Social Capital and Information Technology: The Keys to Building a Knowledge-Based Company

Mostafa Sayyadi September 10, 2019

Executives are spending more time today concerned about operational risk than ever before. Operational risk is an approach that represents knowledge management, but in this case, it seeks to apply organizational knowledge in order to satisfy and exceed customer’s expectations. Similar to customer relationship management, knowledge management is an enabler for identifying and satisfying customers’ and stakeholders’ needs and manifests itself as a significant driver that motivates the development of relationships with customers. Executives can manage organizational knowledge to improve customer satisfaction through acquiring additional knowledge from customers, developing better relationships with them, and providing a higher quality of service and/or products for them. Here are the two steps of successful knowledge management that can be implemented by executives within companies.

Step 1: Aggregating Human Capital into Social Capital

Executives across the globe have found that knowledge management is critical to business success. Knowledge, in of itself, is not enough to satisfy the vast array of changes in today’s organization. Therefore, knowledge management is only a necessary precursor to effectively managing knowledge within the organization. One tool for executives to improve organizational knowledge management and use it to lessen the gaps between success and possible failure, is to become a social architect. Executives can do this by using what is known in the academic realm as social capital. Social capital, however, is different from human capital in that human capital focuses on individual behavior and knowledge while social capital emphasizes relationships and the assets created by these relationships. Executives can aggregate human capital into social capital so as to provide further information and opportunities for all members, and subsequently contribute to organizational knowledge management through developing relationships with subordinates that link followers’ individual interests to the organization’s collective-interests.

Executives want to know how social capital can be defined and used in organizations. At this point, you’re probably asking why social capital is so important. Just as human resource is a huge component of organizations, social capital is the resource that keeps the culture together and builds upon the foundations that helps organizations prosper. Social capital focuses on developing relationships to create valuable resources. Executives may not be as interested in social capital as much as scholars are but there is a kernel worth looking it in this theoretical framework for executives. For example, social capital enables executives to improve organizational knowledge management and help close the gap between success and possible failure. Knowledge management should be seen as an outcome of various factors such as interactions and communications, formal policies and rules, and a climate inspiring innovation and creativity within organizations. Organizational knowledge cannot merely be described as the sum of individual knowledge, but as a systematic combination of knowledge based on social interactions shared among organizational members. Thus, executives need to see organizational knowledge as the knowledge that exists in the organization as a whole and use social capital to convert individual knowledge into a collective mind for their organization to close the performance gap and help organizations prosper. Therefore, firms need to consider a range of other factors such as social capital that is also reflective of their knowledge management performance.

Step 2: Implementing Information Technology

Executives develop relationships and interactions within companies, set desired expectations and inspire employees to identify further opportunities in their business environment. When executives view information technology as a vital important organizational resource that facilitates organizational communications and improves the search for knowledge they begin to see opportunities for successful business ventures.

Executives spend a great deal of time conceptualizing strategic endeavors and the strategic role of leadership is enhanced when the implementation of information technology successfully occurs at the right time and place. Thus, executives raise the levels of awareness on the importance of technology and empower people to improve the effectiveness of information technology implementation within organizations. Thus, executives can highly support information technology to successfully implement the projects of knowledge management and, therefore, remain competitive. Thus, when executives manage information technology, the organization can see increased knowledge management performance, better satisfaction by employees and customers, and most importantly enhance their own effectiveness as organizational leaders.

Information technology is the new competitive advantage and the organizations that embrace it will survive while those that do not will find their organizations facing possible acquisition. Information technology is a resource for knowledge integration. With knowledge integration, executives can sustain current operations while preparing future endeavors. Information technology, as a competitive resource, encourages people to embark on technological facilities such as shared electronic workspaces to provide new ideas and possible solutions for solving problems. Problems that may leave an organization debunk and less competitive. The lack of innovative workplaces adversely impacts on the organization’s capability to integrate knowledge and use information technology to facilitate better knowledge integration. Therefore, information technology, therefore, plays a critical role in integrating knowledge by executives and is also aligned with knowledge management strategy which not only builds upon the dissemination of information but also how it is restored and retrieved.

In Conclusion

This article offers novel insights into how executives can manifest themselves as change agents who implement information technology and create social capital to better manage and disseminate knowledge. I suggest that executives embrace change leadership. My primary focus is on these two factors, but there are many more important components of the managerial function that can be enhanced when change leadership is embraced.

Stakeholder Capitalism
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