Social Capital, Reputational Capital and Organizational Performance

Researchers have established a strong emphasis on the value of intangible resources for increased organizational performance. The RBV of organizations attribute that variation in the heterogeneity of organizations resources can expedite the performance of organization In the recent times of information technology, information creation and knowledge sharing are becoming more powerful tools to run a business. Although we cannot negate the importance of physical facilities, the intangible facilities are coming to the forefront.

Organizational reputation is an important intangible resource for the organization when the competition cannot match the value or prestige associated with a particular organization. Similarly, social capital creates a network of association, trust and reciprocity among the members of an organization, which can create an unbeatable workforce for it to sustain organizational performance.

Under the umbrella of social responsibility activities with internal and external stakeholders, different activities help an organization build certain intangible resources to the organization, such as social and reputational capital. Research identifies a strong link between strategic management of human resources to social capital creation, which is possible through manifestation of a responsible behavior to employees. Similarly, many researchers have concluded that good reputations as a result of an organization’s behavior as a responsible citizen are an important intangible resource for an organization, which can increase organizational productivity.

The role played by knowledge in providing a strategic advantage to firms has been of interest to academics and practitioners alike. In recent years, constructs such as social capital and reputation, where such knowledge may be embedded have aided the development and integration of ideas from other disciplines such as sociology into mainstream strategy literature.