The
authors of this article, Yaqub, Malik, and Shah explore the benefits of social
capital within inter-organizational networks.
More specifically the topics they address are the satisfaction, trust,
and commitment of organizations and its impact on the business relationships
within joint ventures, strategic alliances, and enduring supplier and buyer
relationships among others. There has
been growing interest in these topics, since people are realizing more and more
that positive relationships within business can have a large impact on their
reputation, productivity, and ultimately profitability.
The
authors draw from over 100 different sources to support their findings, which
is the advantage of developing and retaining social capital within an
organization. The authors explain the
relational view of strategic networks, which is concerned with the level of
satisfaction, trust, and commitment in a business partnership. The first issue they discuss is social and
economic trust. When doing business with
another firm, supplier, buyer, etc. there must be a level of satisfaction that
results from the business transaction. It
seems as the two are connected, because a high level of social satisfaction
with your business partner will lead to increased morale, which increases
productivity, resulting in positive business results. This is a cycle process where you enjoy doing
business with a partner that increases your profitability, and increases in
profitability encourage future participation with this partner. The next topic the authors explore is the
level of trust between inter-organizational business partners. Trust cannot be developed between two or more
parties if there is no level of satisfaction, which is obvious since you wouldn’t
be motivated to work with someone you haven’t been satisfied with in the
past. However, if you’ve traditionally
been satisfied with the working relationship then the parties will begin to
develop levels of trust with one another.
When you trust someone you are essentially vulnerable to that person, so
trust is something that is easily broken, and not easily recovered. This is perhaps the most important aspect the
authors explore, because once trust is developed, the working relationship
becomes somewhat predictable. When this
happens, communication and collaboration become less important, freeing up time
for both parties to focus on other aspects of their business. High levels of trust between partners will
result in continued commitment to the business relationship, and if you’ve been
satisfied and successful in the past, then commitment to that partner will
continue to produce positive results for the parties involved. If companies are satisfied when doing
business with one another, they will continue to do business together. This cycle results in a growing trust between
the two parties, which in turn creates even more positive results, because
familiarity with the other party reduces the time spent collaborating with one
another. It also has other benefits such
as the elimination of bulky, time-consuming contracts that have to be
created.
This
is a magnificent article, because as a business student and someone with a
future in business, it lays out the implications and advantages of doing
business in a trustworthy way. Most
people have studied ethics at some point, but it’s usually applied to how a
person lives their life, but this article shows how it can also help a person
to be successful in business. It’s
pretty obvious that people don’t want to do business with another party they
have been dissatisfied with or do not trust; but it isn’t so obvious the
competitive advantages companies can attain and grow through doing business
with partners who exhibit strong moral and ethic practices.
