Social Capital Inside Out: An Empirical Examination of the Relationship Between Organizational Social Capital and Communal Social Capital in Public Organizations
-
Sefit Hashavia-Tzuri
and
Amir Hefetz
Abstract
This study investigates the effect of organizational social capital (OSC) in non-profit organizations on communal social capital (CSC) in the communities where these organizations operate. The study has two goals: First, to theoretically establish rational for the relationship between internal organizational social capital (IOSC) and external organizational social capital (EOSC), especially with relation to public administration agencies in liberal democracies where social capital plays a major role in public policy. Second, to empirically analyze the reciprocal relationship between EOSC, CSC, and IOSC which constitutes an important product of the optimal public administration model in modern nations. A theoretical model was developed to study these relations and suggest several hypotheses. The field study was conducted in 72 community centers operated by the Israel Association of Community Centers. Participants were 1,015 employees (72 general managers, 501 middle managers, and 442 line employees) and 1,816 community members. The findings demonstrate partial support for the relationship between IOSC and EOSC and indicate that IOSC has a moderating influence on the relationship between the EOSC and CSC. Implications and suggestions for future studies in public organizations and their social and administrative sphere are highlighted.
1 Introduction
Public administration researchers have demonstrated that high levels of social capital and civic engagement within a community have a positive impact upon the performance of organizations (e.g. Andrews and Brewer 2013; Coffé and Geys 2005; Cusack 1999; Putnam 1993; Rice 2001; Vigoda-Gadot and Mizrahi 2007, 2014). Alongside the impact of community social capital on public organizations, studies also investigated the value and impact of organizational social capital on improving organizational aspects such as creativity, financial outcomes, innovation, exchange of information and execution of tasks in organizations in general, including public organizations (e.g. Cuevas-Rodríguez, Cabello-Medina, and Carmona-Lavado 2014; Dell et al. 2022; Houghton, Smith, and Hood 2009; Leana and Pil 2006).
This study analyzes the relationship between external and internal organizational social capital in public organizations and further explores the relationship with community social capital around these organizations. We follow Nonino (2013) and Tantardini and Kroll (2015) and more recent studies such as Rodriguez-Plesa et al. (2022) who argue that high levels of internal organizational social capital promote creativity, the exchange of information, effective teamwork, innovation and growth via an intra-organizational social network that provides access to information and resources and assists in disseminating them within the organization. Accordingly, the relationships help the organization to achieve its goals and increase the likelihood that information will be well-used for managerial purposes. Yang and Maxwell (2011) establish a link between two types of organizational social capital and argue that successful integration of information within a public organization is not entirely dependent on inter-organizational social networks, rather, once information reaches an organization from the outside, it must be distributed and disseminated within the recipient organization.
2 Theory, Model and Hypotheses
2.1 Background
Social capital (SC) is defined in the literature (Bourdieu 1986; Coleman 1988) as the ability of individuals and groups to secure benefits for themselves by joining communal networks and other social frameworks. In order to acquire SC, an individual must establish relationships with others where the others constitute the source of the benefit, rather than the individual himself. Putnam (1995) added a new dimension to SC theory from the field of political science and identified SC with the level of “civicness” within communities and entire societies. He maintained that SC is connected to multiple characteristics of social organizations, such as the social networks, norms and trustworthiness that enable action and cooperation for the collective benefit.
SC has a variety of effects; it is a source of social control and supervision, and it helps individuals and families obtain resources, find employment, achieve social mobility, and succeed in business, among other things (Portes 1988). SC promotes cooperation among citizens and government institutions, which is necessary to identify, adopt and implement effective policies within the community (Cusack 1999). It has been argued that there is a basic relationship between SC and the state, and developing SC is key to maintaining democracy (Szreter 2002). SC is also important in that it impacts commitment to equality, which may increase the possibility that marginalized population sectors will have access to public services (Rice 2001).
Organizational OS (OSC) is defined as the sum total of the actual and potential resources contained within the network of relationships of a social unit that are accessible through the network and attained from it (Parra-Requena et al. 2015). OSC can be divided into Internal OSC (IOSC), namely the interpersonal relationships and other relationships within the organization, and External OSC (EOSC), which includes all of the relationships beyond the organization. Nahapiet and Ghoshal (1998) differentiate between three interconnected dimensions of SC: the structural dimension (the relationships among different agents); the relational dimension (the trust between agents); and the cognitive dimension (the joint goals and values shared by the different agents). Each of these dimensions endows the organization’s members with communal resources. Structural SC points to the existence of a network that has access to people and resources, while the cognitive dimension and the relational dimension reflect the capacity to exchange resources (Andrews 2010).
Community SC (CSC) is described as the entirety of institutions, relationships and norms that form the quality and quantity of social interactions within a community, meaning, it is the unifying force that joins these parameters together. This term refers to characteristics such as social networks, norms, and interpersonal trust that facilitate the coordination and collaboration that yield mutual benefits. A community that is characterized by a considerable amount of SC is an easier place to live. Civic engagement networks promote norms of reciprocity and contribute to the emergence of social trust, facilitate coordination and communication, promote joint civic engagement and build a model of successful cooperation (Bourdieu 1986; Coleman 1988; Putnam 1995).
2.2 Model and Hypotheses
The research model proposes a series of relationships between different elements of social capital, both on an organizational level and on a communal level, whose rationale is based on previous research studies (Figure 1). The relationships under discussion represent several new directions of studying social capital and its implications.
Research model. Note. H1, H2, H3 are the main hypotheses. Control variables were added to control for possible confounding effects.
2.2.1 The Relationship Between EOSC and IOSC
EOSC is defined as the network of relationships between the organization and other external organizations, such as customers, stakeholders, and the wider environment in which the organization operates (Koka and Prescott 2002). This network gives the organization access to external service providers or partners, helps the organization gain funding, manpower and exchange of information (Koka and Prescott 2002; Leana and Pil 2006) and, most importantly, protects the organization from harmful external influences and helps the organization manage situations of uncertainty. EOSC is an effective mechanism for managing an intricate system of reciprocal relationships, helps establish alliances, and forms a mechanism of informal oversight (Cuevas-Rodríguez, Cabello-Medina, and Carmona-Lavado 2014). Interorganizational relationship networks help civil society deal with complicated challenges and social issues that call for a comprehensive and multidisciplinary approach that integrates the resources of several organizations (Koschmann and Wanberg 2016).
IOSC refers to the structural element and the relationships between actors within the organization, and it describes the quality of the relationships developed among colleagues within the organization (Andrews 2010; Leana and Van Buren 1999). This refers to relationships such as friendship, trust and respect that influence behavior. IOSC is manifested by employees who are focused on achieving common goals and committed to a joint vision, norms and shared values, whose interactions reflect mutual trust. A high level of IOSC points to a high level of trust and may promote creativity, mutual commitment, and an enhanced ability to generate knowledge and share it, which gives an organization a unique advantage over its competitors (Cuevas-Rodríguez, Cabello-Medina, and Carmona-Lavado 2014; Nahapiet and Ghoshal 1998).
Studies point to the importance of the relationship between IOSC and EOSC (Adler and Kwon 2002). Internal cooperation enables an organization to better coordinate external collaboration and helps an organization incorporate learning processes acquired externally within the organization (Houghton, Smith, and Hood 2009; Yang and Maxwell 2011). Hillebrand and Biemans (2004) add that employees of these companies do not differentiate between behavioral norms with their coworkers within the organization and behavioral norms with external partners. In order to promote democracy in modern nations, public administration must work collaboratively and in a manner that fosters trust, in both internal and external organizational processes at the same time (Brugué and Gallego 2003). It should also promote an organizational culture marked by cooperation and intra-organizational dialogue, and develop methods to form relationships with the environment in which it operates, including all sectors. Thus, the first hypothesis suggests that:
H1:
External organizational social capital (EOSC) is positively related with internal organizational social capital (IOSC).
2.2.2 The Relationship Between EOSC and CSC
The government, as a singular service provider with its own dominant agenda, cannot be the only player in the public sphere. Its role is to bring the other important players to the table and facilitate the creation of solutions to public problems by building a broad coalition of organizations from different sectors (Denhardt and Denhardt 2000; Thomas 2013). Accordingly, an important goal for modern public administration is to build networks with other organizations and with the public. These processes, relationships, and networks among different organizations and community members are described by Putnam (1995) as social capital. In order to succeed in developing social capital, it is necessary to form alliances that are as wide as possible and include communal players from different sectors (Chia 2011).
From an organizational perspective, the public administration’s array of relationships and networks with different organizations and citizens is expressed by EOSC. It has been found that employees with an extensive network of external relationships contribute to better performance of their teams, given that once they have acquired experience and methods of operation externally, they disseminate them among other units within the organization (Leana and Pil 2006). When organizations operate within a wide network of external relationships characterized by reciprocity and trust, it improves the performance of companies operating in foreign markets, as compared to their competitors (Ratajczak-Mrozek 2017). This network of relationships even improves financial outcomes and makes it easier to obtain funding sources (Brian 1999). An organization that is managed as a network and engages in frequent activity with external networks of public sector organizations improves its performance (O’Toole and Meier 2004b). Deep involvement with interorganizational networks enables non-profits to gain strategically important resources that cannot be developed in the intra-organizational context, that allow them to achieve their goals and increase their capacity to make an impact (Hardy, Phillips, and Lawrence 2003). Managers of public organizations and non-profits must place special emphasis on the exchange of resources and building trust in inter-sectorial relationship networks in order to maximize the positive influence of collaboration on its performance, as well as other dimensions of organizational operations (Chen 2008).
Social capital is also connected to the levels of actual achievements and an organization’s ability to meet its goals and objectives. Organizational performance and its efficiency as a public organization can be measured in accordance with the organization’s ability to actually reach the goals and objectives that it sets for itself (Boyne 2003; Jung 2011; Rainey and Steinbauer 1999). Researchers also note the importance of the characteristics of the organization involved in building the community, such as its understanding of processes within the community, genuine commitment, relationships predicated on trust, among other similar things (Mattessich 2009). An organization’s vision and the objectives that shape its involvement may promote the development of social capital within the community (Chia 2011).
Therefore, public organizations that seek to promote the processes of building community and increasing social capital within the community, will work to develop mechanisms that will help them to achieve these goals. High EOSC is an example of one of these mechanisms. It constitutes an effective method of managing systems of reciprocal relationships between the organization and its surrounding environment, including the community. Therefore, the second hypothesis is that there will be a relationship between EOSC in public organizations and CSC.
H2:
EOSC in public organizations are positively related with CSC in the communities in which they operate.
2.2.3 IOSC as a Moderator
Thomson et al. (2009) demonstrate that we live in a time when “networks” grow quickly and there is a need for more complex structures than the ones that we have had until this point in public bureaucracies or in various commercial companies. Today, organizations from different sectors are mutually dependent on one another, which generates new organizational structures, consolidates resources based on relationships, and leads to collaboration, in order to effectively solve complex policy issues and build communities. Studies maintain that there is a relationship between CSC and a variety of organizational processes in public administration including performance and achieving goals (e.g. Andrews and Brewer 2013; Cusack 1999; Putnam 1993).
EOSC is defined as the array of interorganizational ties, the trust between people, and the common goals shared by the members of the network. Ties between organizations enable the accumulation and exchange of information, create good conditions for developing new products, and constitute an effective mechanism for managing a complex system of reciprocal relationships, establishing complex alliances, and helping organizations meet their goals (Cuevas-Rodríguez, Cabello-Medina, and Carmona-Lavado 2014; Leana and Pil 2006). However, while public organizations need an array of external ties to improve their performance, a system of external relationships cannot achieve the organization’s goals and objectives on its own. Hillebrand and Biemans (2004) and Nonin (2013) argue that the effectiveness of external organizational ties is dependent on the functioning of networks within the organization and the intra-organizational mechanisms that will support them.
Accordingly, we can hypothesize that when IOSC is high, it contributes towards better coordination of external collaboration. Therefore, we will argue that the IOSC is the moderating factor that impacts the strength of the relationship between EOSC and CSC. The relationship between the organizational environment and the community, in social capital terms, is expressed through the presence of the public organization’s IOSC.
H3:
IOSC moderates the relationship between EOSC and CSC.
3 Methodology
3.1 Sample, Data, and DEsign
This study was conducted in 72 community centers operated by the Israeli Association of Community Centers, a government agency dedicated to building a national network of local communities and increasing their social capital.[1] These community centers provide leisure activities, supplementary education, and employment, among other things. Their primary objective though, is building social capital and communal resilience among residents of the communities in which they operate, by forming partnerships with local government, businesses, non-profits, and residents. Major players in these centers are instructors and principals who fill operational and managerial functions. To understand the organization, three layers of functions operate in the organization: (1) the managers/principals; (2) instructors who run the community activities; and (3) administrators, or those who are responsible for enrollment and alike. We approached all these employees by random sampling method.
Through our analysis of community centers, we seek to prove our research hypotheses which are based on previous studies that indicate that the characteristics of the organization that carries out interventions are critical to raising CSC effectively (Mattessich 2009), and the vision and objectives of the organization that carries out interventions may promote the development of social capital (Chia 2011). The study sampled 1,816 residents (20.6 % males and 79.4 % females) who participate in activities at their local community centers (25 residents per center, on average, ranging from 10 to 69 across the 72 centers, SD = 11), as well as community center 1,015 employees and managers [how many?], which included 72 general managers, 501 middle managers, and 442 other employees.
3.2 Variables
3.2.1 Dependent Variable
CSC was measured using a questionnaire developed by Onyx and Bullen (2000), a diagnostic tool that measures CSC by assessing several dimensions, whose combined data defines CSC. Questionnaire statement responses were on a Likert scale of 1–5. Validation of the questionnaire format: Exploratory Factor Analysis (EFA) showed distribution similar to expectations. After seven different research model dimensions were identified, it was determined that some factors were highly correlated with one another (r > 0.75). In this case, it can be assumed that the dimensions assessed were not sufficiently differentiated but given the possibility of approximating a complex model later, second-order factors can be constructed or the parceling method can be employed to enable the use of all items, without changing the original research tool. A confirmatory stage was conducted to provide construct validation to the final factor structure.
3.2.2 Independent Variables
IOSC: This variable was assessed with a questionnaire developed by Leana and Pil (2006) whose statements define the dimensions of the IOSC (responses were on a Likert scale of 1–5). The questionnaires were validated using Confirmatory Factor Analysis (CFA) for three dimensions of IOSC: Despite reasonable correlation, extremely high correlations were found between factors (from 0.77 to 0.88) and it was therefore decided to revert to EFA, which identified two factors a. structure, and b. cognitive.
EOSC: (1) Cognitive and relational EOSC was measured using a questionnaire developed by Thomson et al. (2009) that assesses employees’ attitudes towards the level of trust and sense of partnership regarding the goals and objectives their organization shares with its external partners. (Responses were on a Likert scale of 1–5). To validate the questionnaire, we used a method similar to the method used in analyzing the previous questionnaires. Given that we wanted to focus on two central dimensions, factor 1: management and governance that represent the cognitive dimension, and factor 2: norms of trust and reciprocity that represent the relationship dimension, it was decided to remove several questions whose statements were too loaded. (2) Structural EOSC was measured by examining the intensity of the relationships between the community center and its direct partners, from among the key partners with whom it has a network of relationships in the environment in which it operates. We used a network model developed by O’Toole and Meier (2004a). After questionnaire validation, it was decided to retain the original questionnaire. We controlled size of organization, budget and geographical location, gender age, and education.
3.2.2 Control Variables
For control we added two more variables, the periphery-core dichotomy and the organization size. Core-periphery differences is considered an important issue worldwide and in Israel in particular, which indicates access to financial and human resources at the core of social capital studies (Israel and Frenkel 2015, 2018). Organizational size was simply a control for relevant activities that resulted from the size (number of employees) of the organization, see for example a recent publication by Soochange and Daechan (2020). At the individual’s level, we controled gender affiliation, education level (a binary code for academic versus non-academic education), and community member’s age.
4 Findings
Our findings should be discussed in two stages. First, we present the preliminary results based on structural equation modelling (SEM). Next, we will present the main results by diving into the data and exploring additional aspects for the findings, to test and support the hypotheses:
4.1 Preliminary Results
Figure 2 presents a mixed two-level and aggregated scores for community members and center employees, respectively, based on their individual responses and illustration of the empirical analysis and hypotheses. The preliminary step generated employees’ scores and overall, provided construct validation for further hypothesis testing. The employees’ aggregated scores were implemented into the final SEM data, whereas the community members’ factors were assessed for both levels (L1 and L2) within the SEM framework, transferring the item value from L1 to L2 as randomly varying across communities. The main goal of this study was to test the effect of organizational social capital (IOSC and EOSC) on the social capital obtained from community members. In other words, we looked at the role of the community centers in building community social capital. Thus, the individual member was the unit of analysis at L1. The methodology included the parceling technique for high correlations between factor items (Bandalos and Finney 2001). CSC parcels were transferred from the observed at the member’s level (L1) to the community (i.e. center) level (L2) but retained the CSC latent factor at both levels. Note that the three sources of OSC were observed, or more precisely, externally calculated at step 1. Hypothesis H3 was defined as the interaction effect of IOSC on the path from EOSC to CSC, vertical line in Figure 2. We would expect that the higher the level of IOSC, the stronger the effect of EOSC on CSC. Moreover, different aspects of EOSC were measured and tested separately. To gain construct validity, we first used the EFA (Hefez and Liberman 2017) on a training sample to extract factor dimensions. The extracted dimensions were then applied into a measurement (testing) model to ensure that the preferred structures are the most effective way to present the data (Byrne 2012). All measurement models met the required threshold for goodness-of-fit, e.g. CFI, TLI > 0.95, thus, ensuring construct validity for the research instruments.
![Figure 2:
Schematic illustration of the two-level analysis with multiple-nesting data [maybe, just to explain the methodology and delete the figure]. Note. Rectangles for observed data, ellipses for latent factors, arrows for regression direction, broad arrow indicate random factoring L1 into L2.](/document/doi/10.1515/npf-2023-0061/asset/graphic/j_npf-2023-0061_fig_002.jpg)
Schematic illustration of the two-level analysis with multiple-nesting data [maybe, just to explain the methodology and delete the figure]. Note. Rectangles for observed data, ellipses for latent factors, arrows for regression direction, broad arrow indicate random factoring L1 into L2.
4.2 Main Results
Based on multiple-SEM models for the variety of EOSC types, Table 1 and Table A1 shows estimated relationships between IOSC (employees and middle managers) and the 12 different EOSC sources, each in a separate column, as phrased in hypothesis H1, all of which at the center level (L2). Results show that general managers interacted less with local authorities in centers located in the periphery as compared to centrally located centers (β = −0.31, p < 0.001), and more with employees and board members (β = 0.31, p < 0.05; β = 0.31, p < 0.05; respectively). Middle managers from periphery centers showed higher structural EOSC in interacting with employees (β = 0.25, p < 0.05). Organizational size positively affected middle managers’ interactions with employees, active citizens, and board members (β = 0.17, p < 0.01; β = 0.001, p < 0.05; β = 0.16, p < 0.05; respectively), namely, in larger centers these sources of social capital were larger. Higher IOSC by employees was related with higher general managers’ interactions with middle managers (β = 0.27, p < 0.05) but with lower interactions between middle management and local authorities (β = −0.20, p < 0.05). Higher IOSC for middle management was found to associate with higher middle managers’ cognitive EOSC and general managers’ interactions with private businesses (β = 0.32, p < 0.01; β = 0.39, p < 0.01; respectively) with lower rates of general managers’ interaction between general managers and employees (β = −0.27, p < 0.05). For goodness-of-fit of these 12 different models, Table A1 also provides standard fit indices such as CFI, TLI, RMSEA, SRMR. These indices all met the required threshold level.
The effect of internal organizational social capital on various external social capital sources; Standardized coefficients.
| Source of external social capital → | Cognitive | Principals’ structural | Instructors’ structural | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Organizational role → | Instructors | Principals | Local authority | Business | Managers and employees | Active citizens | Center board members | Local authority | Business | Managers and employees | Active citizens | Center board members |
| Level 2 – Main effects | ||||||||||||
|
|
||||||||||||
| Location: Periphery-core |
0.06 (0.09) |
0.09 (0.11) |
−0.31*** (0.09) |
0.06 (0.24) |
0.10* (0.12) |
0.02 (0.11) |
0.31* (0.12) |
0.15 (0.11) |
0.08 (0.11) |
0.25* (0.11) |
0.11 (0.15) |
−0.14 (0.10) |
| Organization size # Employees |
0.11 (0.06) |
−0.06 (0.05) |
0.01 (0.05) |
0.00 (0.00) |
−0.11 (0.10) |
0.03 (0.17) |
−0.09 (0.06) |
−0.04 (0.09) |
0.04 (0.06) |
0.17** (0.06) |
0.00* (0.00) |
0.16* (0.08) |
| Internal social capital – employees | 0.12 (0.13) |
0.05 (0.11) |
0.12 (0.11) |
−0.18 (0.13) |
0.27* (0.11) |
0.06 (0.13) |
−0.002 (0.09) |
−0.20* (0.09) |
−0.18 (0.12) |
−0.13 (0.13) |
−0.18 (0.11) |
0.04 (0.13) |
| Internal social capital – instructors | 0.32** (0.11) |
0.14 (0.11) |
0.01 (0.11) |
0.39** (0.14) |
−0.27* (0.11) |
−0.12 (0.11) |
−0.09 (0.08) |
0.08 (0.12) |
−0.14 (0.11) |
−0.14 (0.11) |
0.15 (0.08) |
0.13 (0.11) |
| R 2 | 0.33** (0.10) |
0.34** (0.10) |
0.33*** (0.10) |
0.33** (0.10) |
0.39*** (0.09) |
0.34*** (0.09) |
0.33** (0.10) |
0.34*** (0.09) |
0.34*** (0.09) |
0.33** (0.10) |
0.33** (0.10) |
0.34** (0.10) |
-
***p < 0.001, **p < 0.01, *p < 0.05. Standard errors in parentheses.
Table 2 reports on the OSC (internal and external) effect on the CSC. This table is divided between the external and internal sources of social capital, and within this division, it shows these effects for different types of OSC, which follows the design of hypothesis H2. The IOSC effect differed slightly across the 12 SEM models. However, we present one set of results to save space, whereas all results are shown in Table 3.
The effect of internal and external organizational social capital on community social capital at level 2.
| Independent effects | Effect on community social capital | External organizational social capital | Manager type | Effect on community social capital |
|---|---|---|---|---|
| Location: Periphery-core |
0.47*** (0.10) |
Cognitive external social capital | Instructors | −0.03 (0.14) |
| Organization size # Employees |
0.15 (0.09) |
Principals | 0.10 (0.12) |
|
| a. Internal Social Capital – Employees | −0.07 (0.11) |
Structural external social capital – communicating with local authority | Instructors | −0.11 (0.13) |
| b. Internal Social Capital – Instructors | 0.28* (0.12) |
Principals | −0.08 (0.13) |
|
| SEM correlation coefficient between a and b | 0.34*** (0.08) |
Structural external social capital – communicating with private businesses | Instructors | 0.10 (0.12) |
| Principals | −0.03 (0.14) |
|||
| Structural external social capital – communicating with non-profit organizations | Instructors | −0.05 (0.13) |
||
| Principals | −0.27* (0.11) |
|||
| Structural external social capital – communicating with active citizens | Instructors | −0.15 (0.19) |
||
| Principals | −0.11 (0.10) |
|||
| Structural external social capital – communicating with center board members | Instructors | −0.10 (0.12) |
||
| Principals | −0.04 (0.12) |
-
***p < 0.001, **p < 0.01, *p < 0.05. Shaded cell for correlation as extracted from the model. Standard errors in parentheses. Note. Independent effects received from the overall model yet changed slightly by the different models.
Main and interaction effects of internal and external social capital on community social capital at L2, standardized coefficients.
| Organizational social capital → | Cognitive external | Principals’ structural external | Instructors’ structural external | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| L2 | Instructors | Principals | Local authority | Private business | Mangers, employees | Active citizens | Board members | Local authority | Private business | Mangers, employees | Active citizens | Board members |
| a. External social capital | −0.03 (0.14) |
0.10 (0.12) |
−0.08 (0.13) |
−0.03 (0.14) |
−0.27* (0.11) |
−0.11 (0.10) |
−0.04 (0.12) |
−0.11 (0.13) |
0.10 (0.12) |
−0.05 (0.13) |
−0.15 (0.19) |
−0.10 (0.12) |
| I1. Instructors X a | 0.04 (0.16) |
0.09 (0.13) |
0.09 (0.27) |
0.26 (−0.31) |
0.19 (0.25) |
−0.02 (0.19) |
−0.01 (0.22) |
0.63** (0.21) |
0.09 (0.27) |
0.64*** (0.10) |
0.11 (0.27) |
0.31 (0.17) |
| I2. Employees X a | 0.24* (0.11) |
0.08 (0.13) |
−0.46** (0.17) |
−0.15 (0.38) |
−0.33 (0.21) |
−0.12 (0.34) |
−0.45** (0.17) |
−0.34 (0.41) |
−0.59*** (0.13) |
−0.27 (0.44) |
0.64*** (0.15) |
−0.70*** (0.06) |
| R 2 | 0.38*** (0.10) |
0.33*** (0.10) |
0.65** (0.22) |
0.45* (0.23) |
0.57** (0.20) |
0.38 (0.21) |
0.66** (0.19) |
0.86*** (0.18) |
0.83*** (0.15) |
0.85*** (0.11) |
0.93*** (0.05) |
0.94*** (0.03) |
|
|
||||||||||||
| I1 decomposition | ||||||||||||
|
|
||||||||||||
| Very low | −2.98 (2.56) |
−2.91* (1.25) |
||||||||||
| Low | −2.61 (2.22) |
−2.54* (1.08) |
||||||||||
| Med | −2.23 (1.88) |
−2.16* (0.92) |
||||||||||
| High | −1.85 (1.53) |
−1.79* (0.75) |
||||||||||
| Very High | −1.47 (1.20) |
−1.41* (0.59) |
||||||||||
|
|
||||||||||||
| I2 decomposition | ||||||||||||
|
|
||||||||||||
| Very low | −0.47 (0.43) |
2.67 (1.50) |
2.06 (1.09) |
3.08* (1.54) |
−3.49 ∼ (1.93) | 5.47** (1.60) |
||||||
| Low | −0.05 (0.27) |
2.04 (1.09) |
1.71 (0.87) |
2.67* (1.30) |
−3.02 ∼ (1.69) | 4.77** (1.38) |
||||||
| Med | .37 (0.21) |
1.40* (0.68) |
1.36* (0.67) |
2.26* (1.06) |
−2.55 ∼ (1.46) | 4.06** (1.17) |
||||||
| High | 0.78* (0.32) |
0.75* (0.31) |
1.00* (0.47) |
1.85* (1.82) |
−2.08 ∼ (1.23) | 3.36*** (0.96) |
||||||
| Very high | 1.20* (0.50) |
0.11 (0.26) |
0.65* (0.29) |
1.44* (0.59) |
−1.60 ∼ (1.00) | 2.66*** (0.75) |
||||||
-
***p < 0.001, **p < 0.01, *p < 0.05 ∼ p < 0.10. Standard errors in parentheses. Note. Each column for an independent SEM model.
Table 3 shows the interaction effects between internal and external social capital which were depicted in hypothesis H3. Counter to our expectations, the only relationship between EOSC and the CSC was found in the general managers’ interactions with non-profit organizations (β = −0.27, p < 0.05). Higher levels of EOSC were related with lower CSC and vice versa, whereas none of the other types of EOSC were found to relate with the CSC. In other words, these interaction effects may explain possible IOSC conditions, in which EOSC does influence CSC. Interactions 1 (I1 with middle managers’ IOSC) and 2 (I2 with employees’ IOSC) were decomposed into varying levels of IOSC (e.g. very low, low, medium, high, very high) H3. We found that middle managers’ IOSC interacted with external managers’ engagement with local authorities to affect CSC (β = 0.63, p < 0.05). However, the breakdown into levels did not indicate at which level this relationship worked, although the effect decreased with levels. In contrast, the negative middle managers’ engagement with managers and employees varied across levels of middle managers’ IOSC, ranging from stronger to weaker negative effect (simple slopes from lowest to highest: b = −2.91, p < 0.05; b = −2.54, p < 0.05; b = −2.16, p < 0.05; b = −1.79, p < 0.05; b = −1.41, p < 0.05). IOSC generated by employees interacted with several EOSC types to affect the CSC: (1) with middle managers’ cognitive EOSC (β = 0.24, p < 0.05); (2) general managers’ interactions with local authorities (β = −0.46, p < 0.01); (3) general managers’ interactions with board members (β = −0.45, p < 0.01); (4) middle managers’ interactions with private businesses (β = −0.59, p < 0.001); (5) middle managers’ interactions with active citizens (β = 0.64, p < 0.001); and (6) middle managers’ interactions with board members (β = −0.70, p < 0.001). The interaction decomposition resulted in support for hypothesis H3.
Finally, EOSC of various types positively affected CSC subject to the level of employees’ IOSC. When facing high or very high IOSC for employees, we found a positive relationship between general managers’ cognitive social capital and CSC (b = 0.78, p < 0.01; b = 1.20, p < 0.05; respectively). Similarly, we found the effect of general managers’ engagement with local authorities subject to medium and high internal employees’ social capital (b = 1.40, p < 0.05; b = 0.75, p < 0.05; respectively), and engagement with board members (b = 1.36, p < 0.05; b = 1.00, p < 0.05; b = 0.65, p < 0.05). Middle managers who generated EOSC through engagement with private businesses were positively related with CSC subject to increasing internal employees’ social capital to a decreasing extent yet significant at all levels (b = 3.08, p < 0.05; b = 2.67, p < 0.05; b = 2.26, p < 0.05; b = 1.85, p < 0.05; b = 1.44, p < 0.05). This was true for engaging active citizens although insignificant simple slopes (p < 0.10) and engagements with board members (b = 5.47, p < 0.01; b = 4.77, p < 0.01; b = 4.06, p < 0.01; b = 3.36, p < 0.001; b = 2.66, p < 0.001).
5 Discussion and Summary
This study aimed to explore the relationships between internal, external, and communal social capital in the public organization sphere and its implications for modern communities in liberal democracies. We followed growing interest in this field (e.g. Dell et al. 2022; Igalla, Edelenbos, and van Meerkerk 2020) and partially supported the relationship between IOSC and EOSC. In the cognitive dimension and the relational dimension, we did not find a link between the IOSC of employees and middle management and EOSC of general managers of community centers. We further found a positive relationship between IOSC reported by middle management and their EOSC in the cognitive dimension and relational dimension, though not in the structural dimension. These findings with respect to hypothesis H1 are supported by studies that found that the culture and accepted norms within an organization influence internal and external collaboration (Campbell 1998; Hillebrand and Biemans 2004). Additionally, intra-organizational conduct influences the way that an organization conducts itself with its external partners (Yang and Maxwell 2011).
Along with the above, different studies (e.g. Draulans, deMan, and Volberda 2003; Thomas 2016) show that the skills and abilities of alliance partners are critical to their performance within the alliance. Organizations invest a lot to train employees and thereby improve their performance, yet staff training is usually focused on the employees’ specific fields, and not on forming alliances with partners, which requires a specific skillset and knowledge base. A possible explanation of the study’s findings is that middle management has the behavioral norms to collaborate with the external environment, but they are lacking the skills to establish this collaboration. The IOSC is necessary for successful external collaboration, but its presence does not predict the presence of EOSC in the structural dimension.
However, the relationship between EOSC and CSC was not supported. The primary role of public administration is to increase its relationship and collaboration with citizens and establish coalitions with organizations from different sectors (Denhardt and Denhardt 2000; Thomas 2013; Vigoda 2002). This indicates a partnership where authorities and policymakers become leaders who must work to improve the lives of citizens, not because of their superiority or power, but because it is an objective to which they are committed (Vigoda-Gadot 2004). Public organizations that are committed to raise trust levels, relationships, and partnerships with their external environments, are working to raise CSC. EOSC is expressed by the organization’s activities that are directed towards it external environment, and it is reflected in the quantity and quality of the organization’s relationships with its environment, the establishment of networks with other organizations, and interpersonal relationships between people within the organization and people external to it (Houghton, Smith, and Hood 2009; Leana and Pil 2006).
There are several ways to explain the findings. First, assessing the criteria for a public administration organization to realize its goals allows for the evaluation of its performance efficiency and its ability to attain its goals (Jung 2011; Rainey and Steinbauer 1999). An organization’s success is indeed measured by assessing its ability to realize its mission, goals and objectives, and therefore assessing only its stated mission is insufficient. Formal objectives will likely remain broad declarations of mission and vision, and not be translated into practical objectives that can easily be measured (Boyne 2003). Community centers are public organizations whose mission is to build communities and raise their social capital. It must be assessed if the mission and vision are reflected in the actual strategies and practical plans, or if they remain merely statements of intent.
In addition, organizations do not recognize all the issues that are key to managing an alliance. Only a few public organizations encourage training or establish suggested work strategies for managing partnerships or external alliances (Thomas 2016). The findings may imply that the transformation of EOSC into CSC is far from trivial. It calls for more work among managers by improving their awareness and skills in contacting their communal environment. Public organization’s performance and impact on the community is influenced by its external relationships with other organizations and institutions, as well as the fabric of internal relationships: Usually an organization’s ability to function successfully is dependent on both (Adler and Kwon 2002; Hillebrand and Biemans 2003; Houghton, Smith, and Hood 2009; Leana and Pil 2006).
Finally, the moderating effect of IOSC on the relationship between EOSC and CSC was partially supported. Findings demonstrated that at times this relationship is positive, and at times negative (Hayes 2017). The strongest moderating effect was found for IOSC of middle management. The IOSC of this layer of managers as a moderating effect on the relationship between general managers’ EOSC and CSC: It seems that in all of the dimensions: cognitive, relational and structural, the IOSC produced by middle management has a moderating effect on the relationship between EOSC and CSC.
What may be the reason for that? The norms of internal collaboration in organizations are similar to the norms of external collaboration with external partners (Hillebrand and Biemans 2004). It seems that the set of norms expressed through internal and external organizational management at middle management levels of public administration organizations is linked to the set of norms expressed by the CSC of the community in which the organization operates. This finding reinforces what has been claimed in previous studies regarding the role that middle management plays in implementing and achieving organizational goals. Middle managers are more involved in the day-to-day functioning of the organization than senior management. Therefore, they are likely to be more creative and provide more focused and specific responses to the environment in which the organization functions (Ahearne, Lam, and Kraus 2014; Johansen 2012). It was found that when middle management feels significant to the organization, meaning when they report high levels of IOSC, it is expressed in the relationship between the EOSC that they form on the cognitive and relational dimensions and the CSC in the communities within which they operate, and in this sense, they promote the mission of the organization within the communities.
In contrast, the IOSC reported by community center employees does not have a moderating effect on the relationship between the EOSC of the middle management, in the cognitive and relational dimensions, and CSC. This may be because employees, despite the high levels of IOSC that they report, are not emotionally connected to the organization’s mission and its broader interests. These employees are not in the “line of sight” as defined by Boswell (2006) and therefore they do not see the relationship between their daily activities and the strategic goals expressed through the activities of the organization’s middle management.
6 Interpretations and Implications
There are three different ways to understand these findings. First, the gap between the sentiments and the skills necessary to form external relationships, collaborations, and alliances at the middle management level. When middle managers have a sense of trust and influence within the community center, it influences their feelings towards their external partners, and is thus connected to CSC. Consequently, they will try to form partnerships and establish alliances with external elements, but these partnerships will vary from actor to actor. Different skills and tactics are necessary to form partnerships with different types of actors and it seems that there is no one specific working method employed by middle managers in their external relationships. Although collaboration and alliances represent a growing element of business strategy, Draulans, deMan, and Volberda (2003) argue that inter-organizational alliances often lead to failure. This stems in part from the fact that companies have not built the infrastructure to manage alliances. Special management techniques must be implemented to strengthen the alliance capacity of an organization.
Second, Observing the organization’s goals, its method of operations, and the attitude of employees and managers towards the mission and operational goals that they must realize. Many public administration organizations are more involved in providing services and less involved in processes that increase social capital. To increase social capital, public administration must form excellent alliances that will last through the years and connect all the different actors in the communal expanse. This is its central goal and it must be expressed in the organization’s operational goals and workplans and understood by all the employees. Community centers must raise social capital, but they also need to provide services to residents. It seems that the processes of building community and raising social capital, even if they are part of the organization’s mission and vision, are not expressed in the operational goals that the community center must carry out.
And finally, the difference between the role of middle management and the role of the organization’s general manager and its influence on the findings should be noted. The greater the involvement of middle management in adapting strategies on-the-ground, the better the organizational performance (Ahearne, Lam, and Kraus 2014). Both in the private and public sectors, middle management is more important to organizational performance, given their involvement in organizational strategy and in the system of relationships that they coordinate within the organization. Middle managers build networks with their superiors in the organization, with other middle managers, and with stakeholders external to the organization, as part of their understanding that interpersonal relationships and personal acquaintances enable processes to be implemented more quickly. Middle managers develop and depend on relationships with actors external to the organization to ensure that complex goals that are beyond the performance abilities of the organization, will be implemented collaboratively and optimally (Morgan et al. 1996).
This study is thus in line with findings of previous studies that show a positive correlation between IOSC and EOSC in the private sector (Campbell 1998; Hillebrand and Biemans 2004) and in public administration (Yang and Maxwell 2011). Moreover, studies that assessed the relationship between OSC and CSC focused primarily the impact of CSC on public administration organizations in general, and specifically, on their performance (Andrews and Brewer 2013; Coffé and Geys 2005; Cusack 1999; Putnam 1993). We examined the relationship between OSC and CSC, based on the assumption that an organization’s relationships with its external environment (EOSC) is a variable that may be linked to the community as the organization’s external environment and as its objective, and the organization’s internal management (IOSC) has a moderating influence on it. It has been argued that public administration organizations must fill a social function by designing the public and communal expanse and building social capital in its communal environment by collaborating with local stakeholders. The goal of public administration though is not only to provide services, but to transform citizens into partners, to be involved in building communities, and to work for community empowerment (Block 2008; Taylor 2006).
7 Limitations and Final Comments
This study has several limitations that should be noted. First, the study was based primarily on self-report questionnaires, a method which may expose the study to a certain data bias. In addition. t the model did not include indices of the characteristics of the towns, which compromises our ability to understand who or what stands behind these relationships. A third possible limitation is linked to the fact that the study was carried out as a one-time assessment and does not reflect a trend or emerging directions of the relationship over time. It is suggested to conduct a follow-up study at different points in time and examine the attitude change of the residents and/or the full gamut of community center employees.
However, despite its limitations, this study primarily explored the relationship between OSC and CSC, with CSC examined as both a key goal and an important outcome. To assess the relationship between OSC and CSC as a goal and as a desired product, we suggest further inquiry into other outcomes of public administration organizations to better understand which organizational goals and tasks they are able to accomplish and which they can’t, given high IOSC or high EOSC. We suggest that In order to develop social capital in a community, it is necessary to generate opportunities for community members to be involved and participate in the political and economic system (Rohe 2004). Hence, future studies should examine residents’ feelings regarding different dimensions of CSC, as well as how involved they really are in decision-making processes in the communities and towns in which they live. Finally, the EOSC, IOSC and CSC should be studied further to better understand their interrelations and the complexity of the relationship between public administration organizations and the community.
Goodness-of-fit indices for all SEM models.
| Type of social capital | Model | CFI | TLI | χ 2 | p | df | RMSEA | L1 SRMR | L2 SRMR |
|---|---|---|---|---|---|---|---|---|---|
| Principals’ cognitive | 0.978 | 0.966 | 115.92 | <0.001 | 25 | 0.045 | 0.032 | 0.082 | |
| Instructors’ cognitive | 0.979 | 0.966 | 113.10 | <0.001 | 24 | 0.045 | 0.032 | 0.073 | |
| Principals’ structural | Local authority | 0.980 | 0.967 | 107.59 | <0.001 | 24 | 0.044 | 0.032 | 0.072 |
| Private business | 0.979 | 0.966 | 110.60 | <0.001 | 24 | 0.045 | 0.032 | 0.073 | |
| Non-profit | 0.979 | 0.966 | 109.87 | <0.001 | 24 | 0.044 | 0.032 | 0.073 | |
| Active citizens | 0.978 | 0.964 | 114.99 | <0.001 | 24 | 0.046 | 0.032 | 0.071 | |
| Center board | 0.979 | 0.966 | 108.33 | <0.001 | 24 | 0.044 | 0.032 | 0.072 | |
| Instructors’ structural | Local authority | 0.979 | 0.966 | 109.36 | <0.001 | 24 | 0.044 | 0.032 | 0.072 |
| Private business | 0.979 | 0.966 | 111.35 | <0.001 | 24 | 0.045 | 0.032 | 0.073 | |
| Non-profit | 0.979 | 0.966 | 109.44 | <0.001 | 24 | 0.044 | 0.033 | 0.076 | |
| Active citizens | 0.980 | 0.967 | 109.08 | <0.001 | 24 | 0.044 | 0.032 | 0.072 | |
| Center board | 0.978 | 0.965 | 113.18 | <0.001 | 24 | 0.045 | 0.032 | 0.073 | |
| Required threshold | >0.90 | >0.90 | <0.08 | <0.05 | <0.08 |
-
CFI: comparative fit index; TLI: Tucker Lewis index; RMSEA: root mean square error of approximation; SRMR: standardized root mean square residual.
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Articles in the same Issue
- Frontmatter
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- True Grit: Exploring Nonprofit Sector Resilience Following Economic Recessions
- Understanding Environmental NGOs’ Inclusiveness: A Comparative Analysis of Two Australian Climate Action Groups
- In Search of Systemic Impact: The Cooperative Assistance Fund and Program-Related Investments
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Articles in the same Issue
- Frontmatter
- Research Articles
- True Grit: Exploring Nonprofit Sector Resilience Following Economic Recessions
- Understanding Environmental NGOs’ Inclusiveness: A Comparative Analysis of Two Australian Climate Action Groups
- In Search of Systemic Impact: The Cooperative Assistance Fund and Program-Related Investments
- Social Capital Inside Out: An Empirical Examination of the Relationship Between Organizational Social Capital and Communal Social Capital in Public Organizations
- Does Rigorous Government Regulation on Nonprofits Improve Their Outputs? Evidence from China
