Framework of Research on Social Capital and Knowledge Acquisition: An Empirical Study of Professional-Client Relationships

Social capital is embedded in relationships and crucial for facilitating value creation. This study adopts a micro-relational perspective on social capital and addresses the gap in the literature concerning its importance for explaining the management of professional-client relationships. The research provides an in-depth analysis of professional-client relationships, considering both the structure and the attributes, as well as how social capital is utilized by professionals to create and maintain networks with new and existing clients. This research proposes a framework for examining the relationship between human capital and social capital. Human capital is understood as manifested by the extent of knowledge acquisition within three domains: market knowledge, technical knowledge and client-specific knowledge. The outcomes of social capital in professional-client relationships are examined in relation to knowledge acquisition and relationship outcome variables. Professionals employed in knowledge-intensive firms rely on both their human capital and social capital to acquire and commercialize their knowledge to deliver value in their professional services to clients. However, research to-date has insufficiently investigated the relationship between human capital and social capital, and the application of social capital theory to the study of lawyers and law firms, as proposed in this PhD research, draws attention to the importance of these social processes within professional-client relationships. Social capital, in this study, is defined as consisting of two dimensions: structural and attributive. The structural dimension of social capital refers to the idea that networks of actors can influence the outcomes of social relationships, while the attributive dimension of social capital refers to the extent of trust in relationships. Structural perspectives on social capital have been predominant in the literature, but discussion on the attributes of such ties have been lacking. As such, with limited attempts to operationalize the construct of social capital in the literature (Koka and Prescott, 2002) and the differing aspects of social capital considered in empirical investigations (Wu, 2008), existing studies on social capital have been characterized by the lack of consensus on the dimensions that compose social capital as well as the measures of social capital (Bolino et al., 2002; Wu, 2008). The theoretical framework is examined through a triangulation of cross-methods and cross-samples approaches by conducting two studies (qualitative and quantitative as different methods) with different samples. Study 1 is a qualitative study, designed to evaluate the theoretical framework through a set of exploratory interviews with Australian client organizations to reveal their views on the contracting, evaluation and continuation of legal service delivery by external law firms. Many of the organizations included in this study are large and diverse businesses, with in-house departments ranging from those managing a small team to large in-house teams working in a large corporate company. Study 1 is an exploratory investigation of the themes that emerged from the interviews, and its findings provide some preliminary evidence for the various propositions. Study 2 is a quantitative study of survey research of Australian law firms and their client organizations conducted by administering web-based questionnaires to lawyers and their clients. The questionnaire items are designed to measure the constructs presented in the theoretical framework, with data collected using both social network techniques and a conventional Likert-type format of question items. The data are analyzed using a series of statistical regression procedures to test for mediation and the effects of the control variables, as well as by conducting Partial Least Squares (PLS)-based structural equation modeling to examine the relationships between the constructs in the full structural model. The findings from Study 2 indicate support for the hypotheses presented in the theoretical framework. First, the findings support the hypothesis that there is a link between human capital and social capital. Knowledge acquired from all clients, representing the aspect of a professional’s human capital in this context, is significant in influencing both dimensions of social capital. Second, the findings of the study denote that human capital, as represented by knowledge acquired from a professional’s most important client, plays a mediating role in the relationships between social capital and the various relationship outcomes of reputation, referrals, fee income, and relationship continuity. Third, the findings reveal that the construct of the structural dimension of social capital is made up of various components, including: centrality, frequency of communication, nature of communication, the non-redundancy of ties, and network diversity. Finally, the findings also indicate a high reliability score for conceptualizing the attributive dimension of social capital as constituting of three types of trust: rational trust, moral trust, and affective trust. In conclusion, the study provides a useful means of advancing our understanding of the link between social capital, human capital (knowledge acquisition), and relationship outcomes by empirically examining these constructs in the context of professional-client relationships, and by creating a new line of research inquiry into this significant area of strategic management research