Thursday, January 12, 2012

GALUNIC D. Charles, ERTUG Gökhan, GARGIULO Martin
The Positive Externalities of Social Capital: Benefitting from Senior Brokers Academy of Management Journal 55, 5 (2012) 1213-1231
The importance of an actor’s network to his/her private benefits is well explored. Less well understood are the positive externalities of social capital, that is whether an actor’s social capital “spills-over” and improves the outcomes of those to whom s/he is connected, creating broader, not just private, benefits. This paper examines how investment bankers add value to one another in the course of everyday work. Our concern is with a banker’s second-order social capital. The main question is whether being connected to a broker matters to the ability of the focal actor to add value to those around him/her. We argue and find that connecting to brokers matters contingent upon the broker being more senior than the focal actor. The networks of contacts who are of higher rank and/or the focal actor’s leader positively contribute to the ability of the focal actor to add value. Second-order social capital does matter, contingent on the contacts: senior brokers.