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What should the leader of a virtual organisation understand about social capital?

Are you in a managerial or human resources role in a virtual or hybrid organisation? What should you know about the importance of social capital and organisational identification for your organisation? This is what we will explore in this blog post.

Social capital has become a key concept in the business world. It refers to all those bonds between people, trust, shared values and norms that bind members of a group together and make it possible to achieve common goals. Social capital has many benefits for both the organisation and the individual. It reduces company costs, improves company performance and facilitates the flow of information between employees.

One of the main benefits of social capital is its positive impact on employee engagement. This happens through improved identification with the organisation. Identification with the organisation refers to the individual's sense of belonging and identification with the organisation. It is the social and psychological bond that connects employees and the organisation.

Social capital and organisational identification play an important role, especially in virtual and new organisations. In new organisations, social capital and individual organisational identification are initially at a low level and therefore need to be developed. In virtual and hybrid organisations, the dispersed nature of the work community and the physical distance from colleagues creates a need for the development of strong social capital.

How then should social capital and organisational identification be developed? One way is to strengthen the embedding of the cognitive dimension of social capital, such as a common language, values and norms in the organisation. It is not enough for people to know the values and norms of the organisation, they must also internalise and identify with them. Organisational communication tools, such as internal newsletters, serve as regular reminders of belonging to the organisation and provide an opportunity to internalise a common language and values.

Social capital and organisational identification can also be strengthened by increasing the interdependence of employees. In particular, interdependencies between group members strengthen the relational dimension of social capital. Increasing interdependence also increases the amount of interaction within the organisation. As interaction increases, so does the amount of social capital, since social relationships in general increase social capital.

Opportunities for physical interaction contribute to social capital and organisational identification, but opportunities for more informal meetings are more limited in virtual organisations. In virtual organisations, it would therefore be important to create alternatives to physical interaction and to streamline communication across the organisation.

The best way to build an organisation's social capital is to develop processes and activities that support the development of social capital and organisational identification. These processes and activities should increase and streamline interactions, increase interdependencies among employees, and communicate the values, norms and goals of the organisation.

Davenport, S., & Daellenbach, U. (2011). 'Belonging' to a Virtual Research Centre: Exploring the Influence of Social Capital Formation Processes on Member Identification in a Virtual Organization. British journal of management, 22(1), 54-76. https://doi.org/10.1111/j.1467-8551.2010.00713.x