Wagerup pasture in front of refinery
Management research shows that social capital between a company and its various stake-holders confers numerous strategic advantages. It confirms the common sense observation that socially isolated entities can be easily manipulated by opportunistic coalitions using a ‘divide and conquer’ strategy.¹

The advantages of high social capital in stakeholder relationships include:²
Better access to financial capital
More innovation, greater corporate capacity to learn
Lower supply chain costs
Lower turnover/recruitment costs
Smoother regulatory approvals
Advance warning about socio-political risks and opportunities

 

1 For a theoretical elaboration of this point see:
Rowley,T.J. 1997. Moving beyond dyadic ties: A network theory of stakeholder influences. Academy of Management Review, 22(4): 887-910.
2 For reviews of studies demonstrating these benefits, see:
Svendsen,A.C., Boutilier,R.G., Abbott,R.M., and Wheeler,D. 2001. Measuring the business value of stakeholder relationships: Part One. Toronto: Canadian Institute of Chartered Accountants.
Svendsen,A.C., Boutilier,R.G., and Wheeler,D. 2003. Stakeholder relationships, social capital and business value creation. Toronto: Canadian Institute of Chartered Accountants.

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