Organizational Size and Social Capital in the Public Sector
| Date | 01 March 2017 |
| Published date | 01 March 2017 |
| Author | Rhys Andrews |
| DOI | 10.1177/0734371X16643575 |
| Subject Matter | Articles |
research-article2016
Article
Review of Public Personnel Administration
2017, Vol. 37(1) 40 –58
Organizational Size and
© The Author(s) 2016
Reprints and permissions:
Social Capital in the
sagepub.com/journalsPermissions.nav
DOI: 10.1177/0734371X16643575
journals.sagepub.com/home/rop
Public Sector: Does
Decentralization Matter?
Rhys Andrews1
Abstract
Organization theory suggests that the strength of the ties between employees is likely
to be weaker in large organizations, but that decentralization of decision making can
help generate norms of collaboration, trust, and shared mission. This article explores
the separate and combined effects of size and decentralization on perceptions of
organizational social capital in central government agencies in Europe. The statistical
results suggest that there is a negative relationship between organization size
and organizational social capital and a contrasting positive relationship between
decentralized decision making and social capital. Further analysis revealed that
decentralization of key decisions can overcome the internal social dysfunctions
associated with being a big organization. Theoretical and practical implications are
discussed.
Keywords
organizational social capital, organization size, decentralized decision making, civil
service, quantitative methods
Introduction
The literature on human resource management within the public sector is currently
expanding at an ever increasing pace (Burke, Noblet, & Cooper, 2013). Even so, there
has been comparatively little systematic analysis of the organizational influences on
the norms of collaboration, trust, and shared mission among public servants, despite
1Cardiff University, Cardiff, UK
Corresponding Author:
Rhys Andrews, Cardiff Business School, Cardiff University, CF10 3EU, UK.
Email: AndrewsR4@cardiff.ac.uk
Andrews
41
calls for research on the role that such social capital might play in public sector orga-
nizations (Pil & Leana, 2009; Tantardini & Kroll, 2015). In particular, little is known
about the impact of organizational size and structure on the strength of the social capi-
tal, which underpins the capability to “deliver” within civil service organizations—
public sector agencies noted for the labor intensity of their work. In fact, few previous
studies undertaken in the public or private sector have analyzed the determinants of
organizational social capital (Payne, Moore, Griffis, & Autry, 2011). Of those that do,
most examine individual antecedents (e.g., Parzefall & Kuppelweiser, 2012) or are
concerned only with the antecedents of social networking (e.g., Burt, 1997). In this
article, the focus is on organizational antecedents of a multidimensional measure of
organizational social capital, with a particular emphasis on the organizational size–
social capital relationship in the public sector.
Classical organization theory suggests that strength of the ties between employees
is likely to be weaker in large organizations, for the simple reason that the average
quantity (and therefore quality) of contact between individual organizational members
is much less (Caplow, 1957). At the same time, classic theories of public administra-
tion, as well as principal-agent theories, suggest that decentralization of decision mak-
ing can help generate norms of collaboration, trust, and shared mission where senior
management faces problems of bounded rationality (Simon, 1976), collective integra-
tion (Selznick, 1957), and information asymmetry (Miller, 1992). This may be espe-
cially important within the large professional bureaucracies found in the public sector,
as such organizations rely upon high levels of worker autonomy and close personal
relationships to get things done (Nigro, Nigro, & Kellough, 2006). Despite widespread
recognition of these distinctive aspects of the “human side” of public service organiza-
tions, the role that the size and structure of organizations might play in determining the
strength of organizational social capital in civil service organizations has rarely been
examined. Do big public organizations have lower levels of internal social capital?
Can decentralized decision making strengthen the bonds between organizational
members? Might decentralization hold the key to building social capital in large public
bureaucracies?
To answer these questions, the interrelationships between size and decentralized
decision making and perceptions of organizational social capital are examined in cen-
tral government agencies using data drawn from a comparative large-N survey of
senior public sector managers in Europe. The article begins by exploring theoretical
perspectives on size, structure, and social capital, developing hypotheses about the
separate and combined effects of size and decentralization on organizational social
capital. Following that the data and methods employed in the study are described, and
the results of the statistical analyses that are carried out are reported. The article con-
cludes by exploring the theoretical and practical implications of the findings.
Organization Size and Social Capital
According to knowledge-based theories of the firm, organizations are “social com-
munities where individual and social expertise is transformed into economically
42
Review of Public Personnel Administration 37(1)
useful products and services” (Kogut & Zander, 1992, p. 384). Positive relationships
between employees can be regarded as collectively owned “assets” which can facili-
tate the transfer of knowledge required to achieve organizational improvements
(Nahapiet & Ghoshal, 1998, p. 243). These collective assets take the form of three
types of social capital, which may enable the unlocking of expertise that can positively
influence organizational outcomes: structural (connections among actors), relational
(trust among actors), and cognitive (shared goals and values among actors; Nahapiet
& Ghoshal, 1998).
Although the presence of strong interpersonal connections, high levels of trust, and
a shared sense of mission among organizational members may bring organizational
benefits, theorists of social capital emphasize that such relationships cannot be taken
for granted. Rather, the development of social capital requires purposeful investment
of time and money in the design of organizational structures and routines conducive to
its growth (Barney, 1991). Likewise, cultural theories of public administration empha-
size the need for organizational leaders to foster identification with the organization
and its mission (Selznick, 1957). This may mean addressing potential barriers to the
emergence of connections, trust, and shared mission, as much as cultivating positive
member behaviors. According to Coleman (1990), a high level of mutual interdepen-
dence is one of the main sources of social capital. Institutional forces that weaken
relationships between individuals may therefore be especially likely to hamper efforts
to build social capital. One such factor is the relative size of the organization of which
an individual is a member. Put simply, in big organizations, people engage in fewer of
the meaningful interactions with others that lead to strong interpersonal connections.
By contrast, in small organizations, people meet one another more frequently and, by
getting to know each other better, develop stronger social bonds and a sense of inter-
personal trust.
The notion that group size plays a critical role in shaping social attitudes and norms
is an idea with a venerable history. Aristotle argued that the civic friendship upon
which society depends could only be achieved in smaller cities. In fact, several empiri-
cal studies identify a negative relationship between community size and social capital
(e.g., Coffe & Geys, 2006; Oliver, 2000). Nevertheless, although organization size has
long been a central topic in the study of organizational behavior (Kimberly, 1976),
comparatively little research has investigated whether “small is beautiful” or “big is
better” for organizational social capital (though see Indik, 1965, for related work).
From the perspective of classical organization theory, increased size is thought to
bring with it greatly inflated complexity in coordination of an organization’s activities
(Rushing, 1967). In particular, bigger organizations bear witness to a proliferation of
communication problems for leaders and members alike (Morgenstern, 1951).
Mathematically speaking, the number of possible social relationships within an orga-
nization increases as an exponential function of the organization’s size (Caplow,
1957). However, this comes at the price of less frequent and meaningful social interac-
tions, which, in turn, problematizes the kind of mutual interdependence underpinning
the growth of interpersonal connections, trust, and values. It also makes it more diffi-
cult for managers to facilitate the development of positive social interactions within
Andrews
43
organizations. Although social capital tends to be path dependent and evolves com-
paratively slowly, it is nevertheless something that can be cultivated by managers and
organizations, albeit not very quickly or easily (Leana & van Buren, 1999). All of
which is likely to mean that large organizations will have lower levels of social capital
than smaller ones, leading to the first hypothesis:
Hypothesis 1: There will be a negative...
To continue reading
Request your trial