The Circulation of Human and Social Capital

Ryan BurgBusiness Ethics and Sociology

The Wharton School of Business

Valery YakubovichManagement

The Wharton School of Business

Disciplines

Methods

Normative analysisAnalytical philosophy

Quantitative Survey design Network methods R, STATA, UCINET Web-based data collection Qualitative Semi-structured interviews Mixed methods

Legal research

Research Interests

Property theoryStakeholder managementJustifications for failureNorms as obligations

Social capitalPost-failure organizingNorms as expectations

Corporate criminal regulation

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.

Networks and Learning

Social capital

Human capital

Coleman 1988

?

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).

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.

Networks MatterNetworks 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).

Networks Matter

Networks Matter to Students Ranked #1Justification for educational investment

N %

Peer relationships 15 11

Critical thinking 15 11

Leadership skills 14 11

Business knowledge 13 10School brand 12 9Teamwork 11 8

Alumni connections 10 8

Analytical skills 9 7

Quantitative skills 6 5

Family approval 4 3Outside friends 4 3

Outside relationships 1 1Faculty 1 1

• 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.

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.

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).

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).

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).

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.

Data and Method• Class-based sample of 3 undergraduate

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.

Descriptive Statistics for Subsamples of Directed Dyads Discrete Variable N % N %Sample Class TeamsObservations 4620 100.0 297 100.0Reciprocated friendship at the beginning of semester 199 4.3 20 6.7Facebook friends at beginning of term 307 6.6 24 8.1New reciprocated friendship at the end of semester 32 0.7 93 31.3Facebook friends at the end of semester 374 8.1 119 40.1Ego friended alter during term 77 1.7 150 50.5

Both women 1006 21.8 73 24.6Both men 1233 26.7 104 35.0Both White 1498 32.4 107 36.0Both Asian 298 6.5 28 9.4Both Black 38 0.8 3 1.0Both Latino/Hispanic 24 0.5 4 1.3Both seniors 2697 58.4 176 59.3Neither senior 226 4.9 27 9.1

LearningSample Class TeamsObservations 4182 268Nobody learned 2102 50.3 52 19.4One student learned 1498 35.8 107 39.9Both learned 582 13.9 109 40.7Continuous Variable Mean Std.Dev. Min MaxSocial proactivity (whole class n=6560) 3.5936 0.7382 1.39 5.25

Model• Bivariate probit

• 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).

Table 6. Coefficient Estimates for Bivariate Probit Regression Models: Friending Excluding Established Ties  Teams ClassDependent variable 1: Ego friended alter Ego friended alter  coef z coef zIndependent Variables Ego learned from alter 1.213*** 2.949 0.575* 1.915Instrument Alter's social proactivity 0.186* 1.646 0.179** 2.545Controls Both female 0.071 0.301 0.084 0.715 Both male 0.029 0.144 -0.263** -1.983 Both White -0.117 -0.647 0.096 0.887 Both Asian 0.505 1.425 0.270 1.631 Both Black 4.813 0.002 0.299 0.599 Both Hispanic or Latino -6.134 -0.005 -3.471 -0.011 Both senior -0.092 -0.471 -0.216** -2.135 Neither senior 0.678** 2.017 0.085 0.405Constant -1.255** -2.482 -2.926*** -9.778 

Dependent variable 2:Ego learned from

alterEgo learned from

alter  coef z coef zInstrument Alter's participation in class 0.055*** 4.351 0.063*** 18.423 Alter's evaluation in group 0.200*** 4.015Controls Both female 0.206 0.917 0.079 1.48 Both male 0.327* 1.713 0.123** 2.417 Both White 0.082 0.454 0.025 0.543 Both Asian 0.329 1.033 -0.053 -0.612 Both Black 4.927 0.004 0.896*** 3.075 Both Hispanic or Latino 0.008 0.012 0.027 0.086 Both senior -0.030 -0.157 0.057 1.281 Neither senior -0.158 -0.499 -0.150 -1.436

Constant -7.534*** -6.202 -6.256*** -20.314athrho 0.007 0.025 -0.003 -0.018rho 0.007 0.272 -0.003Observations 277 4,421note: *** p<0.01, ** p<0.05, * p<0.1 (two-tailed test)

Table 5. Coefficient Estimates for Bivariate Probit Regression Models: Learning through Established and Newly-Formed Ties

Teams ClassDependent variable 1: Ego learned from alter Ego learned from alter

coef z coef zIndependent variables Ego friended alter during term

2.220*** 7.866 1.840** 2.242

Ego friended alter before term

0.852*** 2.042 1.204*** 11.684

Instruments Alter's participation in class 0.043*** 2.615 0.064*** 18.856 Alter's evaluation in group 0.169*** 3.051

Both female -0.045*** -0.205 0.035 0.665 Both male 0.211*** 1.071 0.134*** 2.684 Both White 0.095*** 0.560 0.021 0.455 Both Asian -0.200*** -0.678 -0.072 -0.861 Both Black -0.002*** -0.002 0.313 1.399 Both Hispanic or Latino 1.222*** 1.655 0.054 0.172 Both senior 0.125*** 0.721 0.095** 2.158 Neither senior -0.499*** -1.714 -0.150 -1.475

Constant -7.241*** -3.860-

6.367***-20.955

Dependent Variable 2: Ego friended alter during termEgo friended alter during

termcoef z coef z

Instrument Alter's social proactivity 0.182* 1.896 0.197*** 2.972Controls Both female 0.101 0.477 0.116 1.030 Both male 0.042 0.231 -0.238* -1.897 Both White -0.021 -0.129 0.132 1.247 Both Asian 0.488* 1.742 0.211 1.300 Both Black -0.557 -0.752 0.153 0.368 Both Hispanic or Latino -6.613 -0.000 -3.838 -0.004 Both senior -0.108 -0.644 -0.221** -2.262 Neither senior 0.451 1.466 0.056 0.280

Constant -0.674* -1.674-

2.786***-10.229

athrho -1.2057 -0.880 -0.441 -1.050rho -0.835 -0.414Observations 297 4,620note: *** p<0.01, ** p<0.05, * p<0.1 (two-tailed test)

DV: Ego learned from alter

DV: Ego friended alter

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.

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.

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

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.

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.