Trust in Social Capital


The ability of trust to make a difference makes it crucial to the management of organizational knowledge processes. Thus, trust is strongly manifest in the concept of intellectual capital through social capital. Nahapiet and Ghoshal (1998, pp. 243–245; Tsai & Ghoshal, 1998) define social capital as "the sum of the actual and potential resources embedded within, and available through, and derived from the network of relationships possessed by an individual or social unit. Social capital thus comprises both the network and the assets that may be mobilized through that network." They divide it into the relational, cognitive and structural dimensions. The relational dimension is concerned with the behavioral embeddedness involving the nature of the relationships developed over time including trust, norms and identity. Normative trust relates to the relational dimension of social capital because norms create predictability and trustworthiness. Moreover, normative trust is manifest in the cognitive dimension of social capital that refers to shared representations, interpretations and systems of meaning, for example, to a shared vision among actors. The structural dimension relates to ties of social interaction such as density, hierarchy, etc., between actors. (See also Coleman, 1988, 1990; Putnam, 1993, 2000; and Adler & Kwon, 2002, for a comprehensive review of social capital.)

We believe that in the future social capital will prove to be more important than has been previously recognized. Traditionally, for example, the crucial role of information professionals has been stressed as enhancing both the generation and organization of information resources and the development of an overall infrastructure also involving the information management function (see Huotari, 2001). Awareness of the impact of the profession on social capital has been less emphasized. Therefore, we also seek to provide greater insight on the interaction between the main factors related to social capital in enhancing the development of organizational knowledge and the management of intellectual capital.

Human behavior within and between organizations is the foundation of social capital. Personal relationships developed over time enable such human interaction that can provide the basis for networked organizational activities. Trust develops within these networks. These networks are unique to an organization. Therefore, human relationships form the basis for collective action and facilitate the exchange of resources and information flows (Nahapiet & Ghoshal, 1998). Thus, differences in types and levels of trust may result in different levels of resource exchange and flows (see also Iivonen & Huotari, 2000). Social capital is owned jointly by the actors in a relationship. Therefore, it encourages collaboration and enables the development of new forms of association and innovative organization. Moreover, the basis for institutional dynamics, innovation and value creation is formed by human contacts in these relationships. If the actors in a relationship trust each other, their ability to cope with complexity and diversity increases their potential to combine knowledge for innovation (Nahapiet & Ghoshal, 1998, p. 245, p. 255; Tsai & Ghoshal, 1998.)

Trust and Organizational Culture and Climate

On the one hand, trust or mistrust has an impact on the context in which it is manifested. On the other hand, the context for carrying out knowledge-based activities is shaped by the organizational culture and climate. An organizational culture embraces two levels: deep-seated ideas and beliefs, and espoused values. These values form part of the cultural knowledge embedded within organizations that may be very tacit in nature. Trust or mistrust is exposed by these values, which also form the basis for social norms. Through trust and social norms, that is through normative trust, organizational culture and climate refer mainly to the relational dimension of social capital, and through shared values it also relates to the cognitive dimension. Through trust, we can rather enhance than prevent knowledge and information related behavior and knowledge creation. For example, Davenport and Cronin (2000) stress that in the development of the tasks of information professionals, it is important to take the contextual factors into account when endeavoring to enhance organizational knowledge creation. Trust also plays a crucial role in turning personal knowledge into organizational knowledge.

Trust as a core value of an organization is stressed by Leonard-Barton (1995, 25), according to whom strategic knowledge assets are core capabilities. These capabilities are created through activities consisting of four interrelated dimensions: physical systems, skills, managerial systems, and values and norms. These dimensions, in turn, relate to all three dimensions of social capital. Understanding KM as the management of organizational expertise puts emphasis on the development of core capabilities requiring continuous learning. Leonard-Barton (1995) points out that knowledge creation occurs by combining people's distinct individualities with a particular set of activities. This combination must be managed, as it enables innovation. Therefore, sensitivity to these activities and their potential combinations is a crucial ability of a successful manager (see also Prahalad & Hammel, 1990.)

However, trust must be embedded in organizational culture enabling the sharing of knowledge and information, as well as learning for the creation of new knowledge. For example, we recognize the following features in an organizational culture as signs of lacking trust, as identified by Pfeffer and Sutton (2000), preventing the conversion of knowledge into action. This happens, for example, when talk substitutes for action, when memory is a substitute for thinking, when fear prevents acting on knowledge, when measurement obstructs good judgment, and when internal competition turns friends into enemies. It is somehow amazing that although these features are so damaging to organizations and the people there, they are nevertheless very common. A means to overcome these problems might be to foster normative trust. This requires engendering a shared purpose and a shared identity for an organization.

Our view of the role of trust is also supported by McInery (2002, p. 1014), who favors the development of a knowledge culture that encourages learning and sharing of what is known. She believes that trust and dialogue are the necessary means for building a culture that offers the continual creation and sharing of knowledge. By referring to Shaw (1997), she states that trust allows people to communicate openly and without fearing that the knowledge shared will be used unethically. Moreover, she brings to the surface the fundamental role of trust in on-line communities.

Normative trust is essential to create organizational knowledge that refers to something that is commonly known. Organizational knowledge provides a way to make a difference between what is known by an individual and by a group or other social entity. The creation and maintenance of trust, and the norms of the behavior it engenders, are important factors in enabling knowledge sharing, for example, in communities of practice. Because of the informal nature of communities of practice, it has been stressed that trying to manage the tasks of these communities by formal means is the best way to "kill" these social communities.

An impressive example of the innovative power of the social collectivity of this type is presented by Tuomi (2002), who provides a thorough analysis of the development of the Linux operating system based on an open source development model. It was developed by an informal self-organizing social community and is today challenging Microsoft's market dominance. Tuomi emphasizes that Linux development is characterized as a practice and form of social life, and cannot be explained by any single financial driving force. Instead, it is based on a complex interaction between social practices and technology where "the technological artifact can be seen as a side-effect of the fact that people live and construct their identities in a social world that is organized around this technological artifact, which then becomes the stage for feats and congregations, and the centre of community life" (p. 217). This relates to the establishment of an organizational culture that promotes more autonomous means for performing tasks. For example, such facilitators as boundary spanners, roamers or outposts have been suggested as an import component of the infrastructure of communities of practice contributing to the diffusion of knowledge across and between communities. (See Davenport, 2002, for an empirical application of the idea.)

We, moreover, believe that communication and extensive knowledge and information sharing is not likely to happen in an atmosphere of mistrust. Furthermore, Davenport and Prusak (1998) pay attention to the role of trust in transferring information and in knowledge work by noting that: "Trust can trump the other factors that positively affect the efficiency of knowledge market. Without trust, knowledge initiatives will fail, regardless of how thoroughly they are supported by technology and rhetoric and even if the survival of the organization depends on effective knowledge transfer" (p. 34). Empirical studies likewise support this notion. A study on KM at the European Bank for Reconstruction and Development showed that trust, technology and ownership were the major influential factors for knowledge sharing (see Babeira, 1999). Orlikowski (1993) examined the implementation of the groupware product Notes within an international corporation providing consulting services worldwide. The findings suggested that in competitive and individualistic organizational cultures, where people are not used to sharing their knowledge and expertise, the groupware technology does not give the expected benefit.

Because the critical areas of an organizational culture vary on different industrial sectors and organizational levels (Huotari, 1998), these differences should be taken into consideration when developing appropriate strategies to enhance the conversion of individual knowledge into organizational knowledge through collaboration and knowledge and information sharing. Sometimes failures with the factors related to the relational dimension of social capital may cause problems in the cognitive dimension and thus also in the development of the structural dimension. Nooteboom (2002, pp. 23–29) explains the problems of not adapting to the use of new technology with the intangible nature of tacit knowledge within organizations and the problems of criticizing it. He emphasizes the importance of decreasing the cognitive distance of network members by establishing so called "epistemic communities" of shared mental categories, meanings and interpretations. This may even call for the establishment of shared values between collaborators to increase normative trust. Therefore, we believe that the effective management and application of knowledge and information is to a large extent an outcome of successful leadership.

Trust and Collaboration

Collaboration is a cornerstone of social capital and a necessary form of accomplishing tasks in knowledge-based organizations.It is strongly related to trust and networking. Collaboration is related to all three dimensions of social capital. We can assume that through the cognitive and relational dimensions it also has a strengthening impact on the structural dimension. Collaboration can be defined as human behavior, sharing of meaning and completion of activities with respect to a common goal that takes place in a particular social or work setting (Sonnenwald & Pierce, 2000). Like trust, collaboration enables the conversion of individual knowledge into organizational knowledge. Trust has an effect on collaboration and the development of the structural dimension because it produces more interactions between the interdependent members of an organization or a network. Therefore, the enhancement of trust in collaboration is crucial for knowledge creation.

Problems in collaboration may have an impact on the cognitive dimension. Partners' different background and expertise may increase their cognitive distance and inhibit collaborative efforts. Sonnenwald (1995), who studied collaboration in a design project, claims that problems such as impeding collaboration appear because the partners bring not only their models of work and organization and personal beliefs, but also their own world lives to the collaboration process. We can assume that trust strengthens the cognitive and relational dimensions and has a crucial role as a communicative sense-making process in such a situation.Without trust, different opinions and views could easily be interpreted to be hostile and the benefits of collaboration would be lost. Here, too, the development of normative trust may produce the required effects on collaboration.

Networking makes collaborative ability a critical factor. Therefore, collaboration as a behavioral model should be encouraged and enhanced by applying appropriate strategies. Iivonen and Harisalo (1997) identified three main strategies to increase collaboration in work communities:

  1. Improving the openness of the work community.

  2. Crossing the boundaries which impede the collaboration.

  3. Sharing and increasing knowledge.

These strategies are closely related to the organization's communicative and sense-making processes to cross borderlines and bridge gaps between various groups. Therefore, they also foster the growth of trust. Moreover, they can be applied to strengthen the relational, cognitive and structural dimensions of social capital. The openness of work communities means both good communication practices and understanding of the work done by other people in the same organization. Open work communities are essential for new knowledge creation and use because processes related to the identification, acquisition, storage, sharing, and distribution of information for knowledge creation do not work effectively in closed organizations (see Wid n-Wulff, 2001).

In many organizations there may be both visible and invisible borders to be crossed. These borders may relate to the relational and cognitive dimensions of social capital. The strategies applied should include incentives to boundary spanning behavior because these organizational borderlines prevent human contacts and, consequently, information flows. Thus, they also impede the development of the structural dimension of social capital. Visible borderlines can be found, for example, between various units and departments, invisible ones, in turn, between generations, genders, or individuals with disparate educational backgrounds, worldviews and mental models. Cognitive distance exists where invisible borderlines are strong. Knowledge sharing helps to decrease cognitive distance and enhances knowledge creation and use within organizations. Moreover, it increases inter-organizational learning through collaborators' ability to learn from each other. At the same time it offers an opportunity to learn to collaborate. Communities of practice can become the foundation for this learning.

Trust has an impact on the structural dimension of social capital. Trust in collaborators' relationships allows frequent contacts and sharing of knowledge in practice for the generation of new knowledge. Trust can emerge in relationships of this kind because these activities may be heavily routinized in nature and also have evolved informally. This signifies the role of knowledge sharing that requires that communication also be established, maintained, and facilitated between experts and novices (Blair, 2002, p. 1022).

We can infer that organizational structure can also have an impact on knowledge sharing and the type of trust or mistrust developing within an organization. An empirical study by Tsai (2002) highlights the impact of organizational structure on knowledge sharing. He examined knowledge sharing in a multi-unit organization where units compete against each other. The findings indicate that formal hierarchical structure, in the form of centralisation, has a significant negative effect on knowledge sharing. Informal lateral relations, in turn, in the form of social interaction, have a significant positive effect on knowledge sharing among units that are competing against each other in the market place, but not among units competing for internal resources. This means that external market competition, rather than internal competition for resources, influences knowledge sharing. Social interaction allows units to accumulate social capital to access knowledge or new information. These knowledge and information flows require interaction to promote trust and to reduce perceived uncertainty about providing or acquiring new knowledge to other units (see also Hansen, 2002).

In our view the relationship between collaboration and trust is a two-way relationship. On the one hand, real collaboration pre-supposes trust. People who do not trust each other do not give their best to collaboration. As Fukuyama (1995, p. 27) says, "...people who do not trust one another will end up cooperating only under a system of formal rules and regulations, which have to be negotiated, agreed to, litigated, and enforced, sometimes by coercive means." Instead, if they trust each other, they will appreciate collaboration that they are involved in, and thus also their commitment to it. On the other hand, trust can be learned in organizations through collaboration. When people work together, they can learn to trust each other and find that they will win and succeed simultaneously with their partners. Because trust is based on our own experiences, we need opportunities to learn it in our own lives. Real, honest collaboration offers such an opportunity.

Because learned trust is based on our own experiences, collaboration offers an opportunity to generate trust. However, in certain circumstances people have to collaborate without a history of working together or having had the opportunity to learn trust. Davenport and McLaughlin (2004) consider trust in on-line communities elsewhere in this book. They also pay attention to the concept of swift trust.

Swift trust refers to trust that is based on sharing meanings. It can be developed and maintained rather quickly in social interaction through a clear definition of roles and responsibilities, and handling of disagreements effectively.

The understanding of the social nature of knowledge is manifested, for example, in Nahapiet and Ghoshal's (1998) view of the nature of intellectual capital. They refer to Brown and Duguid's (1991) analysis of communities of practice by stating that "social learning is located in complex, collaborative social practices" and continue that "Intellectual capital stresses the significance of socially and contextually embedded forms of knowledge and knowing as a source of value differing from the simple aggregation of the knowledge of a set of individuals" (Nahapiet & Ghoshal, 1998, p. 246). They provide a comprehensive theoretical analysis for understanding the creation of intellectual capital facilitated by social capital as the processes of combination and exchange of resources to innovate.

Tsai and Ghoshal (1998) also gained empirical support for the hypothesis that social interaction and trust had the potential to increase knowledge creation through resource exchange and combination and to enhance trustworthiness, whereas a shared vision did not. They conclude that inside a firm social interaction and shared vision are two different sources of trustworthiness. Their thesis is that, via its influence on trust, a shared vision can influence resource exchange and pooling only indirectly. Moreover, resource exchange and combination created value for the firm through a significant, positive effect on product innovations (p. 472). Therefore, they conclude that each dimension of social capital reinforces the creation of other dimensions. They also strongly advocate the use of network analysis to understand organizational phenomena.




L., Iivonen M. Trust in Knowledge Management Systems in Organizations2004
WarDriving: Drive, Detect, Defend, A Guide to Wireless Security
ISBN: N/A
EAN: 2147483647
Year: 2004
Pages: 143

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