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Senior Executive Relationship Networks

as a Catalyst for Value Creation

Jacques Marais

March 2013

In partial fulfilment of the requirements for the Executive MBA degree

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Abstract

For humanity to survive and prosper in the future, its need for food and energy must be met. It is,

however, evident that our current consumption and projected growth rates may surpass the earth’s

ability to support us. The imbalances between resource supply and demand are straining political

and economic systems, and changes in the global political economy seem to be accelerating with

consequences that reach across nations. Many of the solutions that were proposed in the past are

no longer relevant. Much of the necessary resources such as food, mineral commodities,

manufactured products and service capabilities exist but are not sufficiently leveraged to meet the

needs of the planet’s population.

The study examined the situation at a country level and considered South Africa as an example. The

main stakeholders were identified as Big Business, Government, Labour Unions, Small and Medium

Enterprises, Civil Society and the Unemployed. They are for the most part not unified and because of

these divisions are not able to mobilise the funds and skills that could extract maximum value to the

benefit of all.

The research focused on the role which senior executives in these stakeholder constituencies should

play. It is apparent that many senior executives are so caught up in the day-to-day management of

their organisations that they do not devote enough time and energy to building relationships with

decision makers outside their groups. They lack the social capital needed to broker collaborative

innovation and thus create value between organisations. This state of affairs was the concern of the

study.

The purpose of the research was to explore ways in which better solutions to business and societal

challenges can be found. It honed in on which factors could be leveraged to improve the social

capital of senior executives in order for them to effectively facilitate value creation. The Research

Question was: “How can the Social Capital of Senior Executives be improved to stimulate Value

Creation?”

The research methodology incorporated ontological philosophies namely Critical Realism and

aspects of Systems Thinking. Grounded Theory was used as the qualitative research methodology

using data gleaned from an interview process, and Beer’s yo-yo model was applied in the theory

building phase. Soft Systems Methodology was used in identifying possible actions to achieve

desired outcomes for the various stakeholders.

The core variables which emerged from the research and the developed theory showed that there is

a link between the social capital of senior executives and the level of value that can be created

through their relationship networks.

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The diagrammatic presentation of the theory is discussed in detail in chapter 5. A basic level of social

capital provides the opportunity for further enhancement of senior executives’ networking skills.

Through networking, senior executives interact with diverse people and have the opportunity to

develop normative management capabilities (dialectic ability, tolerance, congruence and

generativeness). These attributes strengthen the quality of their relationship networks which in turn

further enhances social capital. The network impact of senior executives grows and they become

able to secure and utilise resources more effectively for joint value creation. Senior executives need

to learn how to balance their embeddedness in their own organisations, with the brokering role they

need to fulfil in the wider network.

The study explored the worldviews of the stakeholders and a number of proactive interventions are

proposed. They include improving senior executives’ networking skills, creating visibility of their

relationship networks, improving their normative management capabilities, and educating them on

the practical use of network brokerage. The specifics are detailed in the relevant section of the

paper.

The theory that was developed is important because it gives the stakeholders a good view of areas

on which they can focus to address their concerns regarding the situation. The research field

covered is that of relationship networking among senior executives across various types of

organisations. The contribution of this study to the area of social capital is that it “brings home”

SE NetworkingSkills

SE Broker Impact

ResourceUtilisation

SE NormativeManagement

Capability

SERN Quality

SE IndividualSocial Capital

Value Creation

+

+

+

++

+

SE OrganisationalEmbeddedness

-

-

Quality

Position

Desired outcome

+

+

R

B

R.

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social capital principles to senior executives across a range of sometimes opposing stakeholder

groups in the South African context. It provides practical proposals as to how the social capital of

leaders may be enhanced to bring about positive change in polarised societies.

The ethical aspects of the study were considered in light of the proposed actions’ impact in four

areas. They were the maximising of social benefits and minimising of social injuries, the just

distribution of benefits and burdens, protection of the rights of those affected, and care shown for

those close to the problem context.

Limitations of the research included a time constraint which prevented a large sample of participants

being interviewed. This was overcome through triangulation of the empirical data with that found in

extant literature.

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Contents

Abstract ................................................................................................................................................... ii

List of Figures ......................................................................................................................................... ix

List of Tables ........................................................................................................................................... x

Glossary of Terms................................................................................................................................... xi

Acknowledgements ............................................................................................................................... xii

1. Introduction .................................................................................................................................... 1

1.1. Background ............................................................................................................................. 1

1.1.1. Networking – an old principle needed for today’s world ............................................... 1

1.2. Problem Situation and Concern .............................................................................................. 4

1.3. Structure of the dissertation ................................................................................................... 7

1.4. Purpose of the research .......................................................................................................... 8

1.5. Conceptual framework ........................................................................................................... 8

1.5.1. The setting of the study .................................................................................................. 8

1.5.2. Existing theory and other sources used in the research ................................................. 8

1.6. Research Question .................................................................................................................. 9

1.7. The Concerned Behaviour Over Time ..................................................................................... 9

1.8. Relevance of the study .......................................................................................................... 10

1.9. Conclusion ............................................................................................................................. 10

2. Research Methodology ................................................................................................................. 11

2.1. Introduction .......................................................................................................................... 11

2.2. Positions of the researcher in relation to the study ............................................................. 11

2.3. Research methodology framework ...................................................................................... 11

2.4. Ontology ................................................................................................................................ 12

2.4.1. Critical Realism .............................................................................................................. 12

2.4.2. Systems paradigms – toward a more accurate understanding of organisations ......... 14

2.5. Epistemology ......................................................................................................................... 15

2.6. Research Design .................................................................................................................... 16

2.7. Systems Thinking as Creative Holism .................................................................................... 17

2.7.1. The Viable Systems Model ............................................................................................ 19

2.7.2. Soft Systems Methodology ........................................................................................... 21

2.8. Research methods ................................................................................................................ 23

2.8.1. Stage 1: Data gathering ................................................................................................. 23

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2.8.2. Stage 2: Grounded Theory application ......................................................................... 23

2.9. Theory building ..................................................................................................................... 24

2.10. Intervention identification ................................................................................................ 25

2.11. Initial comments on research validity ............................................................................... 25

2.12. Conclusion ......................................................................................................................... 26

3. Research Results ........................................................................................................................... 27

3.1. Introduction .......................................................................................................................... 27

3.2. Data gathering ...................................................................................................................... 27

3.3. Grounded Theory application ............................................................................................... 28

3.3.1. Cycle 1 ........................................................................................................................... 28

3.3.2. Cycle 2 ........................................................................................................................... 29

3.3.3. Cycle 3 ........................................................................................................................... 29

3.3.4. Cycle 4 ........................................................................................................................... 30

3.3.5. Threats to validity ......................................................................................................... 31

3.3.6. Conclusion ..................................................................................................................... 31

4. Literature Review .......................................................................................................................... 32

4.1. Introduction .......................................................................................................................... 32

4.2. Parent discipline: Social Capital ............................................................................................ 32

4.3. Concepts from the Research Problem and Question ........................................................... 37

4.3.1. Senior executives as actors ........................................................................................... 37

4.3.2. Relationship network quality ........................................................................................ 37

4.3.3. Value creation ............................................................................................................... 37

4.3.4. Embeddedness .............................................................................................................. 38

4.4. Concept analyses of the Research Results ............................................................................ 38

4.4.1. SE Networking Skills ...................................................................................................... 39

4.4.2. SE Broker Impact ........................................................................................................... 39

4.4.3. Resource Utilisation ...................................................................................................... 40

4.4.4. SE Normative Management Capability ......................................................................... 40

4.4.5. SE Perceived Trustworthiness ....................................................................................... 41

4.4.6. SERN Quality ................................................................................................................. 42

4.4.7. SE Individual Social capital ............................................................................................ 42

4.4.8. Value Creation ............................................................................................................... 43

4.5. Limitations and conclusion ................................................................................................... 43

5. Theory Building ............................................................................................................................. 44

5.1. Introduction .......................................................................................................................... 44

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5.2. Choosing a scientific model .................................................................................................. 45

5.2.1. The Viable Systems Model ............................................................................................ 45

5.2.2. Cybernetics .................................................................................................................... 46

5.2.3. Social Capital ................................................................................................................. 46

5.2.4. The selected scientific model ........................................................................................ 46

5.2.5. Comparison of the scientific model with the Research Problem ................................. 47

5.3. Scientific model variables and testing .................................................................................. 48

5.3.1. Key variables from the scientific model ........................................................................ 48

5.3.2. Comparison of research results core variables with scientific model variables ........... 50

5.4. Theory (Causal Loop Diagram) development ....................................................................... 51

5.4.1. Interrelationship Digraph .............................................................................................. 51

5.4.2. Causal Loop Diagram ..................................................................................................... 53

5.5. Relationships between key variables from the scientific model, comparison with CLD and

confidence testing ............................................................................................................................. 58

5.6. Conclusion ............................................................................................................................. 59

6. Interventions ................................................................................................................................. 60

6.1. Introduction .......................................................................................................................... 60

6.2. Soft Systems Methodology as exploration and debate ........................................................ 60

6.3. Initial description and detailed expression of the problem situation .................................. 61

6.4. CATWOEs, root definitions and conceptual models of the relevant purposeful activity

systems ............................................................................................................................................. 61

6.4.1. CATWOEs ...................................................................................................................... 61

6.4.2. Root definitions and conceptual models ...................................................................... 63

6.5. Comparison of conceptual models to the real world ........................................................... 65

6.6. Recommended changes to address systemic challenges ..................................................... 67

6.7. Proposed actions ................................................................................................................... 68

6.8. Design propositions .............................................................................................................. 71

6.9. Conclusion ............................................................................................................................. 71

7. Conclusion and Evaluation ............................................................................................................ 72

7.1. Introduction .......................................................................................................................... 72

7.2. The C-Q-A flow ...................................................................................................................... 72

7.3. Utility ..................................................................................................................................... 72

7.3.1. Significance for the research problem .......................................................................... 73

7.3.2. Significance for the research field ................................................................................. 73

7.3.3. Significance for the research’s parent discipline .......................................................... 73

7.4. Validity of the research ......................................................................................................... 74

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7.4.1. Descriptive validity ........................................................................................................ 74

7.4.2. Interpretive validity ....................................................................................................... 74

7.4.3. Theoretical validity ........................................................................................................ 74

7.5. Ethical considerations ........................................................................................................... 75

7.6. Conclusion and future research ............................................................................................ 76

BIBLIOGRAPHY ...................................................................................................................................... 78

APPENDICES .......................................................................................................................................... 82

Appendix A: Research interview log ................................................................................................... 82

Appendix B: Interview introductory e-mail ......................................................................................... 83

Appendix C: Affinity Diagram .............................................................................................................. 84

Appendix D: Interrelationship Digraphs .............................................................................................. 89

Appendix E: Core variable concept analyses ....................................................................................... 91

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List of Figures

Figure 1: The expansionist perspective (Source: Rees, 2001) ................................................................. 4

Figure 2: World population growth ........................................................................................................ 5

Figure 3: Rich picture of the problem situation ...................................................................................... 5

Figure 4: Structure of the dissertation .................................................................................................... 7

Figure 5: The CBOT .................................................................................................................................. 9

Figure 6: Research methodology framework ....................................................................................... 12

Figure 7: The ontology of Critical Realism ............................................................................................ 13

Figure 8: Systems paradigms - the nature of organisations (Source: Gharajedhagi, 1999) ................. 14

Figure 9: Grounded Theory process (Source: Ryan, 2011a) ................................................................. 15

Figure 10: Maxwell's interactive research design (Source: Maxwell, 2009) ......................................... 17

Figure 11: The Viable Systems Model (Source: Beer, 1972) ................................................................. 20

Figure 12: The recursive nature of the VSM ......................................................................................... 21

Figure 13: The 7 step process of Soft Systems Methodology (Source: Checkland, 1981) .................... 22

Figure 14: Adaptation of Beer's yo-yo model (Source: Beer, 1994) ...................................................... 24

Figure 15: Initial core variables ............................................................................................................. 30

Figure 16: Literature review schema .................................................................................................... 32

Figure 17: Generic social structure (Source: Burt, 2005) ...................................................................... 33

Figure 18: Relationship between performance and brokerage (Source: Burt, 2012) ........................... 35

Figure 19: Good ideas and brokerage (Source: Burt, 2012) .................................................................. 35

Figure 20: Performance impact of brokerage combined with closure (Source: Burt, 2012) ................ 36

Figure 21: Beer's yo-yo model (Source: Beer, 1994) ............................................................................. 44

Figure 22: Scientific model .................................................................................................................... 47

Figure 23: Information flow for team networking ................................................................................ 50

Figure 24: ID development.................................................................................................................... 52

Figure 25: Causal Loop Diagram............................................................................................................ 57

Figure 26: Relationships between scientific model key variables ........................................................ 59

Figure 27: SSM logic .............................................................................................................................. 60

Figure 28: CATWOE diagram ................................................................................................................. 62

Figure 29: Schein's model of organisational culture ............................................................................. 67

Figure 30: First ID (reduced scale) ........................................................................................................ 89

Figure 31: Complex causality between the preliminary variables ........................................................ 90

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List of Tables

Table 1: Comments from the IBM study - Leading Through Connections .............................................. 1

Table 2: Systems Approaches ............................................................................................................... 18

Table 3: Interview participant selection using multiple perspectives .................................................. 23

Table 4: GT cycle 1 categories ............................................................................................................... 28

Table 5: GT cycle 3 category labels ....................................................................................................... 29

Table 6: Initial core variables ................................................................................................................ 31

Table 7: Final core variables .................................................................................................................. 31

Table 8: Management seniority correlation with network measures .................................................. 37

Table 9: Comparison of Research Results and Scientific Model variables ......................................... 50

Table 10: CATWOEs ............................................................................................................................... 63

Table 11: Root Definitions and Conceptual Models ............................................................................ 64

Table 12: Contextual impact on the core variables .............................................................................. 68

Table 13: CIMO...................................................................................................................................... 70

Table 14: Interview log.......................................................................................................................... 82

Table 15: Affinity Diagram layout example ........................................................................................... 84

Table 16: Affinity Diagram (variables 1-10) .......................................................................................... 85

Table 17: Affinity Diagram (variables 11-20) ........................................................................................ 86

Table 18: Affinity Diagram (variables 21-30) ....................................................................................... 87

Table 19: Affinity Diagram (variables 31-40) ....................................................................................... 88

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Glossary of Terms

SE: senior executive

SERN: senior executive relationship network

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Acknowledgements

My deep gratitude to my wife, Berénice, and my daughter, Jaime, for your unwavering support over

the past two years. I couldn’t have done this without you.

Thank you to Johan Dekker and Nico van der Westhuizen for encouraging me to start and stay the

course.

Many thanks to the research participants for sharing their thoughts and experiences. They are

Millard Arnold, Dr. Susan Cook, André Kruger, Lerato Matola, Musa Ngubane, André Robberts, Cobus

Rossouw, Marius Swanepoel, Dougie Truter and Jan van Rooyen.

Finally, thank you to Tom Ryan and the EMBA team. You helped me to see the world from a new

perspective.

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1. Introduction

“Too often, preparing for what the future will demand is hampered by assumptions that tomorrow

will be much like today.”

Steven Kenney

1.1. Background

The idea for this study had been germinating for some time but was really sparked by a number of

conversations I had over the past year. They took place in different settings and with different

people, from board meetings with CEOs to cups of coffee with entrepreneurs. The lament, especially

among leaders of large companies, went something like this... “I am so busy managing my business

that I don’t get to spend enough time with my clients”. From the customer’s perspective I heard

comments such as “our suppliers don’t make an effort to treat us as specially as they used to”. I

wondered why, if most business people accepted that being close to your clients is critical to

success, by their own admission they still weren’t making enough of an effort. It looked as if the

challenging economic climate of recent years had caused several executives to become inward

focused and more concerned with mitigating risk than seeking out opportunity.

1.1.1. Networking – an old principle needed for today’s world

Behind this conversation lies the age-old principle of networking. The saying “it’s not what you

know... it’s who you know” may be somewhat extreme, but it contains a kernel of truth. The

perceived value of social networking is evident from the uptake of platforms such as Facebook which

has close to a billion users, while the online business networking forum LinkedIn currently reports

around 200 million subscribers. Business networking is emphasised as an imperative by the findings

of the 2012 IBM study Leading Through Connections (Berman & Korsten, 2012). During the project,

more than 1,700 CEOs and public sector leaders from 64 countries and 18 industries were

interviewed. A sample of statements is shown in Table 1.

Table 1: Comments from the IBM study - Leading Through Connections

Respondent Statement

CEO, Financial Markets, United States “This is now a continuous feedback kind of world, and we need the organisational nimbleness to respond.”

President and CEO, Consumer Products, Canada “We need to mobilise our collective brain power for innovation.”

CEO, Chemicals and Petroleum, United States “The time available to capture, interpret and act on information is getting shorter and shorter.”

Unit Head, Government, Hong Kong SAR “Of course we need better information and insight, but what we need most is the capability to act on it.”

CEO, Banking, Vietnam “We tend to see everyone as a competitor, but we need to see them as partners...this is a cultural shift; it’s hard to change.”

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Respondent Statement

CEO, Retail, United States “In our industry, the biggest risk we face is not regulatory mandates, as many think. It’s industry disruption.”

From the study leaders: “The pressure to innovate is not subsiding, and organizations are teaming to meet the challenge. Compared to their less successful peers, outperformers are partnering for innovation more aggressively. But they are also tackling more challenging and disruptive types of innovation. Instead of settling for simply creating new products or implementing more efficient operations, they’re more likely to be moving into other industries or even inventing entirely new ones.”

Networking fulfils human needs. In the social context it can be the need for connectedness, while in

the business environment, individuals and organisations need things from each other in order to

improve their chances of success, so they connect with those they perceive as being able to add

value to their aspirations.

In their article Co-creating unique value with customers, Prahalad and Ramaswamy (2004)

emphasised that leaders need a new frame of reference for value creation. In a business

environment the classic approach to strategy development includes market research, understanding

what one’s own capabilities are, developing products and services to meet the perceived market

demand and then marketing and selling them. The closest one gets to a potential customer may be

through activities such as conducting surveys or engaging with test groups to gauge their appetite

for a new consumer product. This may work when you want to sell “widgets”, but it is not the best

approach when selling solutions. Business leaders need to have conversations with their clients

about how to identify and unlock value. Generative conversations are meant to help identify

opportunities to create unique value together; this is called co-creation. The value goes beyond a

new offering which may result from the collaboration. The actual engagement and co-creation

experience is of value for the individuals involved.

The authors proposed four dimensions for the co-creation of value. Dialogue refers to interactive

engagement between the parties with a bias towards action from all involved. Access alludes to the

open sharing of information. This increases the likelihood of individuals perceiving and acting on

opportunities for creative collaboration. Risk assessment is done by the participants and risk is

shared. Transparency means that prices, costs and profit margins are not hidden between

contributors. “As information about products, technologies and business systems becomes more

accessible, creating new levels of transparency becomes increasingly desirable” (Prahalad &

Ramaswamy, 2004, p. 4). Achieving these desired states requires networks of influential

relationships.

Despite the fact that networking to unlock otherwise unavailable value seems to be common sense,

in my experience relatively little of it truly happens in the business world. I use the example of

supply chain / value chain collaboration. The traditional way of using the word chain in this context is

somewhat of a misnomer as it brings a linear image to mind. Value networks is the more current and

correct way of looking at how value is produced (Christensen & Rosenbloom, 1995). The concept of

different businesses involved in aspects of a value network working together to reduce inefficiencies

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and cost by sharing information has been touted for many years. While some industries have

progressed along this path, several still remain caught in a proverbial “silo mentality”.

This type of networked activity means that the participants need to expand their circle of trust

(Aldrich & Dubini, 1991). A limited understanding of how to build and manage trust in a collaborative

network may be one of the biggest challenges to an intuitively advantageous principle being applied.

In their book Radical Openness, Tapscott and Williams (2013, p. 1) spoke of how organisations are

moving away from secretive practices, embracing transparency and sharing intellectual property.

They however noted that this approach comes with risks and responsibilities that have to be

understood and managed.

All of this requires deep skills in how to work with a diverse range of people while unlocking latent

value between stakeholders, however these skills are still not included in much of the formal training

that is available to future managers. To summarise this point, several people in leadership positions

know that networking is important, but may not have the “soft skills” required to make it happen.

It is evident that if one “zooms out” (Google Maps language for looking at the situation from a

higher level of abstraction) to include other stakeholders, the imperative of human connection to

generate value is not limited to the business milieu. On a daily basis the media is awash with tales of

human need and of how the people that could make a difference are not doing so. Our challenges

are complex and no one person or group has all the answers. Despite this, it seems that society is

becoming more polarised as pressure mounts, whereas it could be working together to find

solutions. At the same time there are many examples of how people and groups collaborate and

come up with wonderfully inventive answers to meet market needs and alleviate society’s

predicaments. What is the difference between the victims and the victors?

Bryson, Crosby and Stone (2006) drew learnings from the literature on cross-sector collaborations.

They stated that those wanting to deal with difficult social problems effectively and in a caring way

realise that multiple sectors of a democratic society need to collaborate. Agranoff and McGuire

(1998) and Eggers and Goldsmith (2004) are cited as corroborating Bryson et al.’s finding that cross-

sector collaboration is increasingly seen as necessary to address many of society’s difficult public

challenges. They see cross-sector collaboration as partnerships between government, business, non-

profits and philanthropies, communities and the general public. It is defined as “the linking or

sharing of information, resources, activities, and capabilities by organisations in two or more sectors

to achieve jointly an outcome that could not be achieved by organisations in one sector separately”

(Bryson et al., 2006, p. 44).

Hamann (2003) discussed an instance where the failure of business to work with other stakeholders

had produced a serious social ill. His observations proved to be farsighted as witnessed by recent

events in the South African mining industry - most notably the Marikana disaster in 2012. In 2003

one of the world’s largest platinum mining companies based in South Africa wanted to establish a

new open cast mine in the Rustenburg area. The plans were strongly opposed by the residents of a

small village close to the proposed new operation. This was a symptom of many other issues that

had been simmering between the area’s mines and local communities over the years. Things came

to a head and a precarious situation arose. The case study can be consulted for more detail. The

point is that a lack of communication and collaboration between business, local government and

communities led to a lose-lose scenario for all those involved.

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1.2. Problem Situation and Concern

The nature of the problem which this research seeks to explore has much to do with the level of

abstraction from which one looks at it. At a micro level we see individual people striving to, at the

very least, survive, but hopefully to prosper and even attain material wealth. At a higher level we see

various forms of enterprise ranging from small to big business. These are vehicles through which

people trade to achieve the previously mentioned goals. Altruistic organisations are also active and

are grouped under the banner of civil society. For the purpose of the study I chose the country level

view as a vantage point. It encompasses stakeholders which are also found at a global scale. Big

business includes multinationals that have significant parts of their revenues tied to operations in a

few key countries. Global mega corporations are in a category of their own because they are not as

dependent on country specific issues and can move their value chain components around the world

when conditions in one area are no longer favourable.

The model around which most of today’s businesses operate is that of expansionism. More

frequently businesses seek to be “responsible corporate citizens” pursuing “sustainable growth”.

This is laudable when it is a heartfelt response to mounting environmental and societal concerns.

Importantly, however, it assumes that we have an infinite environment into which we can continue

growing (Figure 1). “Expansionists treat the economy as an open, growing, independent system

which, because of technological innovation, lacks any fundamentally important connectedness to

the ‘environment’ (which is therefore treated as infinite)” (Rees, 2001, p. 2).

Figure 1: The expansionist perspective (Source: Rees, 2001)

This does not seem to make sense based on observations of how the earth is straining under the

weight of human waste. Before one brands big business’ (and the world at large) pursuit of

economic growth as irresponsible, we need to consider another driving force. Figure 2 shows how

the world’s population has increased over the past two millennia. Today the number is seven billion

people and counting.

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Figure 2: World population growth

Source: www.population-growth-migration.info

This raises the question of how people will live if the economy does not grow. It is not the purpose

here to explore this intractable problem, but rather to determine if there are ways in which leaders

can play a bigger part in finding solutions.

The problem situation is illustrated by way of a rich picture (Checkland & Scholes, 1990) that

captures the issues and actors pertaining to the state of affairs (Figure 3).

Figure 3: Rich picture of the problem situation

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For humanity to survive and prosper in the future, its need for food and energy must be met. It is

however evident that our current consumption and projected growth rates may surpass the earth’s

ability to support us. The imbalances between resource supply and demand are straining political

and economic systems and changes in the global political economy seem to be accelerating with

consequences that reach across nations. Chains of events such as the Arab spring, domestic conflict

on the continent of Africa, along with violent public protests in South Africa and across Europe, are

symptoms of increasing unrest among the world’s population. Large numbers of people have

become disenfranchised through unemployment and other forms of personal power loss.

Many of the solutions that were proposed in the past are no longer relevant and society does not

feel their potential benefit. New situations call for new solutions. As Kenny (2009, p. 3) noted, “too

often, preparing for what the future will demand is hampered by assumptions that tomorrow will be

much like today”. The solutions we need often do not have to entail ground breaking scientific

discoveries, but rather the effective use of existing technologies and capabilities. Global, regional

and national supply chains must be configured to bring supply and demand / need (there can be a

difference) together. Islands of resources in the form of food and mineral commodities, products

and capabilities exist and are not sufficiently leveraged to address the challenges we face and the

opportunities we could take advantage of.

There are those in whose reach it is to come up with answers to several of the questions being

grappled with. I describe the main stakeholders as Big Business, Government, Labour Unions, Small

and Medium Enterprises, Civil Society and the Unemployed. They are for the most part not unified

and because of these divisions are not able to mobilise the funds and skills that could extract

maximum value to the benefit of all.

Before we go further it is necessary to elaborate on the term “senior executive” as used in this study.

It refers to any senior leader in any size of organisation, including single-person operations such as

independent consultants. It includes the likes of business executives, senior government officials,

labour union leaders, civil society directors and entrepreneurs.

It is apparent that many senior executives (SEs) are so caught up in the day-to-day management of

their groups that they do not devote enough time and energy to building relationships with decision

makers outside their organisations. Burt (2000) explained why this is a problem for the individuals as

well as for the groups which they represent. He stated that society can be seen as a market in which

people exchange goods and ideas to pursue their interests. Some people and groups receive better

returns for the effort they make. Social capital posits that these people are somehow better

connected; they hold a position in the social structure of exchanges that allows them to benefit

more than peers with equal intelligence, talent and energy.

From my interaction over several years with leaders from different spheres I have observed that a

disproportionate number of SEs are not as well connected as they could be. They lack the social

capital (Burt, 2005) needed to broker innovation and thus create value between organisations. This

state of affairs is cause for concern.

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1.3. Structure of the dissertation

The SCQARE structure is used to create a logical flow throughout the work (Figure 4).

Figure 4: Structure of the dissertation

In the introductory chapter we consider the Situation that serves as the backdrop to the dissertation.

The justification for the work is discussed and so is the cause for the Concern from which the paper

arose. The introduction culminates in a research Question and an argument is made for the

relevance of the study.

In chapter 2 the research methodology is discussed in detail. The reader is introduced to the

research process and initiated in the systems thinking concepts around which the subsequent theory

and recommendations are built. This chapter lays the foundation for the logic that is used later in

the study.

Chapter 3 details the results that came out of the fieldwork. I explain how I went about gathering

data and then combine two forms of philosophy and analysis to distil the key factors that, if acted

upon, are likely to improve the problem situation.

The literature review in chapter 4 is important for two reasons. Firstly it sensitises the reader to the

scholarly body of work that exists regarding the topic of the study. Findings from the foremost

thinkers in the field inform the reasoning that is applied in the theory development section to follow.

I also take a closer look at the core results (derived variables) from chapter 3 to see what they are

about and how they relate to each other.

In chapter 5 a theory explaining the roots of the concerning situation is developed. One needs to

understand what could be causing the problem in order to find ways of doing something that could

alleviate the issues.

Proposed interventions are built in chapter 6. The proposals are positioned as an Answer to the

research question posed at the beginning of the paper.

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In chapter 7 I revisit the Concern-Question-Answer logic. The utility, validity and ethical

considerations of the study are discussed. I then conclude and make recommendations for future

research.

1.4. Purpose of the research

Broadly the purpose of the study is to explore ways in which better solutions to business and societal

challenges can be found. It specifically focuses on the role that organisational leaders need to play in

creating value that benefits all stakeholders. It hones in further on which factors could be leveraged

to improve the social capital of senior executives in order for them to effectively facilitate value

creation.

At a personal level I sought to enhance my skills in discerning which relationships are important to

deliver benefit to stakeholders and in understanding how to develop those bonds.

1.5. Conceptual framework

1.5.1. The setting of the study

My own exposure over the past few decades as well as the availability of near real-time global news

have led me to form a view regarding why the issues discussed in the problem situation section are

currently happening in the world. This forms my initial conceptual framework around which the

study is planned. As a research project progresses the researcher’s original ideas are often

challenged and some adjustment to the research direction and methods may be required. This did

indeed happen during the course of the study and is discussed in the last chapter in the section on

the validity of the work.

An apparently stark contrast between levels of success where strong teamwork is present and the

occurrence of failure where there is disunity led me to conclude that teamwork is desirable.

Teamwork depends in large part on the quality of relationships and communication between team

members. The associated challenges grow with the size of the group.

Globalisation has led to an increase in the interdependency of social, economic, political and

ecological systems, therefore the ability to collaborate has become critical not just within project

teams and between organisational departments, but also across external organisational boundaries.

Recent economic, political and social failures in many parts of the world indicate that there are

serious challenges which inhibit collaborative problem solving. Trust in political and business leaders

have dwindled following the post-2008 economic recession and evidence of regimes being ousted by

the populace.

I believe that the state of affairs necessitates a new calibre of leadership with skills that can unlock

potential value and lead to benefits being equitably distributed.

1.5.2. Existing theory and other sources used in the research

Existing theories on networking, social capital and applied systems thinking are used to develop a

hypothesis regarding the underlying factors that could be causing the observable problems. The

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main contributors over the years to these theories include Burt (social capital), Beer (systems

diagnosis and design) and Gharajedaghi and Jackson (applied systems thinking). Further data sources

came from my experiences as a senior business development executive, observations on the

research topic from other executives, clients and partners, and literature about the connection

between relationship networking and value creation.

1.6. Research Question

The formulation of the question is important as it hints at the direction of the study. At this early

stage of the process it suggests that a number of issues may transpire to be of consequence. They

are: the role to be played by SEs; the social capital associated with SEs; and that these factors can

lead to value creation. At this point I surmise that these features could be important but do not

presuppose that they will be so. This is tested during the empirical research and the literature

review.

The Research Question is: “How can the Social Capital of Senior Executives be improved to stimulate

Value Creation?”

1.7. The Concerned Behaviour Over Time

The empirical research conducted in the study is aimed at discovering the main systemic elements

behind the observed situation and the concern it produces. These components will be framed as

variables of which the quantum can increase, decrease or remain the same. Some of these variables

will be drivers of the dynamic interaction and some will be outcomes. There is one particular

variable that one wants to influence in order to address the concern about the problem situation. It

is called the Concerned Behaviour Over Time or the CBOT. The CBOT is senior executives’ social

capital and is referred to as SE Individual Social Capital (Figure 5).

Figure 5: The CBOT

If a SE’s social capital leads to rewards one would think that it is desirable for it to increase

indefinitely. This is however not feasible since we live in a world with inhibiters such as the social

mistakes made by the person, the competition from other people that could seek to dent his

reputation, and so on. The CBOT will typically improve until it fluctuates within an acceptable band.

SE IndividualSocial Capital

Time

Upper limit

Lower limit

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1.8. Relevance of the study

I propose that this research is relevant in light of the concerning situation that has been discussed.

The issues which were identified and that led to the study are being grappled with in business,

governmental and societal circles on a daily basis. They are common across countries, languages and

cultures. A sampling of the latest media highlights how topical the subjects of unmet human needs,

the need for leadership, and connection through collaboration for innovation and value creation,

are. Research by some of the foremost thinkers in these fields such as Prahalad and Ramaswamy

(2004), Bryson et al. (2006) and Hamann (2004), support the importance and urgency of finding

answers to deal with the challenges.

Recent field research such as the IBM study Leadership Through Connection (2012) confirms that, for

senior executives across the world, enabling connections for collaboration between decision makers

is critical to innovative value creation. From the conversations I have had with senior executives, it

seems that although several of them know that it is important to get personally involved with

external decision makers, they are caught up in operational management or they delegate the task

to people who are too junior to have the needed impact.

Some may argue that the proposed level of collaboration is an idealistic view and not feasible given

individual selfishness and greed that could exist in a social network. I concede that these obstacles

are at the heart of many failed partnerships, however if such negative actors are excluded by the

rest of the network its goals can be achieved, as is evident from numerous success stories.

1.9. Conclusion

In this chapter I have described how the study started and why it was undertaken. I have looked at

how population growth simultaneously calls for economic growth and creates demand, which

business sees as an opportunity to sell products and services. The political economy of countries and

the world seems not to be coping well with society’s needs and many systems from the past have

become obsolete. Significant resources still exist but are not sufficiently utilised to create value for

stakeholders. Leaders need to work together to find solutions that can mitigate the challenges. In

the next chapter I discuss the philosophical underpinning of the research, the systems thinking

approach and how the research was conducted.

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2. Research Methodology

“The imperatives of interdependency, the necessity of reducing endless complexities, and the need to

produce manageable simplicities require workable systems methodology and a holistic frame of

reference that will allow us to focus on the relevant issues and avoid the endless search for more

details while drowning in proliferating useless information.”

Jamshid Gharajedaghi

2.1. Introduction

The research is of a qualitative nature. The reader is introduced to the underlying philosophy and

the methods applied to discover what may be known about the fundamental issues and concern of

the study. A number of systems thinking concepts that will be used in the theory building phase are

elaborated upon. A research design outline encompasses the goals of the research, a conceptual

framework referring to the background of the research and which existing theory will be used in the

process. It poses the research question and considers the methods to be used. Aspects supporting

the validity of the study, as well as possible threats to validity, are discussed.

2.2. Position of the researcher in relation to the study

While this study was conducted I was working as a senior executive responsible for business

development in a blue chip company. This role put me in a position where I was able to observe the

internal organisational dynamics of the business as well as the interplay between it and its

environment. I was privy to the relationship successes and failures amongst other SEs, their teams

and their customers. My responsibility for supporting the company in achieving its financial

objectives meant that I was constantly looking for ways to improve the effectiveness of the sales

function. I was also involved in strategic client relationships and finding new partnership

opportunities. During this time and in the years leading up to it I became increasingly convinced that

business success could not be achieved without strong relationships. I thus had a keen professional

and personal interest in the outcomes of this analysis.

2.3. Research methodology framework

A framework depicting the logic and sequence of the research methodology is shown in Figure 6.

The rest of this chapter is arranged accordingly. The reader was introduced to the problem situation

and the research concern in chapter 1. The paradigms on which the research is based are discussed

under Ontology and the approach chosen to make sense of what is observed is outlined in the

Epistemological discussion. A structured research design was done to assist with the planning of the

study. The theory building process is followed by the identification of possible interventions in

answer to the research question.

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Figure 6: Research methodology framework

2.4. Ontology1

2.4.1. Critical Realism

Over the past few centuries the advancement of scientific study by observing the physical world has

produced a plethora of technologies that led to the improvement of human conditions. The success

of the observation of empirical results, postulation of what causes these outcomes and then

developing technology based on these theories led to the philosophy of empiricism. This is a belief

that the nature of things can only be discovered through what can empirically be observed by the

senses or human measurement instruments. The empiricist position was taken further to arrive at

the philosophy of positivism. Positivism argues that in the natural as well as social sciences, data

obtained from sensory experience and mathematical treatment is the only source of true knowledge

(Macionis & Gerber, 2010).

1 A philosophy concerned with the nature of being (the nature of reality).

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This view is problematic in that it does not seem to consider human bounded rationality. Bounded

rationality recognises that humans do not have unlimited information, time and processing capacity

(Gigerenzer & Selten, 2002) to fully understand the underlying causality of observed phenomena.

Over time people develop mental maps which help them to make sense of complex situations in

order to make decisions towards action. These maps are, however, based on what the people have

observed in their lives as well as the interpretations they have adopted. There is clearly significant

margin for error in this strategy. A groundswell of criticism of the positivist view led to the

development of another extreme; that of postmodernism. As a relativist approach it posits that

there is no absolute truth but that each individual has a personal reality relative to what they

interpret as the truth.

The philosophical foundation used in this research is that of Critical Realism, which was pioneered by

Bhaskar (1989). Critical Realism proposes that objects in the world exist whether or not the observer

is able to know them. It also states that knowledge of such objects is incomplete because knowledge

changes over time (Scott, 2007). It follows an approach of retroduction, which was described by

Sayer (1992, p. 107) as a "...mode of inference in which events are explained by postulating (and

identifying) mechanisms which are capable of producing them...". Put differently, the researcher

builds “a hypothetical model that if it were to exist and act in a postulated way, would account for

the phenomena in question” (Sangera, n.d.). Critical Realism views reality through a stratified

ontology of three domains, namely the Empirical, Actual and Real (Figure 7). The Empirical are those

events that are observed and experienced by humans. The Actual is a universe of all events which

occur regardless of human ability to observe them and are caused by underlying mechanisms and

structures. The Real is the realm of the underlying causal mechanisms and structures that lead to the

events in the Actual. Actors are influenced by these mechanisms but simultaneously their actions

cause the mechanisms to produce certain outputs (events, situations and conditions). This study

harnesses a specific method to explore possible mechanisms in the Real domain that may cause the

events observed empirically. This is discussed further in the section on Epistemology.

Figure 7: The ontology of Critical Realism

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2.4.2. Systems paradigms – toward a more accurate understanding of organisations

In the past people have tried to make sense of their worlds by adopting a variety of paradigms on

what systems look like and how they work. Gharajedaghi (1999) provided a useful synopsis of the

evolution of these organisational systems concepts (Figure 8).

Figure 8: Systems paradigms - the nature of organisations (Source: Gharajedhagi, 1999)

With the advent of the industrial revolution, the concept of the organisation was established. This

meant that workers were grouped together and processes were designed to resemble the structure

and achieve the efficiencies of the machine. Each part had a function and fulfilled it without

question. This concept can be referred to as a mindless system (a mechanistic view), i.e. the system

had an owner that used it as he saw fit.

Many large organisations today are managed as uniminded systems (a biological view); the

organisation is seen as a living system with a purpose of its own and that purpose is survival. The

uniminded system, e.g. a hierarchical company, has a choice but its parts (employees) do not. Critical

choices are made by the most senior entity, for example the board of directors. To maintain this kind

of organisation it is necessary for the employees to subscribe to, or at least toe the line to, a

paternalistic culture. “Errant” behaviour is not allowed.

A social organisation is an example of a multiminded system (a sociocultural view). The organisation

has purposeful members that voluntarily associate. The organisation has an intention but each

member also has a purpose as well as access to resources. Knowledge worker environments are

often well suited to this way of thinking.

The mechanistic view can be used to understand and address simple problems such as

manufacturing a machine. The world is, however, not simple and linear. The concept of

interdependency is today widely accepted in “modern” Western scientific, business and social circles.

Ironically this has been understood for millennia in older cultures. Native American appreciation for

harmony with nature, the African philosophy of ubuntu2, and Eastern philosophies that emphasise

the connection between the physical and the spiritual are but a few examples. Phenomena such as

the impact of atmospheric warming on global weather patterns and the recent near-collapse of the

global economy have demonstrated that the physical environment, social milieu and individual

people are interconnected. A shift in one area can set off causal mechanisms in the Real domain that

have dramatic consequences in seemingly unrelated areas.

2 A classical African worldview that states that people are people through other people.

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2.5. Epistemology3

Critical Realism has been chosen as the ontology in which this research is based. This raises the

question of how we can know enough about the causality underlying the research problem to design

a course of action that will deliver desired outcomes. The process of Grounded Theory is used to

achieve this. The principles of Grounded Theory were first expounded by Glaser and Strauss (1967).

Suddaby (2006) noted that it was developed as a practical method to help researchers in

understanding complex social processes. It is aligned with an interpretivist4 philosophy. Besides

empirical data that is collected through processes such as interviews, Grounded Theory has

foundations in extant theory which enhances the researcher’s theoretical sensitivity and helps him

to recognise emerging patterns. By following the process described here, a developing theory

emerges from the data. The theory points the researcher towards literature which further informs

and contextualises the findings (Goulding, 1998).

The methodology is applied in this research based on the synthesis of Ryan (2011a) (Figure 9).

Figure 9: Grounded Theory process (Source: Ryan, 2011a)

3 Branch of philosophy concerned with the nature and limitations of knowledge. It considers questions such as:

(1) What is knowledge? (2) How is knowledge acquired? (3) To what extent is it possible for a subject or entity to be known? 4 Interpretivism is a view in social science that the social sphere cannot be investigated using the same

methods as for the natural world. Researchers should consider the context in which they discover their findings.

Research Design

Data Collection 1Constant Comparison

Data Collection 2 Theoretical Sampling

Constant Comparison

Data Collection 3Theoretical SamplingConstant Comparison

Saturation

Reduction Sampling

Selected Literature Review

Theoretical Coding

Phenomenon

Grounded Theory

Saturated Categories

Developed Categories

Initial Categories Initial Core Variables

Selective SamplingData Collection 4

Final Core Variables

EMPIRICAL WORLD

Envelope of acceptable behavior

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In the study the inductive5 process starts with an observed phenomenon which was a cause for

concern for the researcher. The aim is to bring the quality (or any other appropriate aspect of the

phenomenon) to within a desired band, typically seeking to improve it over time. The trend is stated

as a variable and referred to as the Concerned Behaviour Over Time (CBOT). Once a research design

has been constructed the Grounded Theory process commences.

Initial data is collected through fieldwork, for example by conducting interviews with selected

participants. Open coding is done by abstracting statements from the interviewees as propositions.

Memoing (the recording of observations by the researcher) can also be used as a source of

propositions. Propositions are categorised by grouping statements with similar themes together

(axial coding). This process delivers a set of initial categories which start pointing towards an early

hypothesis, with the categories being labelled as preliminary variables. In the next round the data

collection becomes more “pointed” and through theoretical sampling6 new sources are selected.

Resultant data is held up next to the initial categories by constant comparison7. New categories may

emerge and existing ones are further developed. The theoretical sampling continues until no new

themes seem to emerge at which point the categories reach saturation8.

The interrelationship digraph (Brassard & Ritter, 2010) is a tool which provides an early indication of

causality between the categories which have been framed as variables. It may be used to highlight

those variables that are the strongest drivers or the most significant outcomes amongst the set of

categories. This process of reduction sampling produces a set of initial core variables.

A selective literature review is conducted to deepen the understanding of the first round of core

variables and to derive the final core variables. Theoretical coding is done by doing a concept

analysis of each core variable which leads to dependencies and causality between the variables

being shown. This is a hypothesis of a probable mechanism which underlies and influences the

CBOT.

Grounded Theory embraces the lived experience of participants and of the originators of other

sources of data. In certain circles this has been a basis for criticism of the research method, as some

argue that the personal views are laden with bias and taint the quality of data. Data triangulation

therefore becomes important in such a qualitative process and may be achieved by selecting

participants and data sources with a variety of perspectives on the problem.

2.6. Research Design

The research design framework of Maxwell (2005, p. 9) (Figure 10) is used in the study. He argued

that a traditionally linear sequential approach to research design is not conducive to qualitative

research “in which any component of the design may need to be reconsidered or modified during

5 Induction is a “bottom-up” approach. It infers general principles or rules from specific facts.

6 The researcher develops an increasing measure of theoretical sensitivity as his knowledge of the issues grows

during the research process. This helps him to become quicker in identifying and selecting relevant data sources. 7 Constant comparison is a kind of “wrestling” with the data. Through the researcher’s cognitive processes

patterns in the data becomes apparent and grouping along common themes becomes possible. This is not a statistical process and triangulation with other sources such as the literature becomes important. 8 Saturation happens when continued exploration of data sources does not produce new categories.

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the study in response to new developments or changes in some other components”. “The activities

of collecting and analysing data, developing and modifying theory, elaborating or refocusing the

Research Question, and identifying and addressing validity threats are usually all going on more or

less simultaneously, each influencing all of the others.”(Maxwell, 2005, p. 1)

Figure 10: Maxwell's interactive research design (Source: Maxwell, 2009)

The purpose of the research, a conceptual framework and the research question was addressed in

chapter 1. Research methods and preliminary comments on the limitations and validity of the study

are covered in chapter 2. A retrospective and more in-depth look is taken at research validity in the

concluding chapter.

2.7. Systems Thinking as Creative Holism

From the human perspective it looks as if our universe consists of an almost infinite number of

interdependent causal links between variables. We can, however, not solve problems if we are

paralysed by this seemingly incomprehensible web of relationships and events. One way of dealing

RESEARCH PURPOSEOrganisational•To determine how senior executives can better collaborate and improve their social capital to create value for stakeholders.

Personal•To enhance my skills in developing relationships that deliver benefit to stakeholders.

RESEARCH QUESTIONHow can the Social Capital of Senior Executives be

improved to stimulate Value Creation?

VALIDITY OF RESEARCHAspects supporting the validity of the study• I have been an unintentionally covert participant observer in my company for a year. I have thus experienced “uncensored” interactions with internal and external stakeholders.•Data quality is addressed through triangulation.

Possible threats to validity and the mitigation thereof •The short time frame specified for the study may make it difficult to conduct extensive iterations during the Grounded Theory process. This can be mitigated by taking care to ensure that propositions abstracted from the interviews are coded with attention to quality.•The nature of my work gives me access for interview purposes to most of the stakeholders relevant to the study. If some cannot be accessed I will use research literature and public records as a proxy for their views.

RESEARCH METHODS•Use the concept of multiple perspectives to select research participants.•Data will be gathered through interviews with senior executives of my company, of customers, of partners, of not-for-profit organisations and with entrepreneurs. •A literature review will be used to gain a deeper understanding of core variables.• Identify a probable causal mechanism that drives the strength of relationship networks by using a Critical Realism perspective and the Grounded Theory approach.•Use the yo-yo model of Beer (1984) for theory building.•Use Soft Systems Methodology (SSM) to identify and prioritise possible interventions in response to the research question.

CONCEPTUAL FRAMEWORKBackground to the study •There is a sharp contrast between levels of success between teams with effective collaboration and those where there is disunity.•Teamwork is needed to address business and social challenges.•This requires leaders with the skills to facilitate collaboration for value creation.

Existing theory and other sources used in the research•The work of Burt, Beer and Gharajedhagi on networking, social capital and applied systems thinking.•My experience as a participant observer in a senior executive role further informs my approach to the research.

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with the dilemma is to adopt a reductionist9 approach. This view has proved to be helpful in the hard

sciences and engineering arenas, and has enabled people to make large strides in the fields of

science and technology. In my view it has however failed in fields such as economics and sociology as

it does not explain and cannot predict emergent properties of multifaceted systems. Behaviour that

could not be envisaged by examining the parts in isolation emerges from the interaction between

parts. This adds another facet to the messiness (Ackoff, 2001) of the problems we deal with daily.

Holism prioritises the study of wholes before that of their parts. Holistic thinking has been steadily

growing in popularity and has prompted the development of a variety of systems approaches.

Jackson (2003) provided an excellent overview of systems thinking and methodologies. His work

helps the practitioner to understand which individual methods or combinations thereof are most

appropriate for using to work on a specific challenge. He called this ability to select, synthesise and

apply systems tools, creative holism. It is as much an art as a science and is best utilised by adopting

an iterative approach. He classified systems thinking approaches under four types (Table 2). For a

comprehensive treatment of these topics the reader is asked to refer to Jackson’s Systems Thinking:

Creative Holism for Managers (2003).

Table 2: Systems Approaches

Type A Improving Goal Seeking and Viability

Hard Systems Thinking

System Dynamics

Organisational Cybernetics

Complexity Theory

Type B Exploring Purposes Strategic Assumption Surfacing and Testing

Interactive Planning

Soft Systems Methodology

Type C Ensuring Fairness Critical Systems Heuristics

Team Syntegrity

Type D Promoting Diversity Postmodern Systems Thinking

Type A systems methodologies look for resources to be efficiently used in order to achieve goals.

They support the effective design of organisations to be adaptable in the face of complexity and

increasingly rapid changes in their environments. They strive for control and prediction to improve

organisational regulation.

9 Reductionism is a philosophy that states that complex systems are nothing more than the sum of their parts.

It holds that a system can be understood by breaking it up into its parts and then studying and comprehending the functions of the parts.

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Type B methodologies are meant to help managers decide which purposes their organisations

should pursue and to achieve a level of agreement between the involved stakeholders.

Type C methodologies aim to help managers improve their organisations by entrenching fairness.

They are emancipatory approaches looking to remove causes of illegitimate power and domination

that negatively affect some stakeholders. This is particularly relevant assuming that the organisation

wants to be sustainable.

Type D methodologies can help managers to improve their organisations by encouraging diversity.

This approach can create a healthy tension when contrasted with a “fairness above all else” view. If

managed well, difference is often conducive to creativity and care should be taken to not let bland

homogeneity (in the name of fairness) dilute this potential.

Two methodologies are used in the study to build a theory regarding the underlying systemic

mechanism and to identify possible interventions to address the research problem; the Viable

Systems Model and Soft Systems Methodology.

2.7.1. The Viable Systems Model

The study is concerned with improving the social capital of senior executives and is therefore of a

goal seeking nature. As such, principles of organisational cybernetics (a Type A approach) are

applicable. More specifically, the Viable Systems Model (Beer, 1972) is used to depict relationships

within organisations and between organisations and their environment.

The Viable Systems Model (VSM) was developed by Stafford Beer (1972) and is described in his book

The Brain Of The Firm. It uses an analogy of the human body to describe organisational dynamics

and is a tool to diagnose the viability of the organisational system.

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Figure 11: The Viable Systems Model (Source: Beer, 1972)

Figure 11 shows the various aspects of the VSM. The metasystem (M) may be likened to the brain;

the operations (O) do the work and the environment (E) is comprised of Political, Economic, Social,

Technological, Environmental and Legislative dynamics, and importantly other organisations and

actors.

Metasystem

System 5: S5 is compared to the higher brain function. It is responsible for policy, the identity of the

organisation and is the ultimate authority.

System 4: S4 is compared to the midbrain function. It processes information from the outside world

and focuses on scanning the environment, developing strategy, planning and innovation. It informs

S5.

System 3: S3 is compared to the lower brain function. It is concerned with providing an overview of

the whole Operation, finding opportunities for synergy and optimisation as well as enforcing policy if

required.

System 3*: S3* is like the parts of the nervous system that register pain. It is called the Algedonic

feedback signal and alerts management to abnormalities and causes for concern.

System 2: S2 is compared to the body’s sympathetic nervous system. It performs functions of

coordination and conflict resolution to ensure stability of the overall system. In an organisation

information systems and standard operating procedures are examples of mechanisms employed to

fulfil this need.

5

4

3 2

3*

E

M

O

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Operations

System 1: S1 is like the body with its muscles and organs. S1 does the work that the overall system is

designed for.

Environment

The system’s relationships and interactions with its environment are critical for system viability.

Another key principle of the VSM is that of recursion (Figure 12). It views organisations as systems

within systems. Each system is autonomously viable and is a subset of another system at a higher

level of recursion.

Figure 12: The recursive nature of the VSM

2.7.2. Soft Systems Methodology

Because the study explores the purposes of the actors in relationship networks as well as those of

the networks themselves, it calls for a Type B methodology. The Soft Systems Methodology

developed by Checkland (1981) is employed which follows a seven step process (Figure 13). He later

developed his methods further but the initial process is used here. It is not meant to be used

mechanistically but is a cyclic process with learning about the problem happening along the way.

R0

R1

R2

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Figure 13: The 7 step process of Soft Systems Methodology (Source: Checkland, 1981)

A succinct explanation of how the process works is provided by Jackson (2003).

1. An initial description of the problem that is causing unease.

2. A detailed expression of the problem through the use of a rich picture. The rich picture is a

graphic representation of the actors, entities and the relationships that constitute the problem

situation.

3. At this point systems thinking starts to be applied. Some relevant human activity systems which

may shed light on the problem situation are selected and used to build root definitions. It is

important to note that the different participants in, or observers of, the system have varying

world views. Each has his own Weltanschauung10. This is taken into consideration when

constructing the root definitions. To capture the heart of each hypothetically chosen system the

CATWOE framework is used. For each possible system this describes the Customers, Actors,

Transformation process, World view, Owners and Environmental constraints.

4. The root definitions are used to build conceptual models. Conceptual models contain activities

which are logically and sequentially structured. They represent the minimum activities that are

required to make the transformation in the root definition happen. These models are artificial

constructs not to be confused with actual mechanisms in the real world.

5. In this stage the conceptual models that spring from the different worldviews are compared to

the observed phenomenon in the real world. It elicits a conversation about which aspects of the

different models most closely resemble the problem situation.

6. Participants can now converse about which possible changes are the most desirable and also

feasible in light of the history, culture and politics of the situation or organisation.

7. Once agreement is achieved, actions can be designed and implemented to achieve the needed

changes.

10

The fundamental cognitive orientation of an individual or a group. A point of view.

1Situation considered

problematical

7Action to improve

the problemsituation 6

Changes:systemically desirable

culturally feasible

2Problem situation

expressed 5Comparison of models

to the real world

Real world

Systems thinkingabout the real

world3

Root definitions ofrelevant purposeful

activity systems

4Conceptual models of the

relevant hypothetical systemsnamed in the root

definitions

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2.8. Research methods

2.8.1. Stage 1: Data gathering

Initial data was gathered through an interview process. The interviews were of a conversational,

semi-structured nature. To incorporate the principle of multiple perspectives (Linstone, 1984) in the

selection of participants, the TOP model was used (Table 3). The descriptions of each of the

participants’ TOP viewpoints e.g. “control and subordination”, should be interpreted as being

benign.

Table 3: Interview participant selection using multiple perspectives

Perspective Participants

Technical (interested in control and subordination)

Business Integration Executive: Responsible for CRM implementation in a large South African blue chip company

Organisational (interested in socio-cultural norms and cooperation)

CEO of a large South African blue chip company

Chief Integration Officer of a large South African blue chip company

President of an international not-for-profit benevolent organisation

Managing Director of a large South African blue chip company subsidiary

Head of Research and Knowledge Management for a large South African community based organisation

Personal (interested in socio-political power and autonomy)

Former Minister Counsellor for the US Department of Commerce in South Africa

Successful entrepreneur and current chairman of a large South African healthcare fund

Divisional CEO of a large South African blue chip company

Owner of a South African Black Economic Empowerment company

2.8.2. Stage 2: Grounded Theory application

Cycle 1: Propositions11 are abstracted from the first five interviews. Homomorphic mapping12 by

using axial coding13 starts to produce initial categories.

Cycle 2: The notes from the remaining interviews are coded applying constant comparison and

produce additional categories while starting to saturate the initial set.

Cycle 3: More propositions are abstracted from relevant documentation such as sales and account

management processes as well as board reports, while constant comparison continues. Some

11

A proposition here is defined as a concise statement consisting of a subject and a predicate. 12

This is a process of many-to-one mapping. Some of the detailed attributes of the many concepts are discarded as they are synthesised to a higher level of abstraction. 13

An affinity diagram (see an example in Appendix C) is used to group propositions with similarity together.

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categories are subsumed by each other while some new ones could emerge. Categories become

saturated.

Cycle 4: Reduction sampling is applied to determine an initial group of core variables. Through

theoretical sampling, selected literature about the variables is studied and clear conceptualisation

takes place. The outcome is a final set of core variables.

2.9. Theory building

The theory building process is based on the yo-yo model of Stafford Beer (1994, p. 6) The specific

application of the process in this study is shown in Figure 14.

Figure 14: Adaptation of Beer's yo-yo model (Source: Beer, 1994)

Topic(Research problem)

Corevariables

Scientificmodel

Scientificmodel

Keyvariables

1

2

3

4 5

6

7

GT

Are they similar?

Is there strong similarity?

CausalLoop

Diagram

Relationshipsbetweenvariables

Conceptanalysis

Study relationships

betweenvariables

compare

Confidence testing

If not strongly similar, find

different vehicle

If low confidence,find different

vehicle

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1. The Grounded Theory process is followed to distill core variables related to the topic.

2. At this point a search is done to find a metaphor in the scientific world that may be similar to the

issue at hand as described in the research problem.

3. The key variables from the scientific model are extracted. These variables are compared with the

core variables from the research problem. If there is a strong similarity it means that there is a

good chance of achieving isomorphic14 mapping between the characteristics of the problem and

those of the scientific comparative model or theory. If the similarity is weak, a different

metaphorical model must be found and the process repeated. This iterative dynamic is why the

method is called the yo-yo model.

4. At this point one goes back to the left-hand side of the model. A concept analysis of each core

variable is done to determine its antecedents, attributes and consequences. This helps to start

seeing relationships between the core variables. The causal direction is highlighted when the

consequences of a variable are similar to the antecedents of another. It is then likely that the first

variable is influencing the second. The causal mechanism that underpins the CBOT is developed

and a Causal Loop Diagram (CLD) is produced.

5. The relationships between the variables abstracted from the scientific model are now studied

and the causality between them is recorded.

6. If at this point the CLD and the scientific variables with their relationships are strongly

comparable, one may say that there is sufficient isomorphism between the two models.

7. The researcher notes his confidence regarding the similarities between the models. The

implications and impact of possible differences are regarded. If any variations are considered to

have too high a degree of influence on the validity of the model, either part of the process is

repeated or it is redone entirely. If the confidence level is sufficient the resulting model can be

taken forward to be used as a fair hypothesis of the mechanism.

2.10. Intervention identification

In chapter 6 I use the Soft Systems Methodology to explore the perspectives of different

stakeholders on the research problem. The process of how stakeholders in different contexts would

go about identifying and prioritising possible interventions is illustrated. Interventions are identified

and framed as design propositions.

2.11. Initial comments on research validity

The nature of the GT process is such that the researcher is not a distant, uninvolved observer. Rather

than rejecting the measure of subjectivity this brings to the exercise, I acknowledge the fact that I

had my own initial views regarding the issues. To prevent this from introducing undue bias into the

research, care was taken to not lead study participants towards my or indeed towards other

14

Isomorphism refers to a one-to-one transformation. Homomorphism is a many-to-one transformation. The achievement of isomorphic mapping between the grounded theory core variables and the scientific model variables means that each variable in one corresponds with a variable in the other. Isomorphism between the causality of the Mechanism (see point 4) and the relationships between the scientific model variables shows that they are very similar.

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participants’ perspectives. Their contributions were triangulated with each other’s observations and

with relevant literature on the subject.

The time limit set for the research as part of UCT’s EMBA programme acted as a constraint to the

number of participants that could be interviewed to gather the initial data. In addition, the seniority

of the interviewees within their organisations meant that their diaries were often full and this

presented some logistical realities which had to be overcome. I did this by being especially selective

in meeting only with highly experienced individuals that would provide the multiple perspectives

needed for the study. A total of 10 executives were interviewed.

An abundance of research that casts a number of perspectives on the Concern of this study exists

and given additional time a more exhaustive literature study could have been done. I am, however,

satisfied that the literature which was consulted captures the essence of contemporary thinking in

the field.

2.12. Conclusion

A clear research methodology provides a good “road map” that one can follow as one embarks on

the journey. Along the way insights emerge and may even surprise the researcher. If this happens

the methodology may be adjusted but the implications of any adjustment and its impact on validity

should be understood. The research methodology proposed for this study provides sufficiently

diverse and relevant sources of data to ensure triangulation.

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3. Research Results

“There is nothing like looking if you want to find something. You certainly usually find something, if

you look, but it is not always quite the something you were after.”

JRR Tolkien

3.1. Introduction

The research methodology is applied here and the results that came to light during the process are

discussed. My observations of the real world problem and the concern I have about it pointed me in

the direction of where and how to collect information that could lead to a satisfactory answer. The

research follows the Grounded Theory (GT) process starting with data gathering and going through a

number of iterations until the results are distilled. The purpose of going through the procedure is to

find a set of key concepts from the sea of ideas and experiences of the study participants. This is

needed to understand what to focus on in order to best address the concern. These concepts are

framed as core variables which one needs so that one may know what to focus on in order to best

address the concern.

3.2. Data gathering

The data came from a series of interviews with selected participants. Interviewees were briefed on

the purpose of the study using an explanatory e-mail sent with the meeting requests (see Appendix

B). The message was framed with enough detail to pique their interest and to help them give some

thought to the topic before the interview. As found by Marais (2011), this is important so that the

meeting participants are mentally prepared to discuss the issues and contribute their perspectives.

Participants were selected so that multiple perspectives according to the TOP model (see chapter 2)

could be swept in. Selection also included practical considerations such as the availability of

interviewees within the allotted time frame for the study.

The interviews were semi-structured and conversational in nature and each lasted for an hour. I

started by briefly reviewing the reason for the study and explained to interviewees that I would

guide the conversation loosely around the research problem. I explained the concept and

importance of multiple perspectives to them and that I needed them to share from their personal

experience and their own viewpoints regarding the subject. During the interviews I allowed them to

speak freely with as little interruption as possible, especially if a new and interesting theme started

to emerge. A balance was kept between keeping the conversations open to allow emergence of data

and honing in on themes that were becoming evident to be common among the participants.

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3.3. Grounded Theory application

If necessary the reader is encouraged to consult chapter 2 for definitions of the GT terminology used

in the following description of how the process was applied.

3.3.1. Cycle 1

Ten senior executives were interviewed during the first cycle of the GT progression. Through an

open coding process a total of 274 distinct propositions were extracted from the conversations. The

pool of propositions formed the first data sample. Affinity diagrams (Appendix C) are used during the

first few cycles of the Grounded Theory process. These help the researcher to group similar

propositions in columns (also referred to as axial coding) and then to label the columns and frame

them as variables. This application of homomorphic mapping15 was used to highlight initial patterns

in the data and produced a set of 42 categories as listed in Table 4. I found this first round of analysis

to be a cognitively intensive process. It relies on the researcher’s ability to recognise similarities

between many data points. Besides the researcher’s experience and mental models, this ability is

also supported by the theoretical sensitivity developed through an early perusal of literature from

the study field.

Table 4: GT cycle 1 categories

Category number Category

1 Access to resources

2 Transaction (verb)

3 SE’s existing networks

4 Opportunity from network connectivity

5 Organisational benefit from networks

6 Competing commitments

7 Individual prominence

8 SE networking tactics

9 SE outsourcing of network tactics

10 SE networking activity

11 Tech-supported networking

12 Use of media exposure

13 Long term effort with relationships

14 Impact of SE designation

15 Explicit network description

16 Team approach to network building

17 Individual connections

18 Influence of connections

19 Professional / personal connection continuum

20 Individual integrity

21 Leverage (verb) of existing networks

22 Ability to see possible connection opportunities

23 Individual networking propensity (incl. personality)

24 Level of networking focus

25 Quality of relationships

26 Impact of network broker

27 Strategicness of conversations

28 SE peer-to-peer connection

15

This is a many-to-one mapping process. Propositions are grouped together i.e. one group contains many propositions.

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Category number Category

29 Impact of competition

30 Mutual benefit between parties

31 Organisational risk of relationship loss

32 Network size

33 Positioning in network

34 Network growth

35 Individual Normative Management capability

36 Perceived value added by network participant

37 Procurement governance impact on network benefit

38 Clarity of network rules

39 Quality of interaction

40 Understanding of network’s value creation

41 Participants’ shared interest

42 Selectivity in connection selection

3.3.2. Cycle 2

At this point I needed to augment my discernment with another methodical tool. The myriad of

relationships which could be produced by so many categories were too complex to continue

constant comparison “by sight” and it was necessary to introduce more rigour to the process early

on. To get a clearer view of which categories could be combined and which of them could prove to

be more influential, a first iteration of reduction sampling was done using the interrelationship

digraph (ID) (see appendix D, Figure 30). Constant comparison continued which helped to narrow

down the list of categories in preparation for the next GT cycle.

3.3.3. Cycle 3

Relevant documentation was chosen as the next source of data. This included a strategic account

plan for a large client of my company, a selling strategy used to secure a major new opportunity,

records of sales management processes as well as business development board reports. My

understanding of the issues grew during the research process. This helped me to identify and select

relevant data sources more quickly. Using theoretical sampling and more constant comparison,

propositions were gleaned from the documents and evaluated against the original categories. This

led to either the addition of new categories or some initial ones being subsumed by others. The

refinement narrowed down the list to 20 categories and with category saturation being reached they

were labelled as variables shown in Table 5. The CBOT was now introduced as a variable to bring the

total number to 21.

Table 5: GT cycle 3 category labels

Category number Category label (variable)

1 Individual social capital (CBOT)

2 Access to resources

3 Perceived trustworthiness

4 SE network leverage

5 SE competing commitments

6 SE networking skills

7 Networking technology use

8 Long term relationship effort

9 Explicit network mapping

10 Network building team approach

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Category number Category label (variable)

11 Networking selectivity

12 Network broker impact

13 Mutual benefit to participants

14 Organisational external relationship loss risk

15 Network positioning

16 Individual Normative Management capability

17 Participant's perceived value add

18 Customer loyalty

19 Excessive shareholder focus

20 Perceived individual integrity

21 Ability to see opportunities from connection

3.3.4. Cycle 4

At this point there were still too many variables to sensibly work with (appendix D, Figure 31) and

closer examination showed that some of them might have a lesser bearing on the problem than

others. Another iteration of the interrelationship digraph (ID) identified driver and outcome

variables (appendix D). Drivers are those variables which have the strongest influence on other

variables and outcomes are the variables most influenced by others.

The ID process of elimination produced a set of initial core variables and their hypothesised

dependencies are shown (Figure 15).

Figure 15: Initial core variables

The main drivers and outcomes are listed in Table 6.

.Access toresources

Individual socialcapital.

.SE networkingskills

.Explicit networkmapping

.Network buildingteam approach

.Perceived individualtrustworthiness

.Ability to seeopportunities from

connections

.SE networkbroker impact

Value creation

.Individual NormativeManagement capability

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Table 6: Initial core variables

Initial core variables Driver / Outcome / Neutral

1. Individual social capital Outcome

2. SE networking skills Driver

3. Value creation Outcome

4. Individual Normative Management capability Driver

5. Perceived individual trustworthiness Driver

6. Access to resources Outcome

7. Network building team approach Driver

8. SE network broker impact Outcome

9. Explicit network mapping Driver

10. Ability to see opportunities from connections Neutral

To get to a set of concluding core variables selected literature was reviewed. The purpose of this was

to broaden my perspective on the first round of core variables and gain a deeper understanding of

the relationships between them. Burt’s work on social capital (2005) and Hoebeke’s contribution on

Normative Management (1994) helped with a clearer conceptualisation of the variables. The final

core variables are captured in Table 7.

Table 7: Final core variables

Final core variables Driver / Outcome / Neutral

1. SE networking skills Driver

2. SE broker impact Outcome

3. Resource Utilisation Outcome

4. SE Normative Management Capability Driver

5. SE Perceived Trustworthiness Driver

6. SERN Quality Neutral

7. SE Individual Social Capital Outcome

8. Value creation Outcome

3.3.5. Threats to validity

During the data gathering phase one of the possible threats to validity that was identified in the

research design came into play; labour union representatives and unemployed people could not be

interviewed. As a proxy for unions’ views I drew on my regular observations of the rhetoric uttered

by union leaders during wage negotiations in my own industry as well as statements they have made

in the media. As far as the poor and unemployed were concerned, I was able to get information from

research such as the study Social Exclusion and Poverty: Translating Social Capital into Accessible

Resources by Boon and Farnsworth (2011). I was also in a position to use reflections from my

interaction with representatives of unemployed and poor communities stemming from community

service performed in my private capacity.

3.3.6. Conclusion

The core variables constitute the results of the research process. Their classification as drivers,

outcomes or neutral came from the ID process, and the import of this early view of their roles was

considered during the concept analysis of each in the full Literature Review. The concept analysis is

meant to provide an unambiguous view of causality between the variables, to be used later in the

Theory Building section.

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4. Literature Review

“Great literature should do some good to the reader: must quicken his perception though dull, and

sharpen his discrimination though blunt, and mellow the rawness of his personal opinions.”

AE Housman

4.1. Introduction

The purpose of the review is to show how the research is grounded in the extant body of knowledge

and literature. The literature review is done at three levels (Figure 16) and the parent discipline is

that of Social Capital. In the last two decades this subject has become more refined, with growing

consensus among scholars and practitioners as to the meaning and application of the concepts in

the field. Specific concepts from the Research Problem and Research Question are then considered

before more detailed concept analyses of the core variables resulting from the Grounded Theory

process are conducted.

Figure 16: Literature review schema

4.2. Parent discipline: Social Capital

The parent discipline within which this research is based is that of social capital. In addition to a

number of papers on the subject, the work of Burt (2005), Brokerage & Closure – An Introduction to

Social Capital, is used to explore the concept for the purposes of the study. He stated that “the

advantage created by a person’s location in a structure of relationships is known as social

capital”(Burt, 2005, p. 4). The concept of human capital posits that people who rise above others in

terms of various forms of success are better educated, more intelligent, more skilled and better

communicators. Social capital is about why some people or groups do better because they are better

connected with other people than their equally capable peers.

Parent discipline: Social Capital

Concepts from the Research Problem and Research Question:• A focus on Senior Executives as actors• Relationship network quality• Value creation•Embeddedness

SE IndividualSocial Capital

SE PerceivedTrustworthiness

ValueCreation

SE BrokerImpact

ResourceUtilisation

SE NormativeManagement

Capability

SE NetworkingSkills

SERNQuality

Core Variables

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Before going into more detail regarding the structural nature of social capital, it is worth considering

the following question: Is the concept an old one that has been dusted off and converted into a

management fad or does it indeed hold real value for an organisation? Coleman (1988), Bourdieu

(1985), Anheier, Gerhards and Romo (1995) and Smart (1993) as cited by Adler and Kwon (2002),

proposed that social capital is both “appropriable” and “convertible” but can be “sticky”. It is

appropriable in that an actor’s network of ties can be used for other goals such as gathering advice

and information. The advantages stemming from one’s location in a social network can be converted

to, for example, economic advantage. Social capital can therefore be of tangible benefit to

individuals and the organisations they are part of. Its stickiness means that the rate at which social

capital can be converted into economic capital may, however, be relatively low. Adler and Kwon

(2002) stated that social capital is unlike all other forms of capital in being “located” not in actors,

but in their relations with other actors.

Two terms that the reader is likely to come across in literature on social capital are those of the ego

(the focal actor in a relationship network) and the alter (one who is tied to the ego) (Soda & Zaheer,

2009). Other concepts that need to be understood are those of structural holes, network density,

network brokerage, network constraint and network closure.

Structural holes

Figure 17 shows a sociogram of a network structure with four groups; A, B, C and D. The dots

represent people or groups and lines show where information flows between them. Solid lines

signify strong information flow and dashed lines show weak flow. As individuals and groups focus on

their immediate tasks they can lose touch with other people in their external environment.

Differences in opinion and practice develop between groups. Over time people in groups grow to

hold similar views of what is important, what to do and how to do it. These groups become clusters

of belief and behaviour. The gaps between the clusters are structural holes in the structure of

information flow. Burt (2005, p. 16) noted that such holes have potential for value because they

separate sources of non-redundant information. Soda and Zaheer (2009) demonstrated that when

structural holes between teams are spanned, team performance becomes superior when compared

to that of peers.

Figure 17: Generic social structure (Source: Burt, 2005)

Network density

Clusters A, B and C are, for example, relatively closed network groups as the relations are more

dense (close) within the groups than beyond them. People in such groups are often brought

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together by being employed by the same company, working on the same project or other factors

that give them common ground and close proximity in terms of communication flows.

Network brokerage

An actor that has relationships across structural holes can act as a relationship and information

broker. Such a person unlocks value by bridging the divide between dense clusters and enabling the

flow of new information between groups. An example of this was illustrated by Stam (2010) who

showed that entrepreneurs who participate in networking events and who act as bridges between

events with few common participants are more likely to be opportunity brokers.

Network constraint

Burt (2000) calculated what he called a network constraint index. This is an indicator of how much a

network is closed to brokerage and is indicated on a scale from 0 to 100. Someone’s network

constraint is high if he has a small network (few contacts), a dense network (the contacts are closely

connected with one another) and/or a hierarchical network (sharing information indirectly through a

central contact). The network constraint is low if the person has more contacts, a network with

many structural holes (thus having opportunity for network brokerage) and where information is not

just channelled through one contact.

Network Closure

This is a phenomenon associated with dense networks. Closure has advantages and disadvantages as

it amplifies trust as well as mistrust. If an individual in the network has a reputation of either being

trustworthy or not, that reputation is quickly disseminated and is perpetuated by the close

relationship proximity and communication between network members. The cost and effort involved

in maintaining relationships in the network is lower than for that of relationships across structural

holes and relationships are less prone to decay. Closure facilitates the development of strong

relationships, trust is often higher between members, and social norms can be enforced in the

network.

Different people have uniquely different linkages to other people and are dependent on exchanges

with these others. Burt (2005, p. 56) used four stylised facts16 to draw conclusions from his empirical

research on social capital. The first two facts are about the mechanism of and returns to network

brokerage, while the last two facts are about those of network closure.

Stylised fact 1: Performance increases with brokerage

Groups and individuals that have networks bridging structural holes receive significantly more

positive evaluations from peers, earlier promotions and higher compensation.

16

The term stylised facts indicates that the conclusions drawn from the empirical data are true in the broad majority of observed cases. Burt’s stylised facts infer that there are underlying mechanisms that cause them to be observed.

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Figure 18: Relationship between performance and brokerage (Source: Burt, 2012)

Relative performance is reduced when structural holes are removed from a network, i.e. when a

person’s or group’s network is more dense or closed (Figure 18).

Stylised fact 2: Good ideas are associated with brokerage

“People whose networks span structural holes have early access to diverse, often contradictory,

information and interpretations which gives them a competitive advantage in seeing good ideas.”

(Burt, 2005, p. 62) These people have a vision advantage because they are privy to ideas in different

groups, whereas the group members may be blind to what is happening outside their tight circle. If

brokers have the ability to synthesise thinking and ideas across structural holes they can come up

with new ideas which are perceived as valuable by the inhabitants of the various dense groups.

Figure 19 shows the correlation between how people’s ideas were evaluated by managers as

valuable and their position in their respective networks (low constraint = brokerage opportunity;

high constraint = caught in group think).

Figure 19: Good ideas and brokerage (Source: Burt, 2012)

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Stylised fact 3: Performance is highest for closure within a group combined with brokerage beyond

the group

I believe this finding to be one of the most profound from the literature I have reviewed on social

capital. Figure 20 depicts four groups with distinct characteristics in terms of social capital. Group C

has low internal cohesion and homogeneous external contacts, as well as the lowest relative

performance. Group B has high cohesion but homogeneous external relationships and Group D has

low closure but diverse external contacts. Group A enjoys the best relative performance through its

combination of closure and brokerage. It benefits from the advantages of closure and is exposed to

varied and new thinking from other groups. In this way it is able to identify and pursue new

opportunities and thus create value.

Figure 20: Performance impact of brokerage combined with closure (Source: Burt, 2012)

Stylised fact 4: Closure reinforces network structure

When two people in a dense network each also have their own relationships with a third party in the

group, their relationship is said to be more embedded in the group and is less susceptible to decay.

Closed networks have an echo effect in that they amplify existing views. An example is that of a new

member of the group making a first impression on the others he meets. The “grapevine” may spread

those first impressions throughout the network before the person has a chance to meet the other

actors. If someone acts in a way that is contrary to accepted group norms, the news spreads fast and

the person is either expected to conform or may have to leave the group.

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4.3. Concepts from the Research Problem and Question

The Research Question is: “How can the Social Capital of Senior Executives be improved to stimulate

Value Creation?” The CBOT is “SE Individual Social Capital”. It is necessary to establish a common

understanding of the concepts contained in and issues raised by the question.

4.3.1. Senior executives as actors

The first point is why I have chosen to focus on senior executives as actors. The findings of Burt

(2005, p. 31) are depicted in Table 8. From a sample of 673 employees in a large electronics

company, the left hand column shows the distribution in terms of seniority levels. Percent Social

Isolates is the portion of actors in that management level that were not meaningfully connected to

any other person in the network sample. The Mean Network Size shows the number of colleagues

with whom the person has in-depth discussions. The Mean Network Constraint, previously defined,

indicates the actor’s opportunity to act as a broker.

Table 8: Management seniority correlation with network measures

Percent Social Isolates Mean Network Size Mean Network Constraint

VP or Director (25) 0% 12.6 29.8

Senior Manager (41) 5% 8.5 37.3

Manager III (121) 11% 6.4 50.2

Manager II (199) 27% 4.1 65.0

Manager I (287) 44% 3.4 73.6

The numbers show that connection increases with seniority as does individuals’ meaningful network

size, however network constraint decreases with seniority. The findings of Ertug, Galunic and

Gargiulo (2012) echoed this picture and showed that higher ranking managers have more leverage in

their relationship networks. They are able to use their network position to create value (more about

this later). If value creation is a goal I therefore believe that it is important to consider actors with

the highest chance of achieving this.

4.3.2. Relationship network quality

Next we consider the aspect of network quality. The structural position of the SE in the network is

important to enhance his social capital. Other factors have to do with relationships between the

actors. They include social interaction (Tsai & Ghoshal, 1998), trust (Kemper, Engelen, & Brettel,

2011), emotional closeness and frequency, as well as duration of contact (Burt, 1997) and long-term

relationships (Jarillo & Ricart, 1987). SERN Quality is one of the core variables from this study’s

results and a concept analysis is found below.

4.3.3. Value creation

The issue of value creation must be examined. Value creation in this context includes financial value

such as revenue and profit as well as societal value, which are benefits that improve the quality of

life of people. The Resource Based View (Fahy & Smithee, 1999; Ford, 1998 and GarcÍa-FalcÓn & Saá-

Pérez, 2002) posited that organisations achieve competitive advantage by using and combining

tangible and intangible resources to create products and services. Fahy and Smithee (1999) assumed

that the goal of managerial effort in a firm is sustainable competitive advantage. The creative

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leveraging of resources creates value and engenders inimitability17. I contend that when societal

benefit is an aim the concept of competitive advantage still holds, albeit in a different form.

Resources are still required to create such benefit and because such resources are not limitless,

some ideas or projects will get allocation while others do not. In that sense the initiatives “compete”

with each other. The skills of an organisation in how it uses resources to create goods and services

are its capabilities. Because of a constantly changing environment, these capabilities need to be

adjusted and updated in which case they become dynamic capabilities. Ryan (2011) explained that

“Dynamic capabilities emphasise the key role of strategic management in appropriately adapting,

integrating, and re-configuring internal and external organisational skills, resources, and functional

competencies toward a changing environment. Dynamic Capabilities are those competencies that

allow the firm to respond to and exploit a changing market environment”.

To have an impact, network actors must have the ability to help those who seek to connect with

them (Adler & Kwon, 2002). A senior executive has access to resources and normally has power to

influence their allocation. If he also occupies a brokerage position in relationship networks he is in a

position to see new opportunities for the combination and exchange of resources to create value

that may not be obvious to others. Because the value is linked to the relationships and not to

something tangible, inimitability is high and the prospect of creating sustainable competitive

advantage exists. The attributes of a low density network make it possible to continue to

dynamically develop value creating capabilities.

4.3.4. Embeddedness

In social networks individuals have relationships with individuals. Organisations as entities do not

have relationships with each other; the individuals in the organisations are connected to individuals

in others. This poses a risk to the value an organisation derives from its members’ social capital. If a

broker leaves the organisation it removes bridges (that were unique to the person) to other groups.

This can be mitigated if the broker is sufficiently embedded in their organisation, where the

information they are privy to is captured and is available even if they leave. It is a fine balance as

overembeddedness may restrict the flow of new ideas into the group (Uzzi, 1997). Group leaders

have a responsibility to manage the networks of inter-organisational linkages to uphold sustainable

organisation performance (Eisingerich & Bell, 2008).

4.4. Concept analyses of the Research Results

The Grounded Theory stage of the study produced seven core variables in addition to the CBOT

variable. A concept analysis of each may be found in Appendix E and provides important detail which

enables the reader’s understanding of the components underpinning the variables. In the discussion

it is noticeable that some points are repeated amongst the variables. This indicates that the

consequences of certain variables are antecedents of other ones. The causal relationships between

these variables emerge in such a fashion and are used to establish a mechanism in the theory

building process. Acronyms used are SE (senior executive) and SERN (senior executive relationship

network). The variables are SE Networking Skills, SE Broker Impact, Resource Utilisation, SE

Normative Management Capability, SE Perceived Trustworthiness, SERN Quality, SE Individual Social

17

Inimitability is a measure of how difficult it is for competitors to imitate the product or service created through resource utilisation.

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Capital (the CBOT) and Value Creation. They are discussed here and emergent causality is used in the

theory building chapter to follow. The thinking here is informed by the work of: Adler and Kwon

(2002), Coleman (1988), Ertug et al. (2012), Kemper et al. (2011), Tsai and Ghoshal (1998), Burt

(1997), Boon and Farnsworth (2011), Eisingerich and Bell (2008), Berman and Korsten (2012), Baker

(2000), Dunlap and Uzzi (2005), Hoebeke (1994), Adelowore and Jamal (2008), Boesso and Kumar

(2009), Eriksen (2008), Cunnington, Limerick and Passfield (1994), Orton and Weick (1990), Leonard

and Onyx (2003), Maister, Green and Galford (2000), Covey (1990), Hamel (2007), Ryan (2011b),

Jarillo and Ricart (1987), and Burt (2005).

4.4.1. SE Networking Skills

Most of the executives interviewed during the data gathering process did not come from a

marketing or sales background but included accountants, engineers and lawyers. For many of them

purposeful networking is not part of their natural behaviour and they will need to pay attention to

enhancing their skills in this area. The first step for them is to acknowledge the importance of

building strong networks for their individual and organisational success. SEs need to engage with

sources of knowledge and experience and practice their skills.

The effective SE broker must be able to see opportunities arising from his network position. Analysis

of his network as well as that of his organisation can help to highlight bridging opportunities. Busy

SEs can use their teams to help with the active monitoring and management of exchange

relationships, and should engage customers and other important stakeholders as individuals. The SE

must reach out to diverse constituent groups e.g. business and political connections. Face-time with

contacts is necessary and consideration must be given to the joining of industry associations and

attending formal and social events with relevant contacts. Although some SEs do not naturally

engage in an informal social setting, this can be a key to the “inner circle” of the contact; it has to do

with exposing oneself to be more fully known and trusted. Establishment and maintenance of

relationships takes time and effort and the SE therefore needs to be adept at time management and

selective network development. A SE must maintain a balance between the breadth and depth of

relationships. Extensive partnering is seen as a key driver of the future success of today’s SEs and

organisations.

The detection of market changes, adaptation to market changes, as well as deep customer insight,

result from SE Networking Skills. This information is only valuable, however, if it is speedily

translated into action. Efficient exchange of information in the network highlights brokering chances

for the exploitation of resources, opportunities and emerging organisational identity. In response to

opportunity information, the building of specialised capabilities such as marketing helps to maximise

network performance. This is especially true for the combination of brokerage with closure.

4.4.2. SE Broker Impact

A SE has large potential to establish himself as a network broker and then to leverage that location

for advantage. By virtue of their career paths the most senior leaders often already occupy broker

positions in influential interaction networks. In addition it has been shown that rank and authority

provide real and perceived power. This leads to SEs being sought out by network brokers from other

organisations. Top managers actively nurture trust network relationships by volunteering their time,

expertise, insight or resources.

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Higher ranking brokers have access to more influential and connected people and higher rank

reduces the negative effects of dense networks. Powerful SEs are more likely to be able to

temporarily “escape” the restrictive norms and thinking of tight groups if it is necessary. They will

however then need to take their constituency on the new journey with them if it is worthwhile.

More senior players are also not as dependent on a group’s social structure to access and utilise

resources.

The impact of SE brokers is also felt in the second-order social capital they create for their

employees and organisations. SEs’ organisational embeddedness leads to their social capital

“rubbing off” and provides their connections in their own organisation with benefits from across

external structural holes. The SE broker’s power enables access to resources and to better quality

alters (i.e. they have influence). When alters from other groups approach a SE they often do so with

new opportunities because they are seeking access to the resources and capabilities that the SE can

bring to bear. The network location of the SE broker provides a vantage point from where he can see

information and opportunities that those in tight groups are unaware of. Through interpretation and

synthesising of non-redundant information he can come to wiser insights. The provision of such

relevant insight to his connected groups further increases his social capital. The SE’s power to act on

ideas means he has greater potential to combine and exchange resources with other actors.

Partnerships brokered by the SE amplifies innovation.

4.4.3. Resource Utilisation

For SEs to be allowed access to contacts’ resources they must have the needed social capital and to

have established trust relationships that bridge holes and reach into their own groups. Trust reduces

fear of being taken advantage of and helps groups to be more open to new and diverse exchange

partners. Trust also reduces transaction costs associated with exchange and improves network

efficiency through faster capturing, interpretation and reaction to information. The SE broker

facilitates teaming between organisations to build capabilities for innovation. Strategic alliances are

formed and breadth of vision leads to more effective collaboration. Data is converted into insight

and insight into action. Partners who specialise in single or specific stages in a value chain provide

complementary capabilities.

Resource Utilisation as a variable includes the provision, exchange and combination of resources and

the development of new capabilities. The network provides access to new technologies and service

know-how. Resources are deployed in novel ways and new industries may be invented. “Flexible

specialisation” refers to greater specialisation of in- and outputs in value chains. Value chains may be

profitably de-integrated and specialised marketing capabilities are required.

New sources of value are created through product and service innovation. Exchange efficiency

reduces input prices and helps with greater speed to market. Partners gain competitive advantage

and profits are optimised.

4.4.4. SE Normative Management Capability

For the reader who may be unfamiliar with Hoebeke’s (2000) value systems domain, the attributes

of normative management capability are covered first and are systematically touched upon.

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Tolerance

Participants do not judge or eliminate others with different world views. Relationships between

adversaries are essential to express values. Weaker parties are tolerant of power imbalances in

relationships.

Dialectic capability

Dialogue takes place between people with different points of view on a subject. Truth is discovered

through reason and logic in discussion.

Congruence

“Opposing” stakeholders debate difficult issues. Stakeholders learn about themselves through on-

going debate. One has rapport within oneself and is grounded in one’s own humanity and traditions.

The individual has internal compliance between the ideal self and the actual self. He has internal and

external consistency.

Generativeness

Constant dialogue and reflection happens between participants. Parties unlearn old

counterproductive habits. Stakeholders are able to recreate their own world views and are open to

new theories from which the users develop a new repertoire of behaviour. New solutions are found

and organisations recreate themselves.

The effective SE broker needs normative management capabilities in order to identify and leverage

common grounds between network participants with diverse world views. The application of such

capabilities is preceded by skills such as cross-cultural communication and team building.

Participants need to desire the establishment of truth through reasoned arguments and must be

open to persuasion and change. They must understand that they have bounded rationality and that

they need multiple perspectives of other people.

When the SE applies normative management good things result. New thinking patterns are

encouraged through rigorous feedback loops. Debate is of a high quality and may lead to new value

systems being created. Respect and trust grows between stakeholders as disagreements are

resolved and they learn to appreciate each other’s world views. A person’s congruency is

strengthened and other participants perceive sincerity from the individual. Relationship satisfaction

such as customer satisfaction with a service provider improves. A shared vision and common goals

and interests are identified and lead to cross-cultural cooperation. Parties develop new ways of

dealing with their environment and may engage in collaborative decision making. Loosely coupled

systems become more cohesive without strangling creativity. The perception of value of resource

exchange grows and long term reciprocity becomes possible.

4.4.5. SE Perceived Trustworthiness

Trustworthiness is an individual attribute. For the SE to be perceived as trustworthy a trust

relationship needs to be developed with his contacts. Trust may be built with a contact by the way

the SE communicates and acts. A first step is to engage (meet) with the person. Through intent

listening by the SE, the person can feel that the broker is genuinely interested in their problem or

proposal. When the SE frames back their understanding to the person, alignment between the two is

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created. The SE can propose alternative possibilities and through discussion jointly envision positive

courses of action and outcomes with the person. When they agree on a way forward the SE needs to

commit to act and follow through on the commitment. I would emphasise that it is important for the

SE to emphasise common goals and a shared vision. He needs to take an unselfish, long-term

approach to the relationship. Because of the investment such a relationship requires, purposeful

network building should be characterised by the careful selection of alters.

For SEs to be perceived as trustworthy by network partners they need to be authentic; if they are

engaging only to exploit the network it will become known in time. Character is typified by

truthfulness, ethical behaviour and reliability. Other important attributes are competence and

proven ability to add value. Inner strength of character and quiet competence are not quite enough,

however. The SE must find a way to signal competence and trustworthiness to desired partners.

When interactions between actors display these qualities, trust grows between them. When an

actor trusts the other person and believes him to be competent, fear of opportunistic behaviour

becomes less and transaction cost reduces. Cooperation and the sharing of resources become more

probable.

4.4.6. SERN Quality

Fertile ground for high quality SERNs is prepared by appropriate social interaction, diversity of

members and openness to new exchange partners. The SE needs sufficient networking skills and

should be known for reciprocity.

Quality SERNs are exemplified by low network constraints as well as sufficient and beneficial

structural holes. SEs are in positions of brokerage and bridge structural holes and alters have

influence and access to desired resources. SEs’ network linkages display stability, intensity, a

measure of emotional closeness, frequent interaction and longevity. The SE is adequately embedded

in the parent organisation.

SERN quality generates social capital for the SE and second-order social capital benefits the SE’s

organisation as marketing opportunities for the SE and the organisation arise. The SE’s ideas are

perceived as valuable and superior remuneration and career advancement often follow, which in

turn reinforces the person’s social capital.

4.4.7. SE Individual Social capital

This is the Concerned Behaviour Over Time variable that we seek to influence in order to achieve

desired outcomes for the SE and the organisation. Aspects of social capital have been elaborated on

as the parent discipline of this study and are mentioned again here.

Social capital is preceded by diverse personal contacts in clusters of political support. The SE broker

has established shared norms across his network and has developed trust relationships.

Attributes of the SE’s social capital include an optimal number of connections, influential alters,

strong relationships, low network constraint and low network density. The SE has access to broader

sources of information with better information quality, relevance and timeliness. The SE is skilled as

a broker who utilises relational ties to provide bridging between relatively isolated groups.

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Built on a bias towards action, the actor’s influence and power facilitates resource accessibility,

resource exchange and product and service innovation. The SE amasses resources and a positive

reputation. Positive externalities flow into his organisation and the network benefits from being

infused with information. Stakeholder relationships are strengthened and the SE’s chance of career

success is higher.

4.4.8. Value Creation

Value comes from SEs and their networks developing new ways of resource utilisation, coupled with

specialised marketing capabilities. The SERN is flexible to respond to changing circumstances and is

open to new ideas, technologies and ways of doing business. It has strong and open network

linkages and the equilibrium between network strength and openness is adjusted over time. A

balance between established and trusted and new and diverse partners is maintained.

Innovation of products and services may even spawn new industries or socially beneficial models

and organisations. Exchange efficiencies may improve, input prices may reduce, profits can be

optimised and the market may be reached faster. Supply chain silos can be broken down and

competitive advantage created for associates. Alliance partners may be able to address new markets

that would not be economically viable for a single firm.

Consequentially new sources of value are created and market (customer) needs as well as those of

shareholders are met. Social needs can be addressed in innovative ways and SE individual and

organisational success becomes sustainable.

4.5. Limitations and conclusion

The body of knowledge regarding the parent discipline as well as the further concepts relevant to

this study is vast. It does not fall within the scope and time limit of the study to have done a more

exhaustive exercise. I believe, however, that key and relevant aspects were identified and

considered.

The review illustrates how the study is connected to the related work that has gone before. The

findings from the review and the concept analyses of the core variables are now used in the theory

development.

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5. Theory Building

The stages of academic acceptance of an idea:

1. “It’s impossible.”

2. “Maybe it’s possible, but it’s weak and uninteresting.”

3. “It is true and I told you so.”

4. “I thought of it first.”

5. “We always knew that. How could it be otherwise?”

Dean Radin (1-4) and Ellen Langer (5)

5.1. Introduction

Beer’s (1994, p. 6) yo-yo model (Figure 21) is shown again and applied to derive a plausible theory of

how the mechanism that underpins the observed research problem functions, i.e. what happens in

the domain of the Real. Step 1 of the sequence has been completed and produced core variables

using Grounded Theory in chapter 3.

Figure 21: Beer's yo-yo model (Source: Beer, 1994)

Topic(Research problem)

Corevariables

Scientificmodel

Scientificmodel

Keyvariables

1

2

3

4 5

6

7

GT

Are they similar?

Is there strong similarity?

CausalLoop

Diagram

Relationshipsbetweenvariables

Conceptanalysis

Study relationships

betweenvariables

compare

Confidence testing

If not strongly similar, find

different vehicle

If low confidence,find different

vehicle

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The process is completed in this chapter as follows:

Step 2 – Identifying a scientific model and testing its similarity to the research problem.

Step 3 – Finding the key variables from the model and testing initial isomorphism with the core

variables from the research.

Step 4 – Building a theory of the systemic mechanism by developing a causal loop diagram (CLD).

The core variable concept analyses done in the literature review are used to find the causality

between variables.

Step 5 – The relationships between the scientific model’s key variables are studied to ascertain

causal direction.

Step 6 – The level of isomorphism between the CLD (the theory) variables and those of the scientific

model are examined.

Step 7 – A pronouncement is made regarding the researcher’s confidence in the level of

isomorphism achieved.

5.2. Choosing a scientific model

(yo-yo step 2)

If a developed theory (a hypothesised mechanism) can be isomorphically mapped to a scientific

concept from the extant body of knowledge, it supports the theory’s credibility and there is a high

probability that it is a good reflection of what causes the Research Problem. That does not mean

that no completely new theory can be found, but if no similarity with existing concepts is evident,

such theory needs to be closely scrutinised and re-examined.

I propose that touch points between The Viable Systems Model (VSM), principles of Cybernetics and

Social Capital lend these models to be combined in a useful synthesis. This is the scientific concept or

model that is subsequently used during the yo-yo process.

Aspects of each of these fields are briefly reviewed to provide a basis for explaining the dynamics of

the model.

5.2.1. The Viable Systems Model

The structure and logic of the VSM (Beer, 1972) was discussed in section 2 and the systems of the

VSM are briefly reviewed below.

S5: The system responsible for policy, final decision making and the identity of the organisation.

S4: The system that processes information from the outside world and focuses on scanning the

environment, developing strategy, planning and innovation.

S3: The system that is concerned with providing an overview of the whole operation, finding

opportunities for synergy and optimisation as well as enforcing policy, if required.

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S3*: The Algedonic feedback signal that alerts management to abnormalities and causes for concern.

S2: The system that performs functions of coordination and conflict resolution to ensure stability of

the overall system. In an organisation, information systems and standard operating procedures are

examples of mechanisms employed to fulfil this need.

S1: The system that does the work which the overall system is designed for.

5.2.2. Cybernetics

The three laws of cybernetics were defined by Leonard (2004) under the guidance of renowned

systems thinker, Stafford Beer. She described them as follows:

Feedback

“Feedback takes a part of a system’s output and applies it to change or to maintain its input. It is

based on the actual rather than the potential or expected performance of the system. Feedback may

be either negative (error correcting) or positive (trend enhancing).” (A. Leonard, 2004, p. 25)

Law of Requisite Variety

“Only variety can absorb variety”. The concept of variety in an organisational context may be likened

to complexity or workload. A practical example is the case where a manager feels that he does not

have the “bandwidth” to handle all his responsibilities; he does not have the required capacity

(requisite variety) to handle everything that is coming his way. There are a number of ways to deal

with the situation. He may find ways to attenuate the variety coming towards him by delegating

responsibilities to his staff, employing more people to manage the work, and/or implementing

systems and processes to improve efficiency. He could also amplify his own variety or capability by,

for example, improving his time management skills.

Self-organisation

“A system may be said to be self-organising if it can alter its internal structure to increase its level of

adaptation. If the environment should change, the self-organising system must change as well in

order to remain adaptive.” (A. Leonard, 2004, p. 51)

5.2.3. Social Capital

Social Capital theory was covered in the literature review as a parent discipline of this study. Of

particular use in the scientific model is the aspect of senior network brokers being able to combine

network capabilities through a process of brokerage and closure in order to create value.

5.2.4. The selected scientific model

The VSM incorporating Cybernetics and Social Capital theory, as shown in Figure 22, is used as a

scientific model to explore whether isomorphism between it and the proposed mechanism can be

achieved.

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Figure 22: Scientific model

Organisation 1 is in the environment of Organisation 2 and vice versa. This happens at the

metasystem (M) as well as operational (O) levels. Similar to the connections between actors as

illustrated in sociograms (Figure 17), in the scientific model diagram the arrows between the actors

fulfilling VSM roles depict the relationships between them across the structural holes that exist

between organisations. The importance of the relationship between S5s is emphasised (). As more

of these relationships are established, senior executive relationship networks develop.

5.2.5. Comparison of the scientific model with the Research Problem

The selected model is compared with the Research Problem to test for similarity.

Research Problem

A fast changing world requires organisations to be adaptive in order to succeed; they must regularly

develop new capabilities in order to sustainably create value. It is apparent that many C-level

executives are so caught up in the day-to-day management of their enterprises that they do not

devote sufficient time and energy to building relationships with decision makers outside their

organisations. Senior executives often do not have the social capital needed to broker innovation

and thus value creation between firms. The study explores how SEs can strengthen their social

capital in order to leverage their unique value add.

5

4

32

3*

E2

M

O

5

4

3 2

3*

E1

M

O

1a

1b

1c

Organisation 1 Organisation 2

Legend: Research finding

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Comparison

The scientific model addresses all aspects of the Research Problem. The S4 function caters for

environmental awareness and feedback to the organisation. The ability of the Metasystem to

perceive opportunities for inter-group capability development should, when taken action on, lead to

value creation aligned with market and societal needs. The dilemma of senior executives not being

able to make time for network building is due to insufficient requisite variety in the system; they are

simply too busy with their urgent everyday tasks to do what they know to be important. They,

sometimes subconsciously, try to attenuate the problem by delegating this responsibility to S4s who

may be people such as marketing and sales executives. When senior executives lack the social

capital (being in a position to act as a broker that combines network brokerage and closure) that

generates value it may be because they do not have the skills to see network opportunities. They

may also be too deeply embedded in their organisations to pay enough attention to their

environment. The selected scientific model resembles the research problem and we may continue to

the next phase of the yo-yo process.

5.3. Scientific model variables and testing

(yo-yo step 3)

The functions and activities of the VSM systems combined with Social Capital and Cybernetics

concepts are framed as variables of the model.

5.3.1. Key variables from the scientific model

Metasystem Environmental Engagement Capability

The functions ascribed to S4 in the VSM are those of processing information from the outside world

and a focus on scanning the environment, developing strategy, planning and innovation, which

corresponds with the role of a broker as previously described. The position of a S4 ideally has a low

network constraint value and if the person or managed team has the ability it should be able to

perceive opportunities for inter-organisational collaboration. S4 is meant to inform the policy

making S5, which again resonates with the optimal position of a broker as being on the edge of

structural holes while still being sufficiently connected to his parent organisation to exert influence

on decisions.

Metasystem Relationship Quality

The metasystem is about connection as much as about direction. As the VSM shows, a strong

connection between S4 and S5 is crucial and will support the need for a team approach to

networking. S4 needs the skills to build strong relationships with S5, with the Operation and with

stakeholders in the Environment. In addition, the quality of S5’s relationships internal to the

organisation as well as externally is important for resource mobilisation.

Policy and Decision Making Effectiveness

The final decisions are made by S5 with S4 playing an influencing role. The research in this study

shows that it is important to have SEs as brokers because of their influence over the allocation of

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resources that are needed to create value (see the core variable SE Broker Impact in the literature

review). In large organisations the S4 function is often fulfilled by a different person or team than

those responsible for S5. A recurring observation from the research interview process was that S5

SEs (e.g. CEOs) often feel that they are too busy managing their enterprises to spend enough time

building their external networks. Care must be taken in such cases to not abdicate the network

development responsibility to S4s. Part of S4’s duties should be to facilitate the process by

attenuating variety and ensure that S5s get face-time with their peers in external stakeholder

groups. S5 can only originate effective policy and make good decisions when it is well informed.

Innovation

Innovation happens when market and other environmental intelligence is acted on to develop new

ways of meeting the needs of customers and society in general. The resources needed to make this

happen can only be released by those with the power to do so. The ability to get resource custodians

to make the necessary resources available is vital.

Value Creation

S1 is where the actual value in the organisation is created using materials with manufacturing

processes or knowledge with services processes. The innovative combination of resources and

capabilities facilitated by the network broker means that a “virtual S1” is created between

organisations. The network’s virtual S1 is a multi-minded system instead of the more easily managed

uniminded system of the traditional organisation. Because of the loosely coupled nature of the

network and the combination of uniminded with multiminded systems, the management of this

virtual function requires a wide array of skills and partnering abilities from the SE broker. One is now

in the territory of system self-organisation and the skill set is indeed different from those that many

managers are equipped with during their careers.

Metasystem Closure Efficiency

Closure has some benefits and they come into play here. The VSM describes organisations as

recursive, i.e. systems nested within systems with similar dynamics. The S3 function responsible for

the sharing and flow of information and for finding opportunities for synergy and optimisation

within the organisation works well in a tight group. In addition, the recursive nature of organisations

is an important consideration (Figure 23). For example, at recursion level R0 the metasystem

connects with the operation through the metasystems of the S1s in the operation. In turn, the

Metasystem of an R0 S1 is the Metasystem of recursion level R1 and connects with its S1s in the

same way. If recursive vertical intra-organisational communication and feedback do not work and if

horizontal inter-organisational communication and feedback is not effective, the potential of the

networked organisations to contribute to value creation is limited. When these channels are

performing well, a team approach to networking becomes possible.

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Figure 23: Information flow for team networking

5.3.2. Comparison of research results core variables with scientific model variables

To test for initial isomorphism the research results’ core variables are compared with the scientific

model variables. In Table 9 research variables are denoted by R and scientific model variables by S.

Table 9: Comparison of Research Results and Scientific Model variables

R: SE Networking Skills S: Metasystem Environmental

Engagement Capability

SEs are the same as the Metasystem’s S4 and S5 actors. The attributes of SE Networking Skills strongly resemble those of S4 and S5. The VSM does not emphasise the connection between S5s and their environment. It illustrates that S4 provides S5 with environmental intelligence. This should not be misinterpreted to mean that S5s are disconnected from the outside world. The S4 – S5 connection helps to address the problem of S5 requisite variety.

R: SERN Quality S: Metasystem Relationship Quality

The variables are similar with regard to the importance they give to the connection aspect of relationships. They stress that intra- combined with inter-organisational connections put the SE in a position to access resources to create value.

R: SE Broker Impact S: Policy and Decision Making

Effectiveness

The variables state that the impact of SE brokers and Metasystem actors is felt in their own groups and across the network. They bring together people that hold sway over resource availability. Because of their seniority they have the responsibility to make the decisions which determines how organisations operate. Good decisions ultimately lead to value creation.

R0

R1

R2

Org

anis

atio

n 1

Org

anis

atio

n 2

Legend: Intra-organisational linksInter-organisational links

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R: Resource Utilisation S: Innovation

In both cases new products or services are created in line with needs. This is done by the innovative use of existing resources and capabilities within and between organisations.

R: Value Creation S: Value Creation

Besides value creation resulting from joint innovation, the removal of barriers in the value chain is common to both variables. The research refers to supply chain silos being broken down and the scientific model points to a virtual S1 being constructed. In both cases this leads to collaboration which is needed to produce value in a new way.

R: SE Organisational Embeddedness S: Metasystem Closure Efficiency

While the research focuses on the importance of an optimal level of SE embeddedness i.e. combining brokerage with closure, the model highlights the benefits that can accrue from closure within the Metasystem and between it and its Operation. The VSM puts less emphasis on the fact that the SE should not be embedded to the point of being constrained.

There is an isomorphic similarity between the variables from the research results and those of the

scientific model. Two variables, namely SE Normative Management Capability and SE Social Capital,

are not explicitly visible in the scientific model. The research, however, shows that the first is a vital

ingredient for the quality of senior bridging relationships and the second is both the outcome of

relationships and the originator of value. With relation to the model these variables are named as

Metasystem Normative Management Capability and Metasystem Social Capital. They are used later

when the relationships between the model variables are considered.

5.4. Theory (Causal Loop Diagram) development

(yo-yo step 4)

5.4.1. Interrelationship Digraph

One now returns to the left hand side of the yo-yo model to look for the causal relationships

between the research core variables. It starts with placing the core variables in an Interrelationship

Digraph (ID) and systematically working with the relationships until a likely causality emerges. The

concept analyses of the variables (Appendix E) pointed towards relational direction if the

consequences of one variable were similar to the antecedents of another. The ID is shown in Figure

24. The variables SE Networking Skills and SE Normative Management Capability proved to be strong

drivers (shown in red), while SE Broker Impact and Value Creation were the most impacted (shown

in green) by the variables overall.

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Initial ID

Final ID

Figure 24: ID development

SE NetworkingSkills 1

SE BrokerImpact 1

ResourceUtilisation 1

SE NormativeManagementCapability 1

SE PerceivedTrustworthiness 1

SERN Quality 1

SE Individual SocialCapital 1

Value Creation 1

.SE NetworkingSkills.

.SE BrokerImpact.

.ResourceUtilisation.

.SE NormativeManagement

Capability.

.SERN Quality..SE IndividualSocial Capital.

.Value Creation.

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5.4.2. Causal Loop Diagram

The causal relationships in the ID were reviewed and tested. The variable SE Perceived

Trustworthiness was subsequently considered to be an attribute of SERN Quality and was removed

as a separate variable. After a number of iterations a final CLD surfaced which detailed and

explained the theoretical mechanism. Positive causality (indicated by a plus sign) means that as the

first variable increases the resultant variable also strengthens. When the first variable weakens the

other variable diminishes. Negative causality (indicated by a minus sign) signifies that as the first

variable strengthens, the next variable weakens and when the first one reduces the following

variable increases.

Causality in the Mechanism

We start with the CBOT – SE Individual Social Capital. This is the variable around which the whole mechanism is centred. As the SE’s social capital grows his Networking Skills improve. When a SE is in a favourable network position he is exposed to a diverse range of actors and relationship types. This necessitates the honing of his skills if he is to maintain and improve his position. One may think that this causal direction is counterintuitive and that it would be skills that lead to social capital. As the rest of the links between the variables unfold it will, however, become clear that these two concepts cannot be viewed in isolation. For example, a SE has some social capital to begin with by virtue of him having reached a senior position in an organisation.

Improvement of the SE’s networking skills in turn strengthens his Normative Management Capabilities. Many people have world views that developed due to their life circumstances and which influence how they judge other people and which decisions they make. The normative management attributes of tolerance, dialectic capability, congruence and generativeness develop over time. As the SE’s networking activities bring him into working relationships with various actors, he experiences diverse worldviews and learns how to work with people with different ways of thinking. This happens provided that he is open to new points of view.

-SE NetworkingSkills-

-SE IndividualSocial Capital-

+

-SE NetworkingSkills

-SE NormativeManagement

Capability

-SE IndividualSocial Capital

+

+

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SE. NetworkingSkills

SE .Broker Impact

SE. NormativeManagement

Capability

SERN .Quality

SE. IndividualSocial Capital

+

++

.Quality

+

+

When SEs’ normative capabilities develop, the Quality of the relationships they have in their networks improves. It must be noted here that SERN Quality includes the perceived trustworthiness of the SEs. As other actors interact with them and experience their normative interpersonal skills, they perceive the SEs to be worthy of trust. This is a key ingredient for quality relationships that stand the test of time. If SEs are unable to develop normative capabilities the quality of their networks will be limited.

SERN Quality bestows increasing Social Capital on SEs. The SE’s investment in mutually beneficial relationships pays off in terms of how it improves their positioning at the edge of structural holes and closely knit groups. Second-order social capital benefits the SE’s organisation as marketing opportunities for the SE and the organisation arise. The SE’s ideas are perceived as valuable, his council is sought out and he is approached by actors who believe him as being able to bring about the resources they need to fulfil their ambitions. If a SE believes that “networking skills” are limited to engendering a lot of contacts and so expanding his network, transient social capital may result. Without the substance of quality relationships built on trust, it will not bear sustainable fruit. The completed loop is about how SE social capital is influenced by the quality of relationships.

As SEs’ Individual Social Capital increases, their Impact as network brokers grows; senior brokers have access to more influential and connected people, their networks benefits from information diffusion, and their higher rank reduces the negative effects of dense networks. Higher ranking players are not as dependent on lobbying for resources. As their reputations and successful execution records become known, their influence in their own organisations as well as across their networks increases. In order to have lasting and growing impact it is necessary for SE brokers to ensure that they master the discipline of quickly converting their privileged information into productive action.

SE NetworkingSkills-

SE NormativeManagement

Capability-

SERN Quality-

SE IndividualSocial Capital-

+

+

+

SE .NetworkingSkills

SE .NormativeManagement

Capability

SERN. Quality

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Quality.

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As a result of SE brokers’ impact, they are able to increase Resource Utilisation and bring new thinking from across structural holes into their parent organisations. They are able to secure resources from their groups and, through their alters who are also brokers, from groups and individuals on the other side of their network links. The provision, exchange and combination of resources help to jointly craft new capabilities which benefit the stakeholders. Potential partners perceive the brokers’ seniority to be a signal of power and influence over the resources that are needed. Brokers’ reputations must be based on delivery; if they are not known for successful execution their influence over resources will be lessened.

When resources are effectively utilised more Value is created. The way resources are combined and capabilities developed should be in response to well understood opportunities in the network. Value is in the eye of the beholder, which in this case is the market or the segment of society that need the product or service. The alignment of resource utilisation with market need will thus improve the chances of true value being built. It is only possible if participants are able to create and manage value chains not just within, but between, organisations. This requires significant skill and perseverance.

SE Networking.Skills

SE Broker. Impact

Resource.Utilisation

SE Normative.Management

Capability

-SERN Quality

SE Individual.Social Capital

+

+

++

.Quality.

+

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SE Networking.Skills

SE Broker .Impact

Resource.Utilisation

SE Normative.Management

Capability

SERN Quality

SE Individual.Social Capital

Value. Creation

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When Value is created because of the role of the SE broker, his Social Capital is further enhanced. Through the way in which he facilitates resource utilisation, inter-organisational innovation occurs. His impact on the levels of trust in relationships may reduce transaction costs (and therefore input costs). The effect he has on the network’s speed-to-value becomes known and in a virtuous cycle he becomes more sought after by network actors. These processes and relationships can become complex and his contribution may “disappear” if other actors seek to take the credit. He must find a way to make certain that the benefit to his social capital is not reduced through free riders that enter the process. If value is not created the SE’s Social Capital is damaged. This is relevant when the feedback loop is mentioned further on. This next completed loop shows how SE social capital starts a virtuous cycle that leads to the desired outcome of value creation.

One now returns to SE Networking Skills. As this improves, SE Organisational Embeddedness reduces. It is important to note that the aim is only to reduce embeddedness to an optimal point. Skills will help the SE to avoid being overly embedded (trapped in a tightly coupled group) or too loosely connected to the group (without enough influence over the allocation of their resources). The ability of an actor to optimally combine brokerage and closure is not yet widely known as an important skill in traditional S4 (from the VSM) circles. Without this expertise the broker will not be sufficiently effective.

SE- NetworkingSkills

SE- Broker Impact

Resource-Utilisation

SE- NormativeManagement

Capability

SERN- Quality

SE IndividualSocial .Capital

Value Creation

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SE Organisational-Embeddedness

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If excessive SE Organisational Embeddedness decreases the SE’s Individual Social Capital grows. Again, the aim is to get the balance right; embeddedness should not become so low that it renders the SE ineffective. The dynamics are made clear in the previous loop’s explanation. The final loop highlights the importance of the SE’s position in the network.

Figure 25: Causal Loop Diagram

SE NetworkingSkills

SE Broker Impact

ResourceUtilisation

SE NormativeManagement

Capability

SERN Quality

SE IndividualSocial Capital

Value Creation

+

+

+

++

+

SE OrganisationalEmbeddedness

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Position

Desired outcome

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SE NetworkingSkills

SE Broker Impact

ResourceUtilisation

SE NormativeManagement

Capability

SERN Quality

SE IndividualSocial Capital

Value Creation

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Position

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The final CLD (Figure 25) consists of two reinforcing loops where relationship quality ultimately

influences SE Individual Social Capital to produce the desire outcome of Value Creation. Value

creation or destruction correlates with the growth or decline of the SE’s social capital. This starts a

balancing feedback loop that incorporates skills and embeddedness and returns to influence social

capital. The CLD represents the theory built from the research results.

5.5. Relationships between key variables from the scientific model, comparison

with CLD and confidence testing

(yo-yo step 5)

The previous variable comparison shows the strong resemblance between the research results and

the chosen scientific model. As explained earlier, the synthesis of Social Capital science with the VSM

requires the logical addition of the variables, SE Normative Management Capability and SE Social

Capital, to the model. The relationships between the model variables are similar to those of the

developed theory.

(yo-yo step 6)

The introduction of the aforementioned two variables leads to a one-to-one likeness between the

relationships of the developed theory’s variables and the relationships of the scientific model (Figure

26). Comparison of the variables of the research results and the model as well as the relationships

between each displays robust mimetic isomorphism18.

(yo-yo step 7)

The confidence level of the scientific model’s resemblance of the theory is high and the yo-yo

process does not have to be revisited.

18

Mimetic isomorphism means that one entity imitates the characteristics of the other.

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Figure 26: Relationships between scientific model key variables

5.6. Conclusion

The theory (CLD) may be used as a representation of the mechanism in the Real world that produces

the observed phenomena in the Empirical realm. The probable validity of the theory is underscored

by its isomorphic correlation with the chosen scientific model.

The theoretical mechanism can form the foundation to identify and explore possible interventions

that can have the desired effect on the CBOT; the increase of SE Individual Social Capital. If this can

be done it will provide an answer to the question: “How can the Social Capital of Senior Executives

be improved to stimulate Value Creation?”

MetasystemEnvironmental

Engagement Capability

MetasystemRelationship Quality

Policy & DecisionMaking Effectiveness

Innovation

Value Creation

MetasystemClosure Efficiency

Metasystem SocialCapital

Metasystem NormativeManagement Capability

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6. Interventions

“One thing is sure. We have to do something. We have to do the best we know how at the moment. If

it doesn’t turn out right, we can modify it as we go along.”

Franklin D Roosevelt

6.1. Introduction

Based on the theory that has been developed, one now goes further and looks for possible

interventions that could strengthen the social capital of SEs. The steps of the Soft Systems

Methodology (SSM) are shown again in Figure 27. They are used to identify possible actions to

improve the problem situation. The choice and sequence of interventions should always be context

specific. The potential interventions form the answer to the Research Question.

Figure 27: SSM logic

6.2. Soft Systems Methodology as exploration and debate

Before the SSM is applied to this study it would be prudent to revisit some of its tenets. It is

important to understand so that one does not mistakenly try to go through its steps in a mechanical

fashion and so miss the purpose of what it was developed for. Checkland (1985) explained the

nature of the methodology in a meaningful way that is worth reading for anyone wishing to use it.

His comments are paraphrased here.

SSM is meant to help people take well-conceived action in problematic human situations. “It is an

organised process of inquiry, based on systems models, which leads to choice of purposeful action.”

(Checkland, 1985, p. 822) It accepts that anyone describing a situation has his own point of view and

as such someone’s interpretation cannot be promoted as “right” or “wrong”. To do this will almost

inevitably antagonise stakeholders who may hold very different world views. All will come to naught,

for example when one of the parties walks out of a negotiation due to a stalemate. Each

stakeholder’s description of the problem is a root definition of the situation from that particular

1Situation considered

problematical

7Action to improve

the problemsituation 6

Changes:systemically desirable

culturally feasible

2Problem situation

expressed 5Comparison of models

to the real world

Real world

Systems thinkingabout the real

world3

Root definitions ofrelevant purposeful

activity systems

4Conceptual models of the

relevant hypothetical systemsnamed in the root

definitions

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perspective. Conceptual models are built for each root definition. The models are not attempts to

“correctly” describe a part of the world; they are explanations of some ways of perceiving it. The

purpose of the models is to supply structure to debate about what to do about the problem. The

debate is organised by comparing the models with observed real-world happenings and the

perceptions thereof. The purpose is to unearth the different views of the stakeholders and to find a

sort of accommodation between varied, opposing opinions. “An ‘accommodation’ does not

eliminate conflict, which is endemic in human situations since we are all free to interpret the world

in our own way, but may make purposeful action (often corporate purposeful action) possible.”

(Checkland, 1985, p. 822) The point of the debate is to find some changes that could be brought to

bear on the problem situation. These changes must be systemically desirable and culturally feasible.

The notion of what is culturally feasible can be changed by the debate itself because norms and

values are exposed in the conversation and the original root definitions may be re-examined for

relevance.

6.3. Initial description and detailed expression of the problem situation

The rich picture and outline of the problem situation in chapter 1 provides a detailed description of

the circumstances that are cause for concern. A concise summation of the situation is reiterated

here. A fast changing world requires organisations to be adaptive in order to succeed. They must

regularly develop new capabilities in order to sustainably create value. It is apparent that many

senior executives are so caught up in the day-to-day management of their enterprises that they do

not devote sufficient time and energy to building relationships with decision makers outside their

organisations. From what I have observed, many senior executives (SEs) do not have the social

capital needed to broker innovation and thus value creation between organisations. The

stakeholders recognised during the research are Big Business, Government, Unions, SMEs, Civil

Society and the Unemployed.

6.4. CATWOEs, root definitions and conceptual models of the relevant purposeful

activity systems

6.4.1. CATWOEs

Each stakeholder has a different worldview or Weltanschauung and a way of looking at a situation

which varies from those of other stakeholders. It is necessary to make these positions visible so that

the implications can be understood. The CATWOE framework as introduced by Checkland and Smyth

(1976) and depicted by Ryan (2011c) in Figure 28 is used to provide a fuller picture of the likely

vantage point of the stakeholder. The layout as applied by Perez (2011) is helpful and is used in the

following tables for the reader to follow the train of thought.

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Figure 28: CATWOE diagram

I have sought to treat the stakeholders with empathy in the analysis to follow. The reality is that all

groups contain people who are there with good intent and those who are in it for themselves. In

highly polarised societies diverse stakeholders tend to demonise the stances of others with opposing

views. The exploration of purposes in Table 10 acknowledges that there is bad in between the good

but assumes that those seeking a beneficial outcome for the whole win out.

The system in focus is chosen as a country, specifically South Africa. The choice supports the validity

of the study as I am familiar with the country’s dynamics. The reader will see, however, that the

findings are largely generalisable to other countries. The system has porous boundaries, for example

because of its interdependency with the global economy. However for practical purposes and for the

sake of this study it constitutes a recognisable structure with physical borders, stakeholders

operating under the same laws and policy enforcement agency (government), one economy with a

GDP and the same currency.

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Table 10: CATWOEs

System in focus: A country (South Africa)

Perspective Big Business (can include responsible and irresponsible actors)

Government (can (include altruistic and selfish actors)

Unions (can include benevolent and opportunistic actors)

SMEs Civil Society Unemployed

Work system input

Investment (Equity & Borrowings) in Assets (fixed & current) and/or Human Capital

Resources Disadvantageous worker pay and employment conditions

Investment (Equity & Borrowings) in Assets (fixed & current) and/or Human Capital

Donor funds Unfulfilled basic needs

Work system output

Responsible actors: Good, sustainable returns Irresponsible actors: Maximum short term revenues and profits

Altruistic actors: Prosperity for citizens Selfish actors: Money and power

Benevolent actors: Fair pay and good working conditions for workers Opportunistic actors: Personal power

Cash and good returns

Equitable and sustainable society

Opportunity for employment

Customer Clients buying services, customers buying products

The population Union members Clients buying services, customers buying products

The underprivileged The unemployed

Actor Managers, operational staff, support staff

National, provincial and local government officials (politicians)

Union leaders and members

Owners, managers, operational staff, support staff

Non-governmental organisations (NGOs), civil society organisations (CSOs), communities

Unemployed individuals, NGOs, CSOs, Government, Business

Transformation Production and/or service provision, management

Craft and implement policy

Lobby government to adjust labour laws, lobby business for higher wages and better conditions

Production and/or service provision, management

Activism, social programmes

Create jobs, look for and find jobs

Worldview Responsible actors: Produce sustainable revenue and profit growth Irresponsible actors: Make as much money as possible in as little as possible time

Altruistic actors: Want to honour the trust put in them by the electorate and deliver on their commitments Selfish actors: Seek re-election

Benevolent actors: Workers should be better compensated Opportunistic actors: Civil upheaval can be leveraged for personal gain

Make a living, grow the business

Seek survival of society through constructive benevolence

The future is uncertain, life is a challenge

Owner Shareholders

Voters Union members Owners Donors (including donor organisations like USAID; Business by means of CSI)

“Self-owned” (each individual)

Environment Input costs, political economy, market demand, competition, political stability, labour stability, ecological change

Global political economy, changing ecology, natural disasters, war, civil unrest

Economy Access to capital, legislative obstacles to starting a business, input costs, political economy, market demand, political stability, labour stability, ecological change

Political economy, competition for funding, ecological change

Economy, changing ecology, natural disasters

6.4.2. Root definitions and conceptual models

In Table 11 a root definition for the system as perceived by each stakeholder is developed and a

conceptual model of the system is derived for each root definition. The model contains the

minimum activities required for the system to adhere to its definition. For the purpose of

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constructing conceptual models it is assumed that the balance of power is in favour of benign actors

in the various stakeholder groups. Though it may take time, it is consistent with the propensity of

self-organising systems to expel factors that threaten system viability.

Table 11: Root Definitions and Conceptual Models

Stakeholders

Perspective Big Business (can include responsible and irresponsible actors)

Government (includes altruistic and selfish actors)

Unions (can include benevolent and opportunistic actors)

SMEs Civil Society Unemployed

Work system input

Investment (Equity & Borrowings) in Assets (fixed & current) and/or Human Capital

Resources Disadvantageous worker pay and employment conditions

Investment (Equity & Borrowings) in Assets (fixed & current) and/or Human Capital

Donor funds Unfulfilled basic needs

Work system output

Responsible actors: Good, sustainable returns Irresponsible actors: Maximum short term revenues and profits

Altruistic actors: Prosperity for citizens Selfish actors: Money and power

Benevolent actors: Fair pay and good working conditions for workers Opportunistic actors: Personal power

Cash and good returns

Equitable and sustainable society

Opportunity for employment

Root definition

Responsible actors: The country is a system in which they can invest to generate good and growing returns Irresponsible actors: The country is a system which can be exploited to secure maximum personal gains without paying appropriate rent

Altruistic actors: The country is a system to prosper all its people Selfish actors: The country is a system for them to obtain and hang on to privilege and power

Benevolent actors: The country is a system that should produce equitable circumstances for workers without individual power Opportunistic actors: The country is a system where labour dissatisfaction can be exploited for personal gain

The country is a place where they can invest in building a future for themselves and their families

The country is a system that needs to be augmented in its ability to look after its people

The country is a system to create jobs to sustain its people

Conceptual model

Root out free riders and irresponsible business people

Continually ascertain market needs and opportunities

Obtain funds to invest in the company’s activities

Acquire / develop products and skills to meet market demand or create new market demand

Produce the product or service

Market the product or service

Sell the product or service

Collect money from sales and deploy to reinvestment and shareholders

Root out internal corruption that will damage the system

Craft policy that creates an investment friendly environment for business

Craft policy that ensures fair compensation for workers

Craft policy for equitable distribution of resources

Up skill government officials and partner with competent providers to implement policies

Encourage SME development for job creation

Facilitate dialogue between stakeholders

Root out opportunists who do not have workers’ interests at heart

Engage with their constituents and understand worker concerns

Lobby government to introduce favourable labour policies

Lobby business to enter into dialogue towards fair employer practices

Expose unfair employer practices

Represent workers that do not have access to resources to defend their cause

Engage in peaceful resistance when constructive avenues do not produce reasonable results

Continually ascertain market needs and opportunities

Obtain funds to invest in the company’s activities

Acquire / develop products and skills to meet market demand or create new market demand

Produce the product or service

Market the product or service

Sell the product or service

Collect money from sales and deploy to reinvestment in the company and pay the owners

Lobby government to introduce fair and equitable policies

Lobby business to allocate funds towards social development

Lobby donor agencies for funding

Partner amongst each other to build critical mass in order to gain traction with those in power

Learn from other places in the world with similar problems

Refrain from “hand-outs” and pursue sustainable development programmes

Organise themselves and elect representatives

Identify organisations that want to help them

Identify their own skill sets (any skills)

Lobby beneficiary organisations to include them in sustainable development initiatives (e.g. getting seed money to start micro-businesses)

Continue to seek formal employment if they have appropriate skills

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6.5. Comparison of conceptual models to the real world

The theoretical mechanism derived from the research has been validated against a recognised

scientific model as a fair representation of what happens in the real world. For ease of reference, the

real world mechanism (CLD) is repeated here and compared with the conceptual models from the

stakeholders’ perspectives.

Big Business

This model is similar to the desired outcome loop of the CLD and incorporates the attributes of SE

Individual Social Capital, SE Networking Skills and SE Normative Management Capability. The SE (S4

function) scans the environment for opportunities. Through social capital the SE (S4 and S5 actors)

influences the release of resources to produce products or services that meet market needs. Value

comes from the utility of the products and services and the inflow of money from sales. These funds

are reinvested in the business and distributed to shareholders. The reinvestment maintains and

creates capacity for the business to continue its operations. It is becoming increasingly important for

business leaders to constructively engage with stakeholders such as government, labour and the

communities within which their companies operate. Senior executives need strong normative

management capabilities and must be worthy of trust.

SE NetworkingSkills

SE Broker Impact

ResourceUtilisation

SE NormativeManagement

Capability

SERN Quality

SE IndividualSocial Capital

Value Creation

+

+

+

++

+

SE OrganisationalEmbeddedness

-

-

Quality

Position

Desired outcome

+

+

R

B

R.

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Government

Variables in all three of the CLD loops have bearing on the Government conceptual model. Quality of

relationships is critical. Government has perhaps the biggest responsibility to engage with all the

stakeholders. This is true if one assumes that the ruling party is focused on facilitating prosperity for

all of the country’s citizens. Senior officials therefore need a large dose of normative management

capability. Corruption debilitates Government and must be rooted out. If Government is not

perceived to be trustworthy its credibility is lost and it is powerless to effect positive change. To

achieve the desired outcome of value creation government must craft and implement policy that

creates an environment conducive to investment and dialogue between affected parties. Effective

senior politicians must be able to position themselves in such a way that they keep their group, such

as a cabinet with influence over resources, on board. At the same time they should be able to bridge

structural holes between their team and decision makers in other stakeholder groups.

Unions

The quality of relationship variables and the position variables are important for labour union leaders

to achieve the outcomes they seek for their constituents. They need to influence senior leaders that

make decisions about the allocation of resources to use the resources in a way that creates value for

the workers. They need strong normative management capabilities because their agenda could be

perceived as being opposed to that of Big Business. At the same time they need to keep a balance

between being seen by their members as having workers’ best interests at heart, and being seen by

business and government as being reasonable enough to negotiate in good faith.

SMEs

The model is similar to that of big business except that proceeds from the business are typically

reinvested in inventory and capacity while some are paid to the owners as the business is their direct

source of income.

Civil Society

Groups like NGOs and CSOs are almost entirely dependent on donor funds and corporate social

investment. They do not have “resources” to exchange for support and are thus highly dependent on

the ability of their leadership to lobby business, donor agencies and government to make funding

available. This makes them reliant on the quality of relationship aspects including networking skills,

normative management capability and social capital.

The Unemployed

This population group is almost completely without formal power and seems to have little to offer

society. For them to make progress they will need a measure of normative management capability

to create critical mass among themselves and choose representatives that can secure support from

civil society organisations and government. It is in a country’s best interest to ensure that the plight

of these people is addressed. This is important from an ethical point of view and also because the

burden of the poor eventually flows through to those who have means.

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6.6. Recommended changes to address systemic challenges

The systemic challenges of South Africa are listed in Table 12. The comparison of the positive

conceptual models with the theory of the mechanism indicates which changes could produce

positive outcomes. Such changes need to be systemically desirable and culturally feasible.

The stakeholder needs to look at his constituency as a system and reach consensus with the other

group members about whether certain changes are desirable for the system and if the timing is right

to implement them.

It can happen that a change looks like it would be good for the system but its cultural feasibility

becomes a deciding factor that determines whether the system is ready for it. Schein (1992)

proposed a model of organisational culture that can be used as a framework to ask oneself good

questions regarding the cultural feasibility of a potential change (Figure 29).

Figure 29: Schein's model of organisational culture

The organisation’s structures and processes, its strategies, goals and philosophies, as well as the

beliefs, perceptions, thoughts and feelings of its members are important to consider. They provide a

“sanity check” for the proponents of change to decide whether the changes are likely to be adopted

by the organisation.

The changes needed to strengthen SE Individual Social Capital are found by reinforcing the

constructive driving variables in the mechanism and mitigating the destructive ones. The reader can

refer to the attributes of each variable as described in the literature review to be reminded of the

implications of each of these changes. The required changes are:

SE Networking Skills should be improved for all senior executives who engage with influential

stakeholders.

SE Normative Management Capability should be developed amongst senior executives who deal

with diverse stakeholders.

SEs should take responsibility for value creation through external collaboration.

ArtefactsVisible organisational structures and processes

Espousedvalues

Strategies, goals, philosophies (espoused justifications)

Underlyingassumptions

Unconscious, taken-for-granted beliefs, perceptions, thoughts, and feelings (the ultimate source of values and action)

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SE Organisational Embeddedness is the only potentially damaging variable in the mechanism. It

should be monitored to prevent senior executives from falling victim to group-think and to ensure

that they remain well positioned to see and take advantage of brokerage opportunities.

6.7. Proposed actions

To get to actions that could bring about desired changes I use the “CIMO-logic” of Denyer, Tranfield

and Van Aken (2008). The logic works as follows: “in this class of problematic Contexts, use this

Intervention type to invoke these generative Mechanism(s), to deliver these Outcome(s)”. (Denyer

et al., 2008, p. 395)

The core variables of the mechanism are impacted by various aspects of the context of the system in

focus, in this case South Africa (Table 12). The variables are seen as “levers” which, when influenced

positively, will produce desired outcomes.

Table 12: Contextual impact on the core variables

Core variables Aspects of a country (South Africa) impacting the variables

SE Individual Social Capital (CBOT) A volatile global and local economy, high inequality in the population and multiple and sometimes conflicting stakeholders.

Pressure on SEs to, almost single-mindedly, represent the interests of their constituents.

Insufficient networking skills among Government, Union and Civil Society SEs.

SE Networking Skills Lack of recognition that networking skills are important for Government, Union and Civil Society and Unemployed SEs.

Lack of visibility and understanding by SEs of their relationship networks.

SE Normative Management Capability Historical animosity (covert and overt) between Business, Government and Unions.

Historical abuse of power leading to mistrust between these stakeholders.

Very little opportunity for stakeholders to learn how to engage dialectically, maintain congruence, exercise tolerance and have generative interaction.

SERN Quality History of individual SEs abusing the trust of their constituents and partners.

Insufficient Normative Management capability.

Insufficient SE Networking Skills.

SE Broker Impact SE Individual Social Capital in most stakeholder groups has been diminished by the aspects listed above.

Lack of visibility of SEs relationship networks.

Insufficient understanding by SEs of their responsibility as network brokers.

Excessive embeddedness of SEs in their organisations.

Resource Utilisation Lack of collaboration between stakeholder leadership.

A scarcity mentality among opposing stakeholders (resources are seen as finite and cannot be grown through innovation)

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Core variables Aspects of a country (South Africa) impacting the variables

Value Creation Insufficient utilisation and combination of resources to create new capabilities, technology and products.

A dependency culture (believing that the historically disadvantaged do not have power to create value and are dependent on hand-outs from those with resources).

SE Organisational Embeddedness Strong pressure on SEs to solely represent the interests of their constituents.

Insufficient appreciation among SEs for the potential power of networked collaboration.

In order to construct a CIMO with the most advantageous interventions, the contextual aspects

considered to have the biggest impact are chosen. This provides a first round of prioritisation of the

actions.

In my view the contextual aspects with the biggest impact are:

1. Insufficient networking skills among Business, Government, Union and Civil Society SEs.

2. Historical abuse of power leading to mistrust between Business, Government and Unions.

3. Strong pressure on SEs to solely represent the interests of their constituents.

4. Insufficient Normative Management capability among SEs.

5. Insufficient understanding by SEs of their responsibility as network brokers.

6. Insufficient appreciation among SEs for the power of networked collaboration.

The CIMO is shown in Table 13. The logic works from left to right. For each Contextual impact, an

Intervention is chosen which is expected to activate corresponding core variables in the Mechanism

to produce desired Outcomes.

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Table 13: CIMO

Contextual impact

Interventions Mechanism Outcomes

1. Insufficient networking skills among Business, Government, Union and Civil Society SEs.

1. Improve SEs’ networking skills by (a) creating visibility of the state of their social networks through network analysis (b) networking training (c) attending networking events and building relationships with external stakeholder SEs.

1. SEs may become more proactive in building their stakeholder SERNs. Their networking skills will develop.

2. Historical abuse of power leading to mistrust between Business, Government and Unions.

2. Improve SEs’ normative management capability by (a) conducting workshops including these stakeholders to explore each other’s assumptions (b) training in working with diverse stakeholders.

2. SERN Quality will be improved across historical and ideological divides.

3. Strong pressure on SEs to solely represent the interests of their constituents.

3. Improve SEs’ normative management capability (dialectic ability, tolerance, congruence and generativeness) by introducing the topic in executive education programs.

3. SEs’ ability to work with other stakeholder groups will improve and could lead to a reduction in conflict. Joint solution development can take place.

4. Insufficient Normative Management capability among SEs.

4. (Same as for 3) Improve SEs’ normative management capability (dialectic ability, tolerance, congruence and generativeness) by introducing the topic in executive education programs.

4. (Same as for 3) SEs’ ability to work with other stakeholder groups will improve and could lead to a reduction in conflict. Joint solution development can take place.

5. Insufficient understanding by SEs of their responsibility as network brokers.

5. Train SEs in the principles of brokerage and closure so that they are able to act as effective brokers between their members and external stakeholders.

5. SE Broker Impact will grow, leading to improved resource utilisation.

6. Insufficient appreciation among SEs for the power of networked collaboration.

6. Conduct sessions with SEs working through case studies showing successful value creation through collaboration in situations they can related to.

6. SEs may become more active in developing their SERNs. Progress can be made with value creation for all stakeholders.

SE NetworkingSkills

SE Broker Impact

ResourceUtilisation

SE NormativeManagement

Capability

SERN Quality

SE IndividualSocial Capital

Value Creation

+

+

+

++

+

SE OrganisationalEmbeddedness

-

-

Quality

Position

Desired outcome

+

+

R

B

R.

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6.8. Design propositions

An answer to the research Question “How can the Social Capital of Senior Executives be improved to

stimulate Value Creation?” is presented as a set of design propositions (Romme, 2003). A design

proposition is a proposed action to solve a problem in a specific context by leveraging the dynamics

of the mechanism that causes the problem. A key ingredient of a design proposition is the

Intervention.

In the context of country dynamics (South Africa) and to achieve the outcomes as described in the

CIMO,

I1 Improve SEs’ networking skills by (a) creating visibility of the state of their social networks

through network analysis (b) networking training (c) attending networking events and building

relationships with external stakeholder SEs.

I2 Improve SEs’ normative management capability by (a) conducting workshops including

these stakeholders to explore each other’s assumptions (b) training in working with diverse

stakeholders.

I3 Improve SEs’ normative management capability (dialectic ability, tolerance, congruence

and generativeness) by introducing the topic in executive education programs.

I4 Train SEs in the principles of brokerage and closure so that they are able to act as effective

brokers between their members and external stakeholders (this addresses the danger of over-

embeddedness).

I5 Conduct sessions with SEs working through case studies showing successful value creation

through collaboration in situations they can related to.

6.9. Conclusion

Soft Systems Methodology is not a tool that select “experts” use to provide answers to real world

problems; it is rather about systems thinking practitioners using the methodology to help

stakeholders find their own answers which make sense for their situations. We have explored the

particular problem situation of this study and possible solutions were presented in the form of

design propositions. The interventions are certainly not exhaustive and should be evaluated,

debated and prioritised by stakeholders who are affected by the situation. They constitute an

answer to the Research Question posed in the introductory chapter.

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7. Conclusion and Evaluation

“I think and think for months and years. Ninety-nine times, the conclusion is false. The hundredth

time I am right.”

Albert Einstein

7.1. Introduction

In the final chapter of this work I review the original Concern and Research Question and consider

the answer that arose from the research. I discuss the significance and implications of the research

results and the project is evaluated for its utility, validity and ethical implications. I end by proposing

areas for further research.

7.2. The C-Q-A flow

The Concern (research problem) that gave rise to this work was that a significant proportion of SEs

which I engage with in my own organisation, in our client base and in community based

organisations did not seem to have sufficient social capital to leverage their access to resources. This

is problematic since the innovative combination of resources including specific capabilities is

necessary to extract and create value for the constituencies of the various stakeholders.

The Research Question is: “How can the Social Capital of Senior Executives be improved to stimulate

Value Creation?”

There are three levels at which a Research Question could have been asked. The answer to a “why”

question could have stopped with the theory of the mechanism that drives the observed situation

and concern. A “what” question would have required at least high level recommendations regarding

which dynamics of the mechanism ought to be influenced to produce desired outcomes. In this

project we ask a “how” question. The answer derived in chapter 6 is not a panacea and is richer than

a list of things that can be done and instructions on how they should be implemented. Rather, the

use of Soft Systems Methodology is illustrated by way of applying it to the problem situation with

possible perspectives of the stakeholders being considered. A number of possible Interventions are

shown. Each of the stakeholders needs to debate how the issues play out in their contexts, and thus

which interventions would be the most systemically desirable and culturally feasible for their

circumstances.

7.3. Utility

The theory that has been developed and the implementation of appropriate interventions identified

by applying Soft Systems Methodology will strengthen the social capital of senior executives and

lead to value creation.

If managed well the SSM process will result in healthy debate and will lead to systemically desirable

and culturally feasible interventions being identified and prioritised. A comparison of the various

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stakeholders’ root definitions of South Africa as a system shows how much common ground there is

to work with if the actors seek solutions in good faith.

Big Business Government

Unions

Responsible actors: The country is a system in which they can invest to generate good and growing returns.

Altruistic actors: The country is a system to prosper all its people.

Benevolent actors: The country is a system that should produce equitable circumstances for workers without individual power.

SMEs Civil Society

Unemployed

The country is a place where they can invest in building a future for themselves and their families.

The country is a system that needs to be augmented in its ability to look after its people.

The country is a system to create jobs to sustain its people.

7.3.1. Significance for the research problem

The theory that was developed comprises of the core variables which came out of the Grounded

Theory process and the mechanism from the domain of the Real. This is important because it gives

concerned stakeholders a good view of the areas on which they can focus to address their concerns.

Recognising the relationships between the variables and the most important drivers helps to know

which variables to take action on to produce the most beneficial outcomes.

7.3.2. Significance for the research field

The field covered is that of relationship networking among senior executives across various types of

organisations. The research shows that senior executives need to recognise the importance of the

role they need to play as influential brokers in relationship networks. To do this they need quality

relationships with other leaders in external stakeholder organisations. This is critical for the effective

utilisation of resources that exist in pockets across network structural holes. Resource combination

and the development of new capabilities are needed so that value may be unlocked and created for

all stakeholders.

7.3.3. Significance for the research’s parent discipline

The contribution of this study to the area of social capital is that it “brings home” social capital

principles to senior executives across a range of sometimes opposing stakeholder groups in the

South African context. It provides practical proposals as to how the social capital of leaders may be

enhanced to bring about positive change in polarised societies. As such the research helps to make

valid theoretical findings practical in situations where its application is much needed.

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7.4. Validity of the research

7.4.1. Descriptive validity

The way the problem situation is described is a fair reflection of what is happening in South Africa. I

mitigated possible researcher bias by sweeping in multiple perspectives on the state of affairs. This

was done by selecting interviewees with technical, organisational and personal (TOP) viewpoints.

The interview process maintained a balance between structure and freedom of expression. This

ensured that the interviewees’ responses were not “guided” by me as the interviewer. The

description of the observations made during the empirical research is accurate. To counter the fact

that there was only one researching observer, the comments made by the participants in the

interviews were recorded as mind maps. Some of these records were shared in their raw format

with the interviewees to verify that their comments were accurately reported and they are still

available for any interested party to interrogate. All interviewees will receive a copy of this

document and they have a further opportunity to go through the statements captured as

propositions in affinity diagrams in the appendices.

7.4.2. Interpretive validity

My interpretation of what the interviewees meant when they provided their observations on the

topic is valid. During the interviews I regularly checked my understanding of the remarks they made

with the interviewees while we were having the conversations. In addition, all the interviewees can

be easily contacted should anyone want to revisit their thoughts. I have worked with most of the

interviewees for a number of years or have known them at a personal level. This enabled me to

more accurately interpret their verbal and body language signals and reduced the chance of

misreading their intent. Within the constraint of an hour long interview it was, however, not possible

to fully explore all the interviewees’ opinions and reasoning. This risk of missing important aspects

was moderated through collecting enough (in this case nearly three hundred) propositions, and the

Grounded Theory process then highlighting the most important themes from the data by using

constant comparison.

7.4.3. Theoretical validity

The time limit imposed on the project as well as the availability of the senior organisational leaders

within the set time frame limited the number of senior executives that could be interviewed for the

research. This was overcome by briefing interviewees before the interviews regarding what to

expect, which helped to get quality propositions out of the hour that was allocated for each

interview. Representatives from all identified stakeholders, except labour unions and the

unemployed, were interviewed. The sample of propositions therefore did not contain observations

from these two groups. The risk to validity was mitigated as follows: (1) my experience in working

with labour unions as well as unemployed community representatives sensitised me to notice if

there were significant themes that did not emerge from the propositions gathered from the other

interviewees; and (2) the process of category saturation through theoretical sampling did not

produce any additional variables that were not already present in some form in the data sample.

Research consulted for the theoretical sampling included work done among lower income /

unemployed groups (Boon & Farnsworth, 2011). The absence of interviewees from the said groups

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was adequately compensated for and does not invalidate the research and its findings due to

insufficient triangulation having taken place.

A literature review provided further theoretical sensitivity and provided a deeper conceptual

understanding of the core variables. The concept analyses highlighted the causal relationships

between variables and helped with developing the theory of the mechanism behind the problem

situation. The theory was corroborated by comparing it with a recognised scientific model and so

achieving isomorphic mapping.

The danger of proposing a “one size fits all” recommendation was avoided by using Soft Systems

Methodology to explore the purposes of the stakeholders. Based on the findings of the study, the

proposed interventions are likely to address the concern of the study and to provide ways of

improving the value creating social capital of senior executives. The stakeholders’ unique world

views will, however, influence the exact nature and priorities of the interventions they may choose

to implement. It is therefore important that the parties enter into dialogue and debate in order to

select the actions which are the most systemically desirable and culturally feasible.

7.5. Ethical considerations

The four ethical questions of Velasquez (2006) were used to explore the ethicalness of the study.

They are:

1. Does the action, as far as possible, maximise social benefits and minimise social injuries?

2. Will the action lead to a just distribution of benefits and burdens?

3. Is the action consistent with the rights of those whom it will affect?

4. Does the action exhibit appropriate care for the well-being of those who are closely related to or

dependent on the problem context?

In this case the actions referred to are the interventions identified in the study that could enhance

the social capital of senior executives to foster collaboration amongst stakeholders to maximise

value creation.

1. Does the action, as far as possible, maximise social benefits and minimise social injuries?

The action does exactly that. The aim of SSM is to avoid looking at a problem from only one

perspective. A parochial approach could lead to sub-optimisation of the system which would

maximise social benefits for the stakeholders with that particular point of view, while potentially

disadvantaging other parties with different interests. SSM encourages the inclusion of all relevant

parties in generative debate to find solutions that would not benefit one at the expense of another.

The main stakeholders related to the problem situation of this study were identified and their

probable world views were included in the application of SSM. The existence of free riders in all

stakeholder groups was acknowledged, but the appropriate use of SSM should lead to buy-in from

the different parties. It is likely that those who want to work together for the common good will

naturally exclude selfish participants from the developing network.

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2. Will the action lead to a just distribution of benefits and burdens among people?

The action will achieve this as it is designed to prevent one stakeholder benefitting by shifting cost as

a burden to other parties. Senior executives who try to take advantage of a network will no longer

be perceived as trustworthy. They will lose social capital, access to the resources with which to

innovate and so their influence in important stakeholder discussions. For the network to be a viable

system it has to self-organise by rejecting actors that threaten its effectiveness and prosperity. One

may ask why there are individuals and groups who still seem to benefit through corrupt behaviour,

and whether this does not invalidate the proposed action. I propose that such ill gained benefit is

not sustainable and that over time such opportunists will be excluded from ethical social networks.

3. Is the action consistent with the rights of those whom it will affect?

By “rights” I refer to individual entitlement to freedom of choice and well-being. The action supports

these individual rights as it encourages inclusion of affected parties in the dialogue that will lead to a

choice of specific interventions which are desirable and feasible. Because individuals can elect

people to represent them at such forums they have a voice that will be heard. It is assumed that

such representatives do indeed have their constituencies’ best interest at heart, in contrast with, for

example, a corrupt politician who wins a term in office and abuses the opportunity for self-

advancement.

4. Does the action exhibit appropriate care for the well-being of those who are closely related to or

dependent on the problem context?

Those closely related to the problem situation are the various senior executives from a variety of

stakeholders as identified earlier. The example interventions would empower them to be more

effective in building the social capital they need to achieve the outcomes they, and those they

represent, desire. It should therefore lower the pressure they experience by giving them the means

to address the challenges they are expected to handle as leaders. The less power individuals (such as

the unemployed) linked to the situation have, the more they are dependent on successful

application of the action to sometimes intractable circumstances. The goal of the action is to

improve the likelihood of such people’s needs being taken care of. The proposed ideas thus show

care for individuals’ well-being.

7.6. Conclusion and future research

I have considered how a synthesis of Social Capital and Cybernetics principles with the Viable

Systems Model echo the results from this research and the subsequently developed theory for

mechanism causality. It is clear that senior executives who develop their social capital can play an

important role in brokering opportunities for innovation and value creation between groups in a

social relationship network. By using Soft Systems Methodology, senior executives from

stakeholders related to a problem situation may be brought together in constructive debate. This

can generate solutions that may help to achieve as many as possible of the beneficial outcomes

desired.

Trust is a key ingredient of the necessary relationships. The dynamic nature of an informal network

does not allow for the waste of time and other transaction costs associated with “policing”

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behaviour of the participants. The visualisation of a senior executive relationship network shows a

loosely coupled, dynamic, informal and voluntary form of organisation or multiminded system. In a

sense one could describe it as a very fluid form of enterprise. Intuitively one should be able to apply

the principles of Cybernetics and the VSM to diagnose and design channels of communication in the

network to ensure that potential value is identified and extracted. Progress towards understanding

how the VSM may be applied to virtual enterprises was made by Assimakopoulos and Dimitriou

(2006). I propose that further work be done in this field exploring its application to senior executive

relationship networks.

The findings and proposals from this study will be applied in my professional environment. The aim

is to record a number of case studies of how this works out and what was learned from the process.

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APPENDICES

Appendix A: Research interview log

Table 14: Interview log

NAME OF INTERVIEWEE DATE TIME LOCATION RELEVANCE TO RESEARCH?

INFORMED ABOUT THE AIMS

AND NATURE OF RESEARCH?*

INFORMED ABOUT THE

POTENTIAL RISKS OF

RESEARCH?**

Millard Arnold 04-Oct-12 12h30 - 13h30 Millard's home office (Johannesburg) Directly relevant Yes YesAndre Robberts 16-Oct-12 09h30 - 10h30 Andre's office (Tshwane) Directly relevant Yes YesMarius Swanepoel 17-Oct-12 11h00 - 12h00 Marius' office (Johannesburg) Directly relevant Yes YesCobus Rossouw 12-Nov-12 09h00 - 10h00 Jacques Marais' office (Johannesburg) Directly relevant Yes YesDougie Truter 13-Nov-12 09h00 - 10h00 Dougie's office (Johannesburg) Directly relevant Yes YesAndre Kruger 13-Nov-12 14h30 - 15h30 Restaurant, Johannesburg Directly relevant Yes YesMusa Ngubane 14-Nov-12 15h30 - 16h30 Musa's office (Johannesburg) Directly relevant Yes YesLerato Matola 15-Nov-12 09h00 - 10h00 Jacques Marais' office (Johannesburg) Directly relevant Yes YesJan van Rooyen 16-Nov-12 14h30 - 15h30 Jacques Marais' office (Johannesburg) Directly relevant Yes YesSusan Cook 11-Dec-12 15h00 - 16h00 Susan's office (Phokeng) Directly relevant Yes Yes

* Do they understand the nature and purpose of the dissertation and why their input is required for it?** Do they understand the negative and positive implications?

RESEARCH INTERVIEW LOG

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Appendix B: Interview introductory e-mail

This e-mail was used to set the scene for the conversations with the interviewees. To be noted is the topic

“Senior Executive relationship networks: a catalyst for business growth”. Throughout the course of the

study it became clear that the theme needed to be more inclusive of other forms of value and became

“Senior Executive relationship networks: a catalyst for value creation”.

“ Dear ____________

My name is Jacques Marais and I am working as Director for Business Development at (Company X). The

purpose of this email is to enquire as to whether I may interview you as part of research that I am currently

conducting. The topic of the study is “Senior Executive relationship networks: a catalyst for business

growth”. The outcome will be a dissertation towards completing an Executive MBA at UCT’s Graduate

School of Business.

Background

In today’s challenging business environment, traditional marketing approaches may not be sufficient to win

the size and quality of business Senior Executives seek to sustainably grow their organisations. In recent

conversations I have had with Chairmen and CEOs within our group and in the private sector, these leaders

have acknowledged the need for their personal involvement in growing their enterprises. Some have

however expressed concern at being so busy with running their organisations that they don’t have enough

time to connect with other decision makers in their environment. The study explores the impact of

leveraging relationships Senior Executives have outside their organisations in order to -

1. Become aware of partnership and business opportunities earlier and more comprehensively. 2. Follow through on these opportunities to establish partnerships and/or win more business.

Interview process

I am interviewing selected Chairmen, CEOs and Directors ranging from blue chip companies to smaller

entrepreneurial organisations. The interviews will provide different views on the subject based on the

extensive experience of the contributors.

1. The interview is designed to benefit from the unique perspectives of each individual, and as such is relatively unstructured and of a conversational nature.

2. The interview will last for one hour (unless you would like to allocate more time). 3. Confidentiality is guaranteed. Deliverable

The outcomes of the study will be made available to you on request. The dissertation will be submitted for

evaluation during March 2013.

In conclusion, I would greatly appreciate the opportunity to incorporate your insights into what I believe to

be a timely and relevant topic. I can meet with you at a venue of your convenience, including your offices.

Thanking you in advance,

Jacques Marais “

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Appendix C: Affinity Diagram

An example of a typical layout is shown in Table 15.

Table 15: Affinity Diagram layout example

Variable 1 Variable 2 Variable 3 Variable 4 Variable 5 Variable 6 Variable 7

Proposition (kind 1)

Proposition (kind 2)

Proposition (kind 3)

Proposition (kind 4)

Proposition (kind 5)

Proposition (kind 6)

Proposition (kind 7)

Proposition (kind 1)

Proposition (kind 2)

Proposition (kind 3)

Proposition (kind 4)

Proposition (kind 5)

Proposition (kind 6)

Proposition (kind 7)

Proposition (kind 1)

Proposition (kind 2)

Proposition (kind 3)

Proposition (kind 4)

Proposition (kind 5)

Proposition (kind 6)

Proposition (kind 7)

Proposition (kind 1)

Proposition (kind 2)

Proposition (kind 3)

Proposition (kind 4)

Proposition (kind 5)

Proposition (kind 6)

Proposition (kind 7)

Proposition (kind 1)

Proposition (kind 2)

Proposition (kind 4)

Proposition (kind 5)

Proposition (kind 6)

Proposition (kind 7)

Proposition (kind 1)

Proposition (kind 2)

Proposition (kind 4)

Proposition (kind 5)

Proposition (kind 6)

Proposition (kind 2)

Proposition (kind 4)

Proposition (kind 5)

Proposition (kind 6)

Proposition (kind 2)

Proposition (kind 4)

Proposition (kind 6)

Proposition (kind 2)

Proposition (kind 4)

Proposition (kind 6)

Proposition (kind 4)

Proposition (kind 6)

Proposition (kind 4)

Proposition (kind 6)

Proposition (kind 6)

The interviews produced a set of insightful propositions and I show groupings from early in the GT process

in Tables 16 - 19.

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Table 16: Affinity Diagram (variables 1-10)

A ccess to

reso urces

P erceived

trustwo rthiness

SE netwo rk leverage SE co mpeting

co mmitments

Individual so cial capital SE netwo rking skills SE netwo rking act iv ity Use o f netwo rking

techno lo gy

Lo ng term relat io nship

effo rt

Explic it netwo rk mapping

A successful entrepreneur has access to resources.

Clients are more inclined to buy from someone they know.

Senior execut ives already have complex networks that got them to where they are.

Preoccupat ion with what you are doing can prevent execut ives from having strong relat ionship networks.

One can strengthen your social capital by perceived associat ion with respected leaders.

Good networkers know how to make contact in a way that gets them remembered.

A CEO should do at least one outreach per week.

One can “ automate” the

reminder to reach out.Reciprocate when someone invites you to an event.

It would be immensely useful to do network mapping.

The people in your network are resources.

The M D earned the trust of his customers.

Senior execut ives know that network building is important.

Senior execut ives want to spend t ime “ off line” .

People who are strong networkers are known.

Send your senior contact a small congratulatory note when you see their good results in the paper.

Senior execut ives have a responsibility to build networks.

The Director wants to learn how to use internet based social networks more effect ively.

Take a long term view on relat ionships.

M apping could be done by overlapping contact lists.

Strategic acquisit ions can be used to buy a capability no one else has.

He earned their t rust by adding value to their lives.

A CEO has a unique network. When the execut ive is f ire f ight ing network building doesn’t happen.

People who are not strong networkers are less known.

Write short personal observat ions to senior contacts.

A CEO should meet with top 20 clients twice per year.

One can use technology e.g. electronic notes to assist with memory.

M ore outreach may be required beyond your exist ing networks.

It is important to understand the causality in a network.

People without experience and resources can access resources through network relat ionships.

A buyer often don's trust that the seller has his best interest at heart .

You can’t do business

without working with people.CEOs get bogged down. After the merging of two

companies an intermediary’s job

was saved by the senior relat ionships he had.

Part icipants need to be responsive. The CEO should have a strong relat ionship with the leaders of the top 20 clients.

A competitor has a system that captures this level of personal detail.

The sustainability of your network is important.

You should know who the person reports to.

It is important to build trust in the selling relat ionship.

Exist ing " old school" networks gives one an advantage.

The complexity in their business takes up the CEO’s

t ime.

Corporate CEOs want to be in the same network as other CEOs.

Follow through on the information you get.

Senior execut ive relat ionship building happens when it is structured and diarised.

Systems are not smart enough to quant ify the strength of a relat ionship.

It takes hard work to maintain and grow relat ionships.

Trust is built through closer relat ionships.

The Chairman will not start a new deal before considering how it could connect with his network.

An overemphasis on f inancial and internal metrics takes focus away from network building.

Others’ percept ion that you have a

network is important.It is important to remember who people are and what they do.

The CEO should meet one potent ial client for every two exist ing clients.

Tools can create network visibility.

Trust can is built quicker at SE level because they have skin in the game.

He sees how an opportunity can f it into his business.

When the execut ive starts micro managing he fails.

M ost execut ive placements come from word of mouth.

One should remember personal details about people.

Some Senior Execut ives abdicate the responsibility for network building to their business development staff .

One can use tools to make tacit knowledge tangible.

We need to have real t rust in the relat ionship.

The relat ionship has to be with a decision maker.

The execut ive should put systems in place to free him from too much detail.

All the Director’s career

opportunit ies came from network contacts.

Strategic communicat ion ability enhances a person's social capital.

One must engage with customers and partners.

The level of your network is important i.e. decision makers.

The CE needs a layer under him that can execute the detail decisions.

All the Chairman’s deals came

through his network connect ivity.You should pick up the detailed personal signals in people's lives.

We spend too lit t le t ime with CEOs.

You should leverage exist ing relat ionships.

The leader must surround himself with the right people.

The Chairman and his business partner decided to delve and use their network further.

You should know the customer's likes and dislikes.

Peer-to-peer relat ionships should be a culture.

Junior people can't leverage their posit ions.

They did good transact ions and both became wealthy.

The M D has business dinners with his peers at top customers.

We are dependent on leveraging our networks to gain social capital.

It doesn’t help to have a good

solut ion but not have the necessary connect ions.

Polit ical connect ions can be leveraged to get economical value.

There are two kinds of entrepreneurs (1) e.g. those who start restaurants and manufacturing (2) those who use business opportunit ies through their networks.

If I allow someone into my network, they owe me.

Networking can make a substant ial dif ference to a company.

The execut ive's ability to accomplish anything is based on networks.

People dont 's want to necessarily share their relat ionship networks.

M any people have good personal networks but their professional networks are not as strong.

M y relat ionship network is my personal social capital.

Billionaires built wealth by leveraging their close social networks.

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Table 17: Affinity Diagram (variables 11-20)

N etwo rk building team

appro ach

F o rmality o f

relat io nship

Individual integrity A bility to see

o ppo rtunit ies fro m

co nnect io n

Individual netwo rking

pro pensity ( incl

perso nality)

Select iv ity o f

netwo rking

R elat io nship

substance

N etwo rk bro ker impact Strategicness o f

co nversat io ns

P eer-to -peer senio rity

impact

It is important to build a team to facilitate strong networks.

The relat ionship doesn’t have

to be social; it can be purely professional.

Integrity in the way you do business is crit ical.

He sees the possible connect ions.

Personality plays a role but it has to be developed.

Be select ive about who you include in your network.

Networks can become a fantasy without substance e.g. “ I heard about so and so” .

The Chairman brought many network contact points together.

Strategic conversat ions with senior peers can uncover opportunit ies

It is not necessary to take your M Ds to the meeting with the other CEO.

A strong relat ionship between the CEO and his/her Business Development execut ive is important.

Some clients prefer regular formal meetings.

Integrity is especially important in compact networks.

Some people don’t see the

opportunity... they don’t see

the connect ions.

The percept ion that a wide social network will deliver results can be wrong.

An individual doesn’t have the

emotional energy to maintain a wide social network with quality relat ionships

The execut ive is valued for strong relat ionship development with the outside world.

The CEO should not be dragged into an operat ional conversat ion.

The other CEO may open up more about problems if the responsible M D is not present.

The Business Development staff should set up appointments for the CEO.

The CEO relat ionship can be just professional but there is a level of personal connect ion as well.

There are some people with whom the chairman will never do business again.

Some people socialise all the t ime but don’t see the

opportunit ies.

It is important to have a compact, powerful network within which you operate.

It is better to have quality networks.

The execut ive is asked to represent the community to the outside world.

There are few people who can talk to each other meaningfully about business.

Peer relat ionships with exist ing clients should be built “ top

down” .

The business development execut ive should support his/her CEO to do networking act ivity.

It is wrong to have an “ item

specif ic” network e.g. just

because you’re the CEO I’ll

contact you.

Professionals can be so focused on chasing specif ic deals that they don’t see

opportunit ies passing by.

The company’s network focus

should change from haphazard to intent ional engagement.

Junior people may be more insecure.

They talk about issues strategic to the customer.

Your CEO can open the door by talking strategy to other CEOs.

Richard Nixon had an aid that prompted him about who people were and what to talk to them about.

The chairman thinks that networking events feel contrived.

A focus on big deals can be a barrier to seeing other opportunit ies

Big networks do not necessarily provide value.

The quality of relat ionships are important.

A CEO understands another CEO's organisat ional object ives.

A CEO’s or Director’s t it le can

open doors.

You must have someone managing this for you.

The Chairman wants to associate with people who he has learned to respect, and from whom he has earned respect.

The Execut ive must be able to see the opportunit ies.

You should target specif ic partners.

The relat ionship with the decision maker has breadth and depth.

Use a combinat ion of a strong company brand and a senior execut ive t it le to get a f irst meeting.

Your PR person can do this for you.

Some people hide parts of their business act ivity from their network.

One must understand what the market needs.

The M D targets peers at strategic clients.

You need depth in the relat ionship.

A CEO brings authority to inf luence decision making.

He prompted his boss with the names of every director, their wives and children.

Some people promote themselves to their own detriment.

The M D's job is business intelligence.

A CEO can form more inf luent ial partnerships.

People relate to you because of what benef it they can get from you.

CEs can tap into the grapevine by being able to join the dots of understanding.

Good peer-to-peer relat ionships facilitate problem resolut ion.

Some people try to use networks only for self-gain.

If the CE can join lots of dots he can posit ion the organisat ion to compete.

Selling by SEs is more eff icient than selling from the bottom.

Junior people may have a polit ical agenda.

One must understand how the various ent it ies form part of the value proposit ion.

The buy-sell process at senior level is more eff icient.

The relat ionship had to be formalised to ensure a percept ion of integrity.

Align your product and strategy with market needs.

A solut ion is delivered faster if driven at SE level.

A too personal relat ionship can be perceived as corrupt.

I should understand who will benef it f rom what I want to sell.

A t it le opens doors.

SEs in the company have blind spots re. opportunit ies in networks.

Relat ionships between community leaders and provincial government are strained.

Local government constant ly challenges act ivity of community leadership.

Value of the community leadership is recognised at nat ional level.

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Table 18: Affinity Diagram (variables 21-30)

Impact o f

co mpetit io n

M utual benef it to

part ic ipants

Organisat io nal

external

relat io nship lo ss

risk

P o sit io ning in

netwo rk

Individual N M

capability

P art ic ipant 's

perceived value add

P ro curement

go vernance impact

o nnetwo rk benef it

Internal SE -

o rganisat io n

alignment

Internal mult iple

perspect ives to SE

Internal intelligence

disseminat io n

Increasing competit ion makes strong relat ionships important

Service excellence is st ill important despite senior relat ionships.

Formalising organisat ion –

organisat ion business relat ionships is important.

It is important how you posit ion yourself in a network.

Relat ionships are risky. A company must def ine its unique value proposit ion.

Procurement governance is replacing the benef it of personal relat ionships.

A leader needs a common understanding for people to make good decisions in a company.

An execut ive needs mult iple perspect ives on information to enhance its quality.

Good decisions need quality information.

The relat ionships need to benef it someone.

Organisat ions don’t have

relat ionships with organisat ions.

“ It is better to be f irst than it

is to be better.”

You have to open up about yourself .

The value proposit ion (product) must be packaged with the right messaging.

A leader can facilitate common understanding through networks, systems and processes.

An execut ive can get dif ferent perspect ives through his/her network in the company.

The information route in the organisat ion should be as short as possible.

The relat ionship part icipants need to have something to share.

Individuals have relat ionships with individuals.

Networking is about posit ioning.

People can be scared to be vulnerable.

A company must create a service offering, a value proposit ion.

The leader needs sages in the organisat ion.

The leader needs feedback from staff .

People will buy from you if they perceive value from you.

It is crit ical to posit ion the organisat ion.

People avoid the risk inherent in relat ionships.

A company can posit ion itself by making a cognit ive decision to change its approach.

The organisat ion needs people who can swim upstream.

Staff feedback provides learning which enables course adjustments.

You must maintain quality service to keep a good relat ionship with the customer.

The execut ive must live out the core value of his/her organisat ion.

Good communicat ion is important for strong networking.

A company should examine its service offering to explore the angles it can take for posit ioning in a network.

The CE should surround herself with opinion formers.

A CRM tool can be a pool of quality information.

The M D makes his company indispensable to the customer.

Building strong relat ionships posit ions you as a strategic partner.

Cultural etc. barriers can be overcome by f inding something you have in common.

The network part icipant (company) must have a def ined product.

The M D should be having conversat ions with people who think outside the box.

The leader must know how to harvest intelligence from the grapevine.

Relat ionships must benef it both part ies.

Without strong relat ionships you are one of the masses.

You need to be able to judge someone's character, not appearances.

A brand is a promise to a customer.

Company structures makes it dif f icult for one person to know what is happening.

The company must posit ion itself strategically.

Diplomacy skills are important to make progress with adversarial relat ionships.

Attract a customer purposefully to attributes of the product/brand.

Company structures causes disconnect between silos.

Relat ionships are about understanding other people.

Align the value proposit ion to the customer’s strategy.

Hierarchical organisat ional structure makes communicat ion dif f icult .

The network part icipant must have the ability to add value.

Network connect ivity is not a subst itute for hard work.

Customers’ and partners’

percept ion of your value is formed through their experience of you.

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Table 19: Affinity Diagram (variables 31-40)

Internal

o rganisat io nal

netwo rk strength

External netwo rk

to uchpo int quality

fro m o rganisat io n

members

C usto mer lo yalty Excessive

shareho lder fo cus

C usto mer fo cus N etwo rk exclusivity P art icipant

co mmo nality

N etwo rk density

impact

So cial interact io n P erceived po wer

asso ciat io n

The leader should build a team that he/she trusts.

The really good intelligence is not found in newspapers or the internet.

Building strong relat ionships with a customer creates loyalty.

The focus on shareholder returns is excessive.

The focus has shif ted away from making sure the customer is happy.

Exclusive networks e.g. " the Stellenbosch club" benefit only their part icipants.

Social networks (electronic) are used more effect ively by younger people.

Being allowed into a core network can create success for an individual.

Lobbying often takes place during informal interact ion.

Being perceived to know the inf luent ial person makes a dif ference.

The leader's people are part of his/her grapevine.

The executive needs a network that brings information to her.

The customer will talk to you f irst before he talks to your competitor.

The focus on shareholder returns is excessive.

There is less focus on customer relat ionships.

Some cultural networks e.g. Indian and Jewish communit ies cut across social strata.

Younger people build trust relat ionships through electronic social networks.

There is a looser network one level removed.

You are excluded from lobbying opportunity if not part of informal interact ion.

People ask the exec. to champion their causes with the decision maker.

Information from the network will make a dif ference one day.

Relat ionships can st ill help despite tender processes.

A company will be hurt in the long run by only focusing on prof its.

Relat ionship management has deteriorated.

A closely knit elite controls access to key resources.

Tokyo Sexwale became successful through people he know on Robin Island.

We are after entert ing this looser network.

Exclusion from informal interact ion leads to high energy networking energy requirements.

Impersonal sales channels like call centres builds no loyalty.

We need to understand each other's needs.

The elite covert ly exclude outsiders from access to resources.

Ethnic and gender dif ference can prevent acceptance into a network.

Trust in the loose network is lower but can be built .

Informal interact ion is a high leverage opportunity.

You need to understand what keeps them awake at night; what they want to achieve.

The elite acts self ishly to get the most gain from transient resources.

Relat ionships rooted in a common past can overcome other relat ionship problems.

Some people confuse social relat ionships with business relat ionships.

An outsider cannot earn enough trust to be allowed into the inner circle.

One can have a professional-social connection (at least go for breakfast or play a game of golf).

Relat ionships based on family or common suffering are the strongest t ies.

A mutual interest e.g. golf can help to strengthen a relat ionship.

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Appendix D: Interrelationship Digraphs

Figure 30 shows the maze of dependencies with the starting category headings minutely visible around the

edges.

Figure 30: First ID (reduced scale)

Access toresources

Perceivedtrustworthiness

SE networkleverage

SE competingcommitments

Individualsocial

capital SE networkingskil ls

SE networkingactivity

Use ofnetworkingtechnology

Long termrelationship

effort

Explicitnetworkmapping

Networkbuilding team

approach

Formality ofrelationships

Perceivedindividual

integrity

Ability to seeopportunities

fromconnections

Networkingselectivity

Relationshipsubstance

SE networkbroker impact

Strategicnessof

conversations

Peer-to-peerseniority

impact

Mutualbenefit to

participants

Organisationalexternal

relationship lossrisk

Individualpositioning in

network

IndividualNormative

Managementcapability

Participant'sperceivedvalue add

Internal SE -organisation

alignment

Internalmultiple

perspectivesto SE

Internalintell igence

dissemination

Internalorganisational

networkstrength

Organisationmembers' external

network touchpointquality

Customerloyalty

Excessiveshareholder

focus

Customerfocus

Networkexclusivity

Participantcommonality

Networkdensityimpact

Socialinteraction

Perceivedpower

association

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Figure 31 shows the ID with the variables denoted by graph symbols. This again illustrates the potential

complexity of the situation if appropriate methods are not used to get to the essential dynamics of the

observed phenomenon.

Figure 31: Complex causality between the preliminary variables

Access toresources 0 0 1

Perceivedtrustworthiness 0 0 0

SE networkleverage 0 0 1

SE competingcommitments 0 0 0

Individual socialcapital 0 0 1

SE networkingskil ls 0 0 1

Use of networkingtechnology 0 0 0

Long termrelationship effort 0

0 1

Explicit networkmapping 0 0 1

Network buildingteam approach 0 0 1

Perceived individualintegrity 0 0 0

Ability to seeopportunities fromconnections 0 0 1

Networkingselectivity 0 0 0

SE network brokerimpact 0 0 1

Organisational externalrelationship loss risk 0

0 1

Individualpositioning innetwork 0 0 1

Individual NormativeManagement capability 0

0 1

Participant'sperceived value add

0 0 0Customer loyalty

0 0 0

Excessive shareholderfocus 0 0 1

Mutual benefit toparticipants 00 0

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Appendix E: Core variable concept analyses

REFERENCES:

(Adler & Kwon, 2002), (Ertug et al., 2012), (Kemper et al., 2011), (Boon & Farnsworth, 2011), (Eisingerich &

Bell, 2008), (Berman & Korsten, 2012), (Baker, 2000), (Dunlap & Uzzi, 2005),

SE Networking Skills Antecedents Belief in the importance of network development

Understanding of which skills are important

Engagement with sources of knowledge and experience

Practice of skills

Attributes Network analysis

Network opportunity perceptivity

Network building team approach

Engaging customers as individuals

Attending formal and social events with relevant contacts

Joining industry associations

Establishment and maintenance of relationships

Active development of non-redundant networks

Reaching out to diverse constituent groups e.g. business and political contacts

Extensive partnering

Selectivity in network building

Face-time with contacts

Conversion of data into insight and action

Time management

Flexibility

Avoidance of overinvestment in SC

Active monitoring and management of exchange relationships

Consequences Detection of market changes

Adaptation to market changes

Development of deep customer insight

Exploitation of resources, opportunities and emerging organisational identity

Understanding of organisation’s openness to change

Network efficiency

Balance between breadth and depth of relationships

Building of specialised capabilities such as marketing

Opportunities for brokering

Maximised business performance

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REFERENCES:

(Ertug et al., 2012), (Kemper et al., 2011), (Tsai & Ghoshal, 1998), (Berman & Korsten, 2012)

SE Broker Impact Antecedents SE volunteering time, expertise, insight or resources

Top managers actively nurturing trust network relationships

Leader occupies a broker position in an influential interaction network

Rank and formal authority brings greater power

Attributes Social structures of SE contacts strengthens influence of subordinates

SE influence

Higher-rank brokers have access to more influential and in-the-know people

Higher rank reduces negative effects of dense networks

Higher ranking players are not as dependent on social structure to extract resources

Higher rank boosts the benefits of wide-spanning networks

Consequences Second-order social capital

Connections benefit in doing their jobs

Power to access and acquire resources

Better resources through better quality of alters

Interpretation and synthesising of diverse and non-redundant information

Better accumulated (wiser) insights

Provision of relevant insight

Power to act on ideas

SEs with perceived power are more likely to be approached with opportunities

SE broker has greater potential to combine and exchange resources with other actors

SE partnerships amplifies innovation

REFERENCES:

(Hamel, 2007), (Adler & Kwon, 2002), (Tsai & Ghoshal, 1998), (Ertug et al., 2012), (Kemper et al., 2011),

(Eisingerich & Bell, 2008), (Berman & Korsten, 2012)

Resource Utilisation Antecedents SE’s social capital

Top managers actively nurturing trust network relationships

Openness to new and diverse exchange partners

Trust between parties

Reduction of uncertainty

Network efficiency

Fast capture, interpretation and action on information

Balance between breadth and depth of relationships

Partnering to build capabilities

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Teaming for innovation between organisations

Strategic alliances

Breadth of vision

Network partners with the ability to help you

Effective collaboration

Partners who specialise in single/specific stages in a value chain

Attributes Access to new technologies and service know-how

Conversion of data into insight and insight into action

Resource supply

Resource exchange

Resource combination

Dynamic capability development

Novel deployment of resources (e.g. new ways of resource exchange and combination)

Invention of new industries

Greater specialisation of in- and outputs in value chains (“flexible specialisation”)

Profitable de-integration of value chains

Specialised marketing capabilities (e.g. distribution partners – distribution capabilities)

Consequences Product and service innovation

New sources of value are created

Exchange efficiency

Reduced input prices

Greater speed to market

Competitive advantage

Profit optimisation

REFERENCES:

(Hoebeke, 2000), (Adelowore & Jamal, 2008), (Boesso & Kumar, 2009), (Eriksen, 2008), (Cunnington et al.,

1994), (Orton & Weick, 1990), (Kemper et al., 2011), (Tsai & Ghoshal, 1998), (R. Leonard & Onyx, 2003)

SE Normative Management Capability Antecedents Diversity of world views

Debate participants know they must live with the results

Cross-cultural communication skills

Team building skills

A desire to establish the truth of a matter through reasoned arguments

Participants are open to persuasion

Participants understand that they have bounded rationality

Compliance between ideal self and actual self

Internal and external consistency

Rapport within oneself

Grounding in one’s own humanity and traditions

Encouragement of new thinking patterns through rigorous feedback loops

Openness to new theories

Willingness to change

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Attributes Tolerance

o Participants do not judge or eliminate others with different world views

o Relationships between adversaries are essential to express values o Weaker parties are tolerant of power imbalances in relationships

Dialectic capability o Dialogue between people with different points of view on a subject o Truth is discovered through reason and logic in discussion

Congruence o “Opposing” stakeholders debate difficult issues o Stakeholders learn about themselves through on-going debate o Stakeholders recreate their own world views

Generativeness o Constant dialogue and reflection o Unlearning of old habits o Organisations as organisms recreate themselves

Consequences High quality of a debate and its outcome

Participants learn to appreciate each other’s world views

Respect and trust grows

Resolution of disagreement

Appreciation and trust between stakeholders

Trust between adversaries

New value systems are created

Debate requires and strengthens the congruency between the inner and outer worlds of the participant

Stakeholder perceives sincerity from congruent person

Relationship satisfaction

Customer satisfaction with service provider

Theory users develop a new repertoire of behaviour

They develop new ways to deal with their environment

Collaborative decision making

Cross-cultural cooperation

Shared vision

Common goals or interests

Loosely coupled systems are held together

Perception of resource exchange value

Organisational integration

Long term reciprocity

REFERENCES:

(Maister et al., 2000), (Covey, 1990), (Ertug et al., 2012), (Kemper et al., 2011), (Tsai & Ghoshal, 1998)

SE Perceived Trustworthiness Antecedents Building of a trust relationship

o Engagement o Listening o Framing

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o Envisioning o Commitment

Social interaction

The SE emphasises common goals and shared vision between actors

Taking a long-term approach to the relationship

Attributes Character

Truthfulness

Ethical behaviour

Competence

Reliability

Proven ability to add value

SE reputation of trustworthiness

SE ability to signal competence and trustworthiness

Consequences Trust

An actor believes in the competence of the other party

Cooperation

Sharing of resources between parties

Reduced fear of opportunistic behaviour

Reduces transaction costs

REFERENCES:

(Tsai & Ghoshal, 1998), (Kemper et al., 2011), (Burt, 1997), (Eisingerich & Bell, 2008), (Jarillo & Ricart,

1987), (Burt, 2005)

SERN Quality Antecedents (Appropriate) social interaction

Membership diversity

Openness to new exchange partners

SE reputation for reciprocity

SE networking skills

Attributes Low network constraint

Sufficient and beneficial structural holes

SE position as broker bridging structural holes

Alters’ influence and access to resources

Sufficient embeddedness in SE organisation

Stability of network linkages

Intensity of network linkages

Emotional closeness

Frequency of interaction

Longevity

Consequences SE social capital

Secondary social capital to SE organisation

Opportunity for SE and organisational marketing

Recognition of SE’s ideas as valuable

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Superior SE remuneration

SE career advancement

REFERENCES:

(Adler & Kwon, 2002), (Coleman, 1988), (Ertug et al., 2012), (Kemper et al., 2011), (Tsai & Ghoshal, 1998),

(Burt, 1997), (Boon & Farnsworth, 2011)

SE Individual Social Capital (CBOT) Antecedents Diverse personal contacts in clusters of political support

Trust

Shared norms

Attributes Managerial tie (including social interaction) utilisation

Access to broader sources of information

Improved information quality, relevance and timeliness

Number of connections

Strength of relationships

Network density

Consequences Actor’s influence, control and power

Bias towards action

Network benefits from information diffusion

Positive externalities for actor’s organisation

Facilitation of resource accessibility

Resource exchange and product innovation

Career success

Strength of supplier relations

Amassing of resources

Amassing of reputation

Solidarity

REFERENCES:

(Adler & Kwon, 2002), (Tsai & Ghoshal, 1998), (Ertug et al., 2012), (Kemper et al., 2011), (Eisingerich & Bell,

2008), (Ryan, 2011c)

Value Creation Antecedents SEs develop specialised marketing capabilities

Dynamic capability development

Openness to new ideas, technologies and ways of doing business

Novel deployment of resources (e.g. new ways of resource exchange and combination)

Strong and open network linkages

Adjustment over time of balance between network strength and openness

Flexibility to respond to changing circumstances

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A balance between established and trusted partners and new and diverse partners

Attributes Invention of new industries

Profitable de-integration of value chains

Product and service innovation

Exchange efficiency

Reduced input prices

Greater speed to market

Competitive advantage

Profit optimisation

Supply chain linkages are broken down

Alliance partners address new markets not viable for a single firm