Sumantra Ghoshal on Management: A Force for Good

Chapter 10. Social capital, intellectual capital, and the organizational advantage

<authorgroup>Janine Nahapiet and Sumantra Ghoshal</authorgroup>

In this paper, Sumantra and Janine Nahapiet tackle the thorny question: What is it that really makes the economic institution of the firm different from the market? Building on Sumantra’s earlier work with Peter Moran on the nature of the organizational advantage, Sumantra and Janine show how under certain conditions the “social capital” embedded in individual relationships can lead to significant increases in the knowledge base or “intellectual capital” of the firm, in ways that are unlikely to happen in a market-based system of exchange. Or as they say, “organizations build and retain their advantage ...