Understanding ‘Shared Valued’ and Social Capital Link to Pave the Path of next Generation of Innovation

Mubashar Majeed QADRI, Dawood MAMOON


Abstract. The idea “Creating shared value” (CSV) offers a resolute direction to the debate on the link between business and society which can be restored through three distinct actions such as a) reconceiving products and markets; b) redefining productivity in the value chain; and c) building supportive industry clusters. The critical analysis predicts that the path of these actions is progressive in nature and their scope apparently ranges from narrow to wider deliberations. Keeping variant scope of proposed actions, this paper focuses only first course of action as it paves the path of new wave of innovation. For this new wave of innovation, the role of social capital is explored to determine the extent this capital can derive next wave of innovation. In this regard, a model is proposed to predict the link between various dimensions of social capital and innovation that can produce both social and business revenues. The proposed model assumes that narrow conceptualization of social capital to network theory only and ignoring its origins and deep rooted relations with community will lead towards routine innovations that lacking potential benefits of shared value. If organizations emphasize more and invest in developing relationships restricted to network actors, then potential benefits might be unnoticed. Therefore, like defining ‘value’ too narrowly due to strategic myopia, keeping the social circle of small radius also limit the organization’s ability to exploit the embedded potential of social capital necessary to pave the path of new generation of innovation benefiting both business and society.

Keywords. Creating shared value (CSV), Social capital, Innovation, Network relationship(s).

JEL. O31, O35, Q55.


Creating shared value (CSV); Social capital; Innovation; Network relationship(s).

Full Text:


Adler, P.S., & Kwon, S.-W. (2002). Social capital: Prospects for a new concept. Academy of Management Review, 27(1), 17-40. doi. 10.5465/AMR.2002.5922314

Akçomak, I.S., & Ter Weel, B. (2009). Social capital, innovation and growth: Evidence from Europe. European Economic Review, 53(5), 544-567. doi. 10.1016/j.euroecorev.2008.10.001

Anheier, H.K., Gerhards, J., & Romo, F.P. (1995). Forms of capital and social structure in cultural fields: Examining Bourdieu's social topography. American Journal of Sociology, 100(4), 859-903. doi. 10.1086/230603

Araujo, L., & Easton, G. (1999). A relational resource perspective on social capital. In R.T.A.J. Leenders & S.M. Gabbay (Eds.), Corporate social capital and liability (pp. 68-87). Boston: Kluwer.

Baker, W.E. (1990). Market networks and corporate behavior. American Journal of Sociology, 96(2), 589-625. doi. 10.1086/229573

Baron, J.N., & Hannan, M.T. (1994). The impact of economics on contemporary sociology. Journal of Economic Literature, 32(3), 1111-1146.

Belliveau, M.A., O'Reilly, C.A., & Wade, J.B. (1996). Social capital at the top: Effects of social similarity and status on CEO compensation. Academy of Management Journal, 39(6), 1568-1593. doi. 10.2307/257069

Beugelsdijk, S., & van Schaik, T. (2005). Differences in social capital between 54 Western European regions. Regional Studies, 39(8), 1053-1064. doi. 10.1080/00343400500328040

Birkinshaw, J., Bouquet, C., & Barsoux, J.-L. (2011). The 5 myths of innovation. MIT Sloan Management Review, 52(2), 43.

Bourdieu, P. (1986). The forms of capital. In J. G. Richardson (Ed.), Handbook of Theory an d Research for the Sociology of Education (pp. 240-260). New York: Greenwood Publishing Group.

Burt, R.S. (1992). Structural holes: The social structure of competition. Cambridge, MA: Harvard University Press.

Burt, R.S. (1997). The contingent value of social capital. Administrative science quarterly, 42(2), 339-365. doi. 10.1016/B978-0-7506-7222-1.50014-3

Capaldo, A. (2007). Network structure and innovation: The leveraging of a dual network as a distinctive relational capability. Strategic Management Journal, 28(6), 585-608. doi. 10.1002/smj.621

Chua, A. (2002). The influence of social interaction on knowledge creation. Journal of Intellectual Capital, 3(4), 375-392. doi. 10.1108/14691930210448297

Coleman, J.S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94(Supplement), S95-S120. doi. 10.1086/228943

Coleman, J.S. (1994). Foundations of social theory. Cambridge: Harvard University Press.

Collinson, S. (2000). Knowlege networks for innovation in small Scottish software firms. Entrepreneurship & Regional Development, 12(3), 217-244. doi. 10.1080/089856200413473

Collinson, S., & Wilson, D.C. (2006). Inertia in Japanese organizations: Knowledge management routines and failure to innovate. Organization Studies, 27(9), 1359-1387. doi. 10.1177/0170840606067248

Crosby, M. (2000). Patents, innovation and growth. Economic Record, 76(234), 255-262. doi. 10.1111/j.1475-4932.2000.tb00021.x

Daft, R.L., & Becker, S.W. (1978). The innovative organization: Innovation adoption in school organizations. New York: Elsevier.

Dakhli, M., & De Clercq, D. (2004). Human capital, social capital, and innovation: a multi-country study. Entrepreneurship & Regional Development, 16(2), 107-128. doi. 10.1080/08985620410001677835

Damanpour, F., & Gopalakrishnan, S. (1998). Theories of organizational structure and innovation adoption: the role of environmental change. Journal of Engineering and Technology Management, 15(1), 1-24. doi. 10.1016/S0923-4748(97)00029-5

DeFilippis, J. (2001). The myth of social capital in community development. Housing Policy Debate, 12(4), 781-806. doi. 10.1080/10511482.2001.9521429

Doh, S., & Acs, Z.J. (2010). Innovation and social capital: a cross-country investigation. Industry and Innovation, 17(3), 241-262. doi. 10.1080/13662711003790569

Drucker, P.F. (1994). Post-capitalist society: Routledge.

Dyer, J.H., & Nobeoka, K. (2000). Creating and managing a high-performance knowledge-sharing network: the Toyota case. Strategic Management Journal, 21(3), 345-367. doi. 10.1002/(SICI)1097-0266(200003)21:3<345::AID-SMJ96>3.0.CO;2-N

Evans, P. (1996). Government action, social capital and development: reviewing the evidence on synergy. World Development, 24(6), 1119-1132. doi. 10.1016/0305-750X(96)00021-6

Fountain, J. E., & Atkinson, R. D. (1998). Innovation, social capital, and the new economy: New federal policies to support collaborative research. Retrieved from Progressive Policy Institute (PPI) [Retrieved from].

Freel, M.S. (2000). External linkages and product innovation in small manufacturing firms. Entrepreneurship & Regional Development, 12(3), 245-266. doi. 10.1080/089856200413482

Freel, M.S. (2005). Perceived environmental uncertainty and innovation in small firms. Small Business Economics, 25(1), 49-64. doi. 10.1007/s11187-005-4257-9

Fukuyama, F. (1995). Trust: The social virtues and the creation of prosperity. New York: Free Press.

Goodburn, M. (2015). What is the life expectancy of your company? Retrieved from World Economic Forum. [Retrieved from].

Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91(3), 481-510. doi. 10.1086/228311

Grant, R.M. (1996). Toward a knowledge‐based theory of the firm. Strategic Management Journal, 17(S2), 109-122. doi. 10.1002/smj.4250171110

Hamel, G. (1998). Strategy innovation and the quest for value. MIT Sloan Management Review, 39(2), 7.

Hamel, G. (2012). What matters now: How to win in a world of relentless change, ferocious competition, and unstoppable innovation: John Wiley & Sons.

Hamel, G., & Prahalad, C.K. (2013). Competing for the Future: Harvard Business Press.

Hansen, M.T. (1999). The search-transfer problem: The role of weak ties in sharing knowledge across organization subunits. Administrative Science Quarterly, 44(1), 82-111. doi. 10.2307/2667032

Hechter, M. (1988). Principles of group solidarity (Vol. 11): Univ of California Press.

Hirsch, P.M., & Levin, D.Z. (1999). Umbrella advocates versus validity police: A life-cycle model. Organization Science, 10(2), 199-212. doi. 10.1287/orsc.10.2.199

Hofstede, G. (1980). Culture and organizations. International Studies of Management & Organization, 10(4), 15-41. doi. 10.1080/00208825.1980.11656300

Holmen, E., Pedersen, A.-C., & Torvatn, T. (2005). Building relationships for technological innovation. Journal of Business Research, 58(9), 1240-1250. doi. 10.1016/j.jbusres.2003.10.010

Ibarra, H., & Andrews, S.B. (1993). Power, social influence, and sense making: Effects of network centrality and proximity on employee perceptions. Administrative Science Quarterly, 38(2), 277-303. doi. 10.2307/2393414

Inkpen, A.C., & Tsang, E.W. (2005). Social capital, networks, and knowledge transfer. Academy of Management Review, 30(1), 146-165. doi. 10.5465/AMR.2005.15281445

Jap, S.D., & Anderson, E. (2003). Safeguarding interorganizational performance and continuity under ex post opportunism. Management Science, 49(12), 1684-1701. doi. 10.1287/mnsc.49.12.1684.25112

Kern, H. (1998). Lack of trust, surfeit of trust: Some causes of the innovation crisis in German industry. In C. Lane & R. Bachmann (Eds.), Trust Within and between Organizations (pp. 203-213). New York: Oxford University Press.

Knack, S., & Keefer, P. (1997). Does social capital have an economic payoff? A cross-country investigation. The Quarterly Journal of Economics, 112(4), 1251-1288. doi. 10.1162/003355300555475

Kogut, B., & Zander, U. (1992). Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science, 3(3), 383-397. doi. 10.1287/orsc.3.3.383

Lappe, F.M., & Du Bois, P.M. (1997). Building social capital without looking backward. National Civic Review, 86(2), 119-128. doi. 10.1002/ncr.4100860205

Leana, C.R., & Van Buren, H.J. (1999). Organizational social capital and employment practices. The Academy of Management Review, 24(3), 538-555. doi. 10.5465/AMR.1999.2202136

Lengrand, L., & Chatrie, I. (1999). Business networks and the knowledge-driven economy. European Commission, Brussels, 1-37. [Retrieved from].

Levin, D.Z., & Cross, R. (2004). The strength of weak ties you can trust: The mediating role of trust in effective knowledge transfer. Management Science, 50(11), 1477-1490. doi. 10.1287/mnsc.1030.0136

Levin, D.Z., Cross, R., & Abrams, L.C. (2002). The strength of weak ties you can trust: the mediating role of trust in effective knowledge transfer. Paper presented at the Academy of Management Proceedings.

Lin, N. (2002). Social capital: A theory of social structure and action. UK: Cambridge University Press.

McFadyen, M.A., & Cannella, A.A. (2004). Social capital and knowledge creation: Diminishing returns of the number and strength of exchange relationships. Academy of Management Journal, 47(5), 735-746. doi. 10.2307/20159615

Miles, R.E., & Snow, C.C. (1978). Organizational strategy, structure and process. New York: McGraw-Hill.

Miller, D., & Friesen, P.H. (1982). Innovation in conservative and entrepreneurial firms: Two models of strategic momentum. Strategic Management Journal, 3(1), 1-25. doi. 10.1002/smj.4250030102

Moorman, C., & Miner, A.S. (1997). The impact of Organizational memory on new product performance and creativity. Journal of Marketing Research, 34(1), 91-106. doi. 10.2307/3152067

Nahapiet, J., & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23(2), 242-266. doi. 10.5465/AMR.1998.533225

Narayan, D., & Pritchett, L. (1999). Cents and sociability: Household income and social capital in rural Tanzania. Economic Development and Cultural Change, 47(4), 871-897. doi. 10.1086/452436

Nonaka, I. (1994). A dynamic theory of organizational knowledge creation. Organization Science, 5(1), 14-37. doi. 10.1287/orsc.5.1.14

Ostrom, E. (2000). Social capital: a fad or a fundamental concept. In P. Dasgupta & I. Serageldin (Eds.), Social capital: A multifaceted perspective (pp. 195-198). Washington, DC: The World Bank.

Pérez-Luño, A., Medina, C.C., Lavado, A.C., & Rodríguez, G.C. (2011). How social capital and knowledge affect innovation. Journal of Business Research, 64(12), 1369-1376. doi. 10.1016/j.jbusres.2011.01.014

Piazza‐Georgi, B. (2002). The role of human and social capital in growth: extending our understanding. Cambridge Journal of Economics, 26(4), 461-479. doi. 10.1093/cje/26.4.461

Pisano, G.P. (2015). You need an innovation strategy. Harvard Business Review, 93(6), 44-54.

Polanyi, M.E. (1966). The Tacit Dimension. US: The University of Chicago Press.

Porter, M.E., & Kramer, M.R. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review, 80(12), 56-68.

Porter, M.E., & Kramer, M.R. (2006). Strategy and society: The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 45-55.

Porter, M.E., & Kramer, M.R. (2011). Creating shared value: How to reinvent capitalism – and unleash a wave of innovation and growth. Harvard Business Review, 89(1/2), 62-77.

Portes, A. (1998). Social capital: Its origins and applications in modern sociology. In E. L. Lesser (Ed.), Knowledge and Social Capital. Foundations and Applications (pp. 43-67). Boston: Butterworth-Heinemann.

Portes, A., & Sensenbrenner, J. (1993). Embeddedness and immigration: Notes on the social determinants of economic action. American Journal of Sociology, 98(6), 1320-1350. doi. 10.1086/230191

Prahalad, C.K., & Hamel, G. (1990). The core competence of the corporation. Harvard Business Review, 68(3), 79-91.

Prahalad, C.K., & Hart, S.L. (2002). The fortune at the bottom of the pyramid. Strategy + Business, 26(1), 55-67.

Putnam, R.D. (1993a). Making Democracy Work: Civic Traditions in Modem Italy. NJ: Princeton University Press.

Putnam, R.D. (1993b). The prosperous community: Social capital and public life. The Aamerican Prospect, 4(13), 35-42.

Rindfleisch, A., & Moorman, C. (2001). The acquisition and utilization of information in new product alliances: A strength-of-ties perspective. Journal of Marketing, 65(2), 1-18. doi. 10.1509/jmkg.

Ring, P.S., & van de Ven, A.H. (1992). Structuring cooperative relationships between organizations. Strategic Management Journal, 13(7), 483-498. doi. 10.1002/smj.4250130702

Ring, P.S., & Van De Ven, A.H. (1994). Developmental Processes of Cooperative Interorganizational Relationships. The Academy of Management Review, 19(1), 90-118. doi. 10.5465/AMR.1994.9410122009

Sandefur, R.L., & Laumann, E.O. (1998). A paradigm for social capital. Rationality and Society, 10(4), 481-501. doi. 10.1177/104346398010004005

Schumpeter, J.A. (1909). On the concept of social value. The Quarterly Journal of Economics, 23(2), 213-232. doi. 10.2307/1882798

Schumpeter, J.A. (1934). The theory of economic development: An inquiry into profits, capital, credit, interest, and the business cycle. Cambridge: Harvard University Press.

Shane, S.A. (1992). Why do some societies invent more than others? Journal of Business Venturing, 7(1), 29-46. doi. 10.1016/0883-9026(92)90033-N

Shane, S.A. (1995). Uncertainty avoidance and the preference for innovation championing roles. Journal of International Business Studies, 26(1), 47-68. doi. 10.1057/palgrave.jibs.8490165

Shu, S.T., Wong, V., & Lee, N. (2005). The effects of external linkages on new product innovativeness: an examination of moderating and mediating influences. Journal of Strategic Marketing, 13(3), 199-218. doi. 10.1080/09652540500171373

Simanis, E., & Hart, S.L. (2009). Innovation from the inside out. MIT Sloan Management Review, 50(4), 77.

Smith, K.G., Collins, C.J., & Clark, K.D. (2005). Existing knowledge, knowledge creation capability, and the rate of new product introduction in high-technology firms. Academy of Management Journal, 48(2), 346-357. doi. 10.5465/AMJ.2005.16928421

Spitzeck, H., & Chapman, S. (2012). Creating shared value as a differentiation strategy-the example of BASF in Brazil. Corporate Governance: The International Journal of Business in Society, 12(4), 499-513. doi. 10.1108/14720701211267838

Taalikka, S. (2002). Factors Affecting Innovation Adoption in organization The Case of Corporate Website Adoption. (Master Unpublished Thesis), Lappeenranta University of Technology, Lappeenranta, Finland.

Tsai, W., & Ghoshal, S. (1998). Social capital and value creation: The role of intrafirm networks. Academy of Management Journal, 41(4), 464-476. doi. 10.2307/257085

Uzzi, B. (1997). Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42(1), 35-67. doi. 10.2307/2393808

Villena, V.H., Revilla, E., & Choi, T.Y. (2011). The dark side of buyer–supplier relationships: A social capital perspective. Journal of Operations Management, 29(6), 561-576. doi. 10.1016/j.jom.2010.09.001

Weber, R.A., & Camerer, C.F. (2003). Cultural conflict and merger failure: An experimental approach. Management Science, 49(4), 400-415. doi. 10.1287/mnsc.49.4.400.14430

Williamson, O.E. (1985). The Economic Institutions of Capitalism Firms Markets Relational Contracting: Free Press.

Wu, W.P. (2008). Dimensions of social capital and firm competitiveness improvement: The mediating role of information sharing. Journal of Management Studies, 45(1), 122-146. doi. 10.1111/j.1467-6486.2007.00741.x

Zadek, S. (2004). The path to corporate responsibility. Harvard Business Review, 82(12), 125-133.

Zahra, S.A., & George, G. (2002). Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review, 27(2), 185-203. doi. 10.2307/4134351

Zaltman, G., Duncan, R., & Holbek, J. (1973). Innovations and organizations. New York: John Wiley & Sons.

DOI: http://dx.doi.org/10.1453/jel.v3i4.1093


  • There are currently no refbacks.


Journal of Economics Library - J. Econ. Lib. - JEL - www.kspjournals.org

ISSN: 2149-2379

Editor: jel@ksplibrary.org Secretarial: secretarial@ksplibrary.org   Istanbul - Turkey.

Copyright © KSP Library