich 2011; McKeever, Anderson, and Jack 2014), SMEs (Brunetto and Farr-Wharton 2007; Pinho and Prange 2016), not-for-profit organizations (Jenner and Oprescu 2016), economic and regional development (Woolcock 1998; Hayami 2009) and multi-national environments (Tsai and Ghoshal 1998; Levin and Cros...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• Citation Information
• Notes on Contributors
• Preface
• Introduction: reflections on research on social capital and the services industry
• 1 Spilling the social capital beans: a comparative case study of coffee service enterprises within Asia-Pacific
• 2 Disruptive innovation and the creation of social capital in Indonesia's urban communities
• 3 Selling trust in cyber space: social networking service (SNS) providers and social capital amongst netizens in South Korea
• 4 The effect of technology management capability on new product development in China's service-oriented manufacturing firms: a social capital perspective
• 5 Beyond 'know-what' and 'know-how' to 'know-who': enhancing human capital with social capital in an Australian start-up accelerator
• Conclusion: future directions for research on social capital and the services industry
• Index