Social Capital of Trust and Managerial Strategies

Abstract

In this research we relied upon classical conceptions of social capital, put forward by P. Bourdieu and J. Coleman. We proceeded from the fact that social capital is norms of reciprocity and networks of civil activity. That is why it can noticeably expand the opportunities of social and economic development — since it promotes the coordination of people»s actions. Our research was focused on such a specific social and professional group as managers, because as representatives of the middle class they in many respects initiate social and economic changes in the country. At first sight, the following assumption seems to be completely natural: the atmosphere of trust promotes business activity, and trust is the social capital, which is converted into the development of management. Correspondingly, growth of trust give the opportunity to use more subtle techniques of management, which are inapplicable or not effective in the situation of low level of trust. Nevertheless it is important to get reliable empirical confirmation to these assumptions, to reveal internal mechanism of such conversion of trust into the development of management, into the perfection of managerial strategies of firms. Preparing and carrying out the research we used the method of triangulation. In this research qualitative and quantitative methods mutually supplemented and commented each other. From November 2003 to November 2004 questionnaire survey of 129 managers was carried out. During the same period of time we conducted 21 in-depth interviews with managers from the same target population aimed at the same problems. After the interviews the respondents were asked to fill in a short-cut version of the questionnaire, used in the above mentioned survey of 129 managers, to provide a better ground for the comparison of the results of questionnaire survey and the results of interviews. Besides, empirical registration of the reality under study was carried out from three points of view: managers (21), leaders of the organizations of employers (1) and wage earners (2). The total amount was 27 interviews. During the questionnaire survey we followed the principle of proportionality for the sectoral structure of industry of this region. Our research proved that even in the conditions of Russian crisis which hasn’t been overcome yet, trust acts as an important social capital. Firms, where managers build relations of trust with subjects of social environment, get a real advantage — more diverse and more modern management. This type of social capital cannot be a result of unilateral efforts of any separate subject. It is elaborated mainly by mutual efforts of subjects-partners. In this sense managers, if they want to expand the social capital of a firm, should act as agents of the formation of «trust networks» in the social and economic environment around them. Considerable value of such trust networks consists in the fact that they promote business, stimulate gradual transformation of competitive confrontation of firms into partner cooperation of the former rivals. Correspondingly, the completeness and diversity of trust networks between firms and subjects of social environment act not only as the social capital of firms and these subjects. They act as an aggregate social capital of the region, because the prospects of its development depend directly on its investment attractiveness. Unfortunately the level of trust of managers to the subjects of social environment, discovered in the research, turned out to be very low. Such low level of trust makes us speak about social anomie in Russian business life. The consequence of such anomie for the economy of Russia as a whole is that the capital, which could have been invested in the development of firms, including the industrial firms, escapes abroad. Of course in view of low trust of managers to the subjects of social and economic environment, the level and diversity of managerial practices turns out to be not so high. And this fact leads us again to the assumption that Russian industry can sink into a new stage of stagnation. The conducted analysis allowed us to single out 12 types of trust networks, which are formed by modern Russian managers of industrial firms. There is no doubt that in their main features trust networks coincide with the networks of real connections, which have been already formed by the firms for the provision of the success of their activity or are just beginning to be formed. It becomes clear that industrial firms are forced to behave selectively as regards the subjects of the social environment. If they have formed and have subscribed any concrete networks of contact and trust, then they are thereby «excluded» from other networks of contact and trust. At the same time each of these types of trust rather definitely displays the concrete managerial strategy, which was chosen by the concrete group of industrial firms. Correspondingly, we have to admit that the relations between many subjects of social environment of contemporary Russian firms are to a great extent disharmonious. And that is why the firms have to choose: with whom they need to come close and from whom they have to move away or to keep neutrality. However there is no reason to dramatize the situation. This disharmony is not sharply expressed, it is not a question of serious conflict. Negative correlations are not often found, and they do not reach a statistically significant level. But nevertheless, the conducted analysis revealed the fact that many subjects of social environment by their straightforward and inflexible functioning pursue their own interests, ignoring the interests of other subjects from the same social environment. They force the firms to support and satisfy their interests, to some extent to the prejudice of the interests of other subjects. From the above mentioned 12 types of networks we singled out three «geographically specialized» types of trust networks, three types of managerial strategies of industrial firms, strategies aimed at: - independence, relative all-sufficiency of the region; - getting the support from the federal center; - cooperation with the western structures; - the analysis allowed to single out the following stages, which determined networks corresponding to them; - the stage of relatively traditional functioning of the firm; - the stage of extensive development due to the absorption of other firms; - the stage of restructurization; - the stage of technological development; - the stage of innovation development. the influence of the level and the structure of trust on managerial strategies is apparent for these groups of firms. The dominating factor is the peculiarity of the strategy, which forces the firms to look for partner support from concrete subjects of the social environment. As for managerial strategies of firms, the conducted analysis makes clear that these strategies are formed to a great extent in response to the specific strategies of the subjects of the social environment themselves. For the existing Russian conditions this proves to be especially important, when subjects of geographical organization of the society are meant. It demonstrates again that a substantial reserve for the increase of the level of trust as the social capital of Russian economy lies first of all in the opportunities of regulation of the interaction between regions and the federal center, incentives, coming from the international market and national level of the organization of economic life. The elaboration of economic and industrial policy of the country as a whole and its most important regions could have already served both as a considerable step towards harmonization of the interaction of the mentioned social subjects and a step towards the increase of the level of trust of managers of industrial firms to them. This effect will be greater if the formation of this policy itself is specially aimed at the harmonization of interests of firms and subjects of the social environment in the widest sense of this word, if it is steadily aimed at the increase of the level of trust of the managers of firms toward their social and economic environment. In other words, since trust in management displayed itself as a significant social capital, capable of activating production, it is necessary for federal and regional bodies of management to set a deliberate and purposeful task - extended reproduction of this social capital - trust. As any other type of capital, trust is capable to transform into other values, it takes part in the processes of conversion, reproduction.