Social Capital in a Regional Context

1. Social Capital in a Regional Context Edward J. Malecki Department of Geography The Ohio State University Columbus, Ohio 43210, USA Conference on The Future of European Regions Warsaw, May 31-June 2, 2007

2. Social capital is essential for a knowledge economy • Social capital is part of a region’s ‘collective personality’ – comprised of individual personalities, social and business interactions and networks, institutions, market structures, and accidents of history. • Innovativeness and entrepreneurship are products of regions with social capital. • Westlund and Bolton (2003)

3. Glue, but Not Created by Decree • ‘Knowledge and innovation capabilities cannot be created by decree, and the processes of knowledge creation, utilization and transformation are not top-down processes’. • Schwaag Serger (2006: 258) • ‘Social capital can be seen as a conceptualisation of the glue that facilitates transactions, cooperation, and learning in an uncertain world’. • Cappellin (2004: 214) • Top-down planning is not adequate. • Guth (2005)

4. Technical Culture • Underlying the constant information flows and cohesiveness of a community is a shared culture or value system. • Technical culture includes awareness of quality and innovation and an understanding of technology. • These are supported by a local infrastructure of banks, local government, education and training, large firms and other institutions. • Sweeney (1991, 2001) • This is also known as an associational economy. • Cooke and Morgan (1998)

5. Social Capital in the Economic Sphere • “The key performance indicators of the development process in a ‘knowledge economy’ are the adoption of innovation [both product and process innovation] and the birth of new firms, since they both determine the growth of employment and GDP’. [Cappellin (2003: 311) ] • He proposes territorial knowledge management, based on four types of intellectual capital: • internal to the firm is ‘human capital’ • internal to the organisation but outside the individual employees is ‘structural capital’ • This also may be distinguished into ‘innovation capital’ and ‘process capital’ • external to the firm is ‘relational capital’ – or social capital

6. Networks are needed both within the region and to other places • Source: Cappellin (2004)

7. Social Capital Is (only one) Part of a Socially Integrative Innovation Policy • Source: Guth (2005)

8. Social Capital of an Enterprise[Source: Westlund and Nilsson (2005), Table 1] • Social capital internal to the enterprise • Company spirit, climate of cooperation, methods of product development, codifying knowledge, and resolving conflicts • The enterprise’s external social capital • Production-related • Links to suppliers, product users, partners • Environment-related (in the regional environment) • Links to local political decision-makers and universities • Market-related • General customer relations built through marketing, trademarks, clubs

9. Benefits of Production-Related Social Links [Source: Westlund and Nilsson 2005, Figure 1] Social links to: Suppliers, Demanding & collaborating customers, R&D partners Faster access to information and knowledge Lower information and knowledge costs Increased supply of information and knowledge Improved quality of information and knowledge Faster dialogue with suppliers, customers and partners Improved quality of dialogue Faster innovation processes Higher quality of innovations Increased innovation potential

10. Multidimensional Information Benefits of Social Capital Network Centrality Number of Partners Number of Ties Information Volume Technological Diversity Country Diversity Holes Information Diversity Social Capital Information Richness Multiplex Ties Repeated Ties Source: Koka and Prescott (2002), Figure 1

11. Social Capital is a Meso-Scale Concept • Social capital operates between • the macro-scale of the nation or supra-national region and • the micro-level (firms, employees, people). • The meso-level includes intermediaries, knowledge brokers, institutions, and unions. • Guth (2005), Murphy (2006)

12. Trust-Building Depends on Micro-, Meso-, and Macro-scale Processes Source: Murphy (2006), Figure 1

13. Gatekeepers • To tap into widely dispersed sources of knowledge, an organization (and a region) needs extroverted, talented gatekeepers. • Gatekeepers have expertise, credibility, and extroverted personalities. • Gatekeepers’ information sources are usually informal and personal, with information supplied to sources in return. • Macdonald and Williams (1993) • The social behavior of gatekeepers is not only essential but also difficult to reconcile with ‘normal’ company activities. • A great deal of information flows outside hierarchical channels, and it must continue to do so for state-of-the-art R&D to occur. • Macdonald (1996) • These boundary-spanning people are ‘knowledge enablers’. • Gertler (2003)

14. Higher Education Institutions as Knowledge Brokers • Universities are core institutions within knowledge-based regions, because universities are ‘centrally involved in knowledge transfer, intended and unintended, formal and informal’. • Howells (2002: 877) • Knowledge transfer is neither predictable nor automatic, and it must rely on people with the ability to serve as bridges across boundaries. • Knowledge brokers who have credibility and understanding in both academic and commercial cultures are key catalysts in knowledge regions. • Reichert (2006)

15. Social Capital Contributes to Absorptive Capacity • Regional visionary capability depends on the absorptive capacity of the members of the network. • ‘Collective learning processes with sufficient creative social capital are the best guarantees for a high level of regional visionary capability.’ • Harmaakorpi and Uotile (2006: 787)

16. Conclusion • Much of what we know about social capital and its benefits comes from Europe. • Social capital is how people function productively with other people • primarily locally but also at a distance. • Social capital is part of a region’s ‘collective personality’, out of which innovation takes place. • Social capital is central to the development of regions.