Social capital lends itself to interpretation. It is an all-encompassing and important concept for viewing present day businesses, economic situations, organizational behavior, politics and even in how self-interest can play out in areas like natural resources or public health. Social networks are connected inside and outside of themselves. They are found in groups and individuals. In many cases, individuals have connections of their own that can even function autonomously outside of an organization. In studying social capital, the various conceptualizations intertwine. Because of those linkages, the most effective way to examine social capital in an organization like The Gap is to consider multiple perspectives.
The reason that multiple lenses of social capital are most helpful in developing a concept that can be used to analyze The Gap's use of social capital is because the issues of present day commerce come from the issues of contemporary organizations. Social networks are more crucial, and even valuable, in a flatter and wider world, but they also need to be able to prevail in situations of ever-increasing social complexity. Globalization and outsourcing are common themes of American business at this point and The Gap's products are made in almost fifty different countries.
[...] The two most important elements of social capital for The Gap, Inc. (NYSE:GPS)—because of the competitive advantages it obtains in these relationships—are its customers and its suppliers. It is a complex process and social capital illuminates The Gap's success in ways that few other social or business concepts are able to do. Social capital is built by social networking. The better the social network and the more successful the social network, especially in the business environment, the greater the social capital. [...]
[...] By offering a consistent, well-made and useful line of apparel, social capital was built, in the strong, embedded way, with customers. Differentiation was generated in the way that "The Gap has been very successful with Banana Republic, and its decor reflects originality, creativity, and the personality of its location" (Michman & Greco p. 122). Making the Banana Republic stores different that The Gap, not just in the design of its clothes but also in the design of its stores, helped communicate a strong message and build a strong social network with a different base of customers. [...]
[...] Weak ties and structural holes provide the theoretical lens that is most powerful in examining the case of The Gap, given that that lens provides the idea that the ability to create connections that are productive and high in social capital, yet of shorter duration, can be a competitive advantage in terms of social capital. With these connections in the social network functioning as weak ties with structural holes, especially when considering that The Gap is often sourcing from international suppliers who are intentionally working in economies that have lower wages, one of their strengths is that mutual benefit and trust can be formed in situations that are quite far-flung and removed from the classic business model of a look in the eye and a firm handshake. [...]
[...] Given that social capital is the sum of resources that accrue because of mutual relationships, The Gap's non-localized social network is currently proving durable enough to weather the economic challenges. References Burt, R Structural Holes: The Social Structure of Competition. Boston: Harvard University Press. Carruthers, B. G. & Babb, S. L Economy/Society: Markets, Meanings, and Social Structure. Thousand Oak, California: Pine Forge Press. Cooke, P. (2007). Social Capital, Embeddedness, and Market Interactions: An Analysis of Firm Performance in UK Regions. [...]
[...] The Gap decreased the number of organizations that had long-standing social capital and emotional connections with many of the competition. This made more room for consumers to connect with The Gap. The one downside that The Gap has experienced is that the trust of embedded ties can also become a burden because an organization's reputation is displayed prominently throughout its social network. Failure to live up to a contract or verbal agreement (explicit or implicit) can decrease social capital in a way that spreads throughout all of an organization's social networks, as if the mistake or damage to the reputation is re- broadcast by the social network. [...]
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