The Circulation of Human and Social Capital

1. The Circulation of Human and Social Capital • Ryan Burg • Business Ethics and Sociology • The Wharton School of Business • Valery Yakubovich • Management • The Wharton School of Business

2. Disciplines

3. Methods Quantitative Survey design Network methods R, STATA, UCINET Web-based data collection Qualitative Semi-structured interviews Mixed methods Legal research Normative analysis Analytical philosophy

4. Research Interests Social capital Post-failure organizing Norms as expectations Corporate criminal regulation Property theory Stakeholder management Justifications for failure Norms as obligations

5. The Circulation of Human and Social Capital • Research question: What is the causal relationship between human and social capital? • Why it matters • Business schools wish to help students to be successful. Relationships contribute to student success, but relational outcomes are not measured as classroom outcomes. • Businesses wish to build bridges between employees. Learning provides one strategy.

6. Networks and Learning Coleman 1988 Human capital Social capital ?

7. Network Origins at School • Sociometric studies of 1930s and 1940s explore origins (Moreno 1934; Bonney 1943; Frankel and Potashin 1944). • Generally, networks emerge through interpersonal contact, points of commonality, and collaborative work . • The topic has special importance for those concerned with inequality and justice because homophilous ties can lead to segmentation (Schofeld 1995).

8. Networks and Knowledge at Work • Blau (1955) explores an exchange process between access to knowledge and coordination efforts. • Highly competent people receive most incoming contacts. • But ties form between more and less competent people (measured by employee evaluations) in the process of interaction. • The theory received little subsequent development.

9. Networks Matter Networks provide access to • Unique information (Granovetter 1973). • Strategic advantage (Burt 1992). • Lower prices (Uzzi 1999). • Desired goods and services (DiMaggio and Louch 1998). • Social support (Wellman and Wortley 1990). • Subjective well-being and health (Cacioppo, Hawkley, Kalil, et al. 2008). • Identity and sense of meaning (Baker 2000, Podolny and Baron 1997).

10. Networks Matter

11. Networks Matter to Students • Over ninety percent of students surveyed in an undergraduate management class (n=131) consider social relationships as “important” or “very important” to their economic future.

12. Hypothesis 1 • H1: In a classroom setting, a student is more likely to learn from a peer to whom he or she has a preexisting social tie. • With Coleman (1988) we suggest that learning occurs within relationships that are exogenous to the classroom, formed prior to the class interaction.

13. Hypothesis 2a • H2a: In a classroom setting, a student is more likely to learn from a peer to whom he or she formed a tie during the semester of the class than from a peer to whom he or she does not have a tie. • Feld (1981) proposes that relationships form around a “social focus,” a classroom serves as a classic example. • Many relationships emerge through structured interactions, such as campus housing (Festinger, Schachter, and Black 1950).

14. Hypothesis 2b • H2b: In a classroom setting, a student is less likely to learn from a peer to whom he or she formed a tie during the semester of the class than from a peer to whom he or she does not have a tie. • Coleman (1961) argues that competition between students can undermine relationships and learning, stigmatizing the “teacher’s pet” (McFarland 2005). • Work-limiting norms are common to studies of production environments (Roethlisberger and Dickson 1939, Roy 1953).

15. Hypothesis 3 • H3: In a classroom setting, socio-demographic similarities induce friendships. • Many studies of friendship identify homophily as a key factor in tie formation: “Birds of a feather flock together” (McPherson, Smith-Lovin, and Cook 2001). • Homophily has been identified as an important social process on college campuses (Mayer and Puller 2008).

16. Hypothesis 4 • H4: The more a student learns from a classmate, the more likely she is to befriend her. • Following Blau (1955), we view learning as a process that often results in tie formation. • This runs against McFarland’s (2005) findings that high school students do not gain social acceptance through academic tasks. We note the contrast between secondary and post-secondary educational contexts.

17. Data and Method • Class-based sample of 3undergraduate sections of a Human Resource Management class. • Dyadic level of analysis. • Two “samples:” class-wide and team-based dyads. • 4,620 dyads in class sample; 297 dyads in teams. • Data from surveys and website Facebook.com.

19. Model • Bivariateprobit • Dependent variables (survey-based): • Ego learned from alter • Ego friended alter • Instruments • For learning – measure of classroom participation and team-based evaluation (excluding ego). • For friendship – measure of social proactivity(monotonic transformation of number of friends added to Facebook.com during term).

20. DV: Ego learned from alter DV: Ego friended alter

21. Conclusion • Research question: What is the causal relationship between human and social capital? • Findings: • H1 pre-existing ties Learning (supported) • H2a newly-formed ties  Learning (supported) • H3: Homophily Friendship (unsupported) • H4: Learning  Friendship (supported) • Key contribution: human and social capital are interdependent outcomes of classroom interaction.

22. Limitations • Classroom-based study of business students lacks external validity; results should be confirmed in workplace settings before managerial implications can be asserted. • Sample size is a limiting factor. With more statistical power we would have also liked to examine individual-level traits. • Study took place over 12 week term. Other time horizons may provide different results.

23. Managerial Implications • Workplaces are increasingly interested in “managing networks” • But some things are not easily maximized directly • Relationships at work emerge through interdependence • Relationships are unlikely to form by fiat

24. Disciplines • Research on human and social capital connects with current project on organizational failure. • Journalists and banker networks originate in the learning processes within firms. • Networks create stable normative environments that survive organizational collapse. • Rose (2000) describes reliance on interpersonal networks in Russia where organizations fail. I find similar processes in the US.

25. Future Research • Study relating social norms and peer network formation among MBA students. • Survey implemented as application on Facebook.com. • Plans for workplace-based study.