Managing Organizational Social Capital through Value Configurations

• Date: 01 March 2014
• Author: Georg von Schnurbein
• Published date: 01 March 2014
• DOI: http://doi.org/10.1002/nml.21096

Managing Organizational

Social Capital through Value

Configurations

Georg von Schnurbein

University of Basel

Nonprofits are said to serve as places for the reproduction of

social capital. However, little is known about how to manage

social capital in a nonprofit. This article presents a theory-

based perspective on how to plan, execute, and measure social

capital production in a nonprofit organization. By using the

concept of value configurations as a method to analyze and

describe the creation of organizational social capital, bonding

and bridging social capital can be managed in alternative

ways. In a value shop framework, the participants are more

homogeneous, and growth is heavily based on referrals and

reputation as well as the quality of the members. Organizations

managed as value shops will foster bonding social capital. In

contrast, a value network framework incorporates more likely

heterogeneous, multilevel participants that add legitimacy

to the network. Organizations in this framework will strengthen

the evolution of bridging social capital.

Keywords: bridging social capital, bonding social capital,

competitive advantage, strategic analysis, value configuration

SOCIAL CAPITAL HAS GAINED a great amount of attention as a con-

cept for explaining nonprofit organizations’ added value to so-

ciety (Bryce 2006). Understood as “networks, norms, and

trust that enable participants to act together more effectively to

pursue shared objectives” (Putnam 1995, 664–65), social capital

can be an individual or a collective asset that is stored in the rela-

tionships among individuals, groups, or organizations. From an

Correspondence to: Georg von Schnurbein, Centre for Philanthropy Studies, Univer-

sity of Basel, PO Box 4653, 4002 Basel, Switzerland. E-mail: georg.vonschnurbein@

unibas.ch.

NONPROFIT MANAGEMENT & LEADERSHIP, vol. 24, no. 3, Spring 2014 © 2013 Wiley Periodicals, Inc 357

Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/nml.21096

358 VON SCHNURBEIN

Nonprofit Management & Leadership DOI: 10.1002/nml

economic perspective, social capital reduces the transaction costs

associated with formal coordination mechanisms such as con-

tracts, hierarchies, and bureaucracies (Fukuyama 2001).

The linkages between nonprofits and social capital have been

described at several levels in existing literature. For the analysis of

social capital at the macro-level of communities, regions, or states,

the prevalence of nonprofits serves as a measure of social capital

(Coffé and Geys 2007; Huntoon 2001; Putnam 1993). Putnam

(2000) stated that social capital is a more powerful predictor of phi-

lanthropy than financial capital. Accordingly, social capital has been

described at the level of the individual person as an asset that fosters

giving and volunteering as major contributions to nonprofit organi-

zations (Brown and Ferris 2007; Isham, Kolodinsky, and Kimberly

2006). At the level of the organization itself, prior studies have

claimed the usefulness of social capital in creating organizational

effectiveness (Passey and Lyons 2006; Prusak and Cohen 2001;

Schneider 2009). Nonprofit organizations—especially associations—

are reputed to reproduce social capital (Leonard and Onyx 2003;

Wollebaek and Selle 2002). Especially, recent literature has focused

on different types of social capital, differentiating the bonding and

bridging functions of social capital as resulting from different forms

of nonprofits (Leonard and Bellamy 2010; Passey and Lyons 2006).

Although there is growing literature on the forms and the meas-

urement of social capital in nonprofits, little attention has been paid

to the question of how to manage and improve social capital in non-

profits. Several reasons exist for this neglected perspective. First, it

is unclear whether social capital should be managed as an individ-

ual asset of nonprofit leaders or as an organizational resource (King

2004). Second, because social capital is inherent in social relations,

it is always the by-product of other activities or purposes (Coleman

1990). Thus, it is difficult to separate the reproduction of social

capital from the primary activities that it is associated with. Finally,

and as a consequence, social capital cannot be measured directly. So

far, the analysis of social capital has relied on indicators at the

organizational and individual levels, which impedes any clear

description of what is to be managed and how social capital devel-

ops over time. Consequently, Prusak and Cohen (2001) observed a

lack of research on how managers can invest in their organization’s

stock of social capital.

In the present article I aim to develop a conceptual understand-

ing on how to analyze social capital production in a nonprofit

organization. I use the concept of value configurations developed by

Porter (1985) and Stabell and Fjeldstad (1998) as a method to ana-

lyze and describe the creation of organizational social capital. The

underlying idea is that social capital increases the use or creation of

other capital forms, for example, financial, intellectual, or cultural

capital.