Human or Social Resources Management: Which Conditions Force HR Departments to Select the Right Employees for Organizational Social Capital?

• Published date: 01 March 2016
• Date: 01 March 2016
• Author: H. Okan Yeloglu,Demet Varoglu,H. Nejat Basim,H. Cenk Sozen
• DOI: http://doi.org/10.1111/emre.12063

Human or Social Resources Management:

Which Conditions Force HR Departments to

Select the Right Employees for

Organizational Social Capital?*

H. Cenk Sozen1,Demet Varoglu2,H. Okan Yeloglu1, and H. Nejat Basim1

1Baskent University, Ankara, Turkey

2TOBB University of Economics and Technology, Ankara, Turkey

This study examines in which cases organizations tend to form social capital, and explores how such attitude

affects their recruitment strategies. This countrywide research project covering 158 firms located in 18 different

cities was conducted to understand and to identify the variables which increase organizations’ tendency to form

social capital. A mixed methodological approach was adopted to reveal relationships between variables. The

results show that dependency to state and suppliers, environmental uncertainty, rate of tenured staff in organiza-

tions, ownership status, conduct of HR activities by other departments or units and educational level of HR staff

increase organizations’ tendency to form social capital. Besides, it was found that organizationalage, outsourcing

of HR activities and centralized HR departments are negatively associated with social capital.

Keywords: human resource management; social capital; social networks; recruitment and selection

Introduction

There are several studies (Mincer, 1974; Hitt et al.,

2001; Makela et al., 2009; Tian et al., 2011; Schulz

et al., 2013) emphasizing the benefits of human capital

(Schultz, 1961) and searching the ways how HR prac-

tices should be used to improve this type of capital.

Nowadays there is a growing trend among scholars to

explain how level of organizational social capital can be

increased. It is quite clear from the statements and find-

ings of some authors (Walsh et al., 1981; Markovsky

et al., 1997; Tsai and Ghosal, 1998; Fiol et al., 2001;

Cross and Parker, 2004; Lamertz and Aquino, 2004) that

social capital may determine the influential capacity and

competitiveness of organizations.Although the literature

on social capital of organizations mostly focus on ties of

employees working in higher-level managerial positions

(Belliveau et al., 1996; Gargiulo and Benassi, 2000;

Tian et al., 2011), network ties of employees working in

any organizational level can also be beneficial for

organizational purposes. Therefore, HR departments

should seek and select actors who are holding critical

positions in an organizational ecosystem (Burt, 1992),

having plenty of arms-length ties (Granovetter, 1973) or

strong relations with important actors (Bourdieu, 1983;

Coleman, 1988). There may also be pressures arising

from the stakeholders to involve in focal organization’s

HRM practices (Swart and Kinnie, 2014). So, develop-

ment and management of such complex relations may

add further responsibilities to HR departments as

pointed out by Swart and Kinnie (2014).

We claim that, among all HRM practices, employee

selection deserves special attention in terms of develop-

ing external and internal social capital (Adler and Kwon,

2002). If we take a closer look into the literature on

employee selection, it is possible to see that searching

ways to develop human capital is a dominant issue (Coff,

2002; Makela et al., 2009; Winnie and Sels, 2010;

Schulz, et al., 2013, Shaw et al., 2013; Lakshman,

2014). Human capital represents employees’ contribu-

tions to an organization in terms of levels of education,

skills, work experiences and training (Wright and

Correspondence: Cenk Sozen Baskent Universitesi, Eskisehir Yolu 20.

Km, Baglica Kampusu, Iktisadi ve Idari Bilimler Fakultesi, 06530,

Ankara / Turkey. Tel: +90 312 246 66 66 / ext:1243. E-mail: csozen@

baskent.edu.tr

*This research was funded by TÜBI

˙TAK (The Scientific and Techno-

logical Research Council of Turkey).

DOI: 10.1111/emre.12063

© 2015 European Academy of Management

European Management Review, Vol. 13, 3–1 (201 )

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McMahan, 2011). Employees who feel the firm does not

treat fairly can decrease their efforts or can simply leave

the organization (Wright and McMahan, 2011).

However, human capital cannot help organizations to

create links with the external actors so as to manage their

dependency relations (Pfeffer and Salancik, 1978). Con-

sider the case stated below:

Imagine yourself as a HR manager of a firm produc-

ing medical imaging appliances.You are going to

recruit an electric engineer for the R&D department

of the company.You have only one position to fill and

two candidates applied for the position.

Candidate 1: A very talented and experienced electric

engineer who graduated from a countrywide known

school.

Candidate 2: Recently graduated from an irrelevant

area of engineering and has no field experience.But

he/she is nephew/niece of a man who works as CEO of

the largest hospital chain in the country.

What would be your decision?

If we evaluate this case with the paradigm of human

capital, selection of candidate 1 seems to be the only

alternative for an organization. But, what will happen if

one of your rivals recruit candidate 2 after you refuse him

or her? Your rival may anytime use this link to influence

decisions of the CEO. Regardless of innovative capacity

gained through your skilled and talented engineers, the

rival company may have a great advantage in terms of

marketing its appliances to the hospital chain.

The case is also a typical example of how different

levels of organizational networks can jointly affect

organizational outcomes. Moliterno and Mahony (2011)

criticize the idea of isolating individual, group and

interorganizational level networks and they suggest that

integrative approaches should be used to create links

between micro and macro. Network structure at one

level relates to network structures and relationships at

higher or lower levels of the system (Molinero and

Mahony, 2011). There is a structural hole between the

company and a potential customer – hospital chain – and

the decision of HR department to recruit the candidate

who has a potential to act as a broker (Burt, 1992) may

positively affect outcomes in the future. Recruitment of

candidate 2 may also serve to strengthen current rela-

tions between the firm and the hospital chain (Bourdieu,

1983; Coleman, 1988).

The case may seem as a typical example of corruption

in business life. However, we have to make a distinction

between what should be and what is happening in

reality. Organizations, which invest heavily on their

social capital by finding and recruiting the employees

who have beneficial social connections, may have great

advantage over others that do not prefer to follow such a

strategy. This situation is evident from the findings of

several studies (Gomez and Sanchez, 2005; McDonald

and Elder, 2006; Kim and Cannella, 2008; Venneberg

and Wilkinson, 2008). In this case, some factors like

successful management of internal operations, quality of

production, and level of human capital (Schultz, 1961)

seem pointless. Krackardt and Hanson (1993) highlight

the relational aspect of organizational life and state that

the concept of human capital doesn’t capture its integra-

tive and relational aspect very well.

As it can be seen from the case, development of

organizational social capital is not restricted to network-

ing activities of managers. And the main purpose of

nurturing social capital via HR practices is not just about

creating information linkages or sharing knowledge

between organizational subunits or with other organiza-

tions as it emphasized by some authors (Taylor, 2007;

Tian et al., 2011; Espedal et al., 2013). Organizational

social capital also provides political support, increases

influential capacity and enables resource flow into

organizations (Yamaguchi, 1996; Markovsky et al.,

1997; Greve and Salaf, 2003). Therefore, managing

internal and external social relations of organizations has

become a strategic imperative of HR departments (Swart

and Kinnie, 2014). Snell and Wright (1999) suggest that

HRM practices aim at promoting and supporting

organizational social capital, should support and encour-

age employees to build social relationships. Leana and

Van Buren (1999) emphasize role of employment prac-

tices in shaping organizational social capital.

Collins and Clark (2003) state that there are limited

numbers of empirical studies showing how HRM

practices nurture social capital at the firm level. We

assume that among all HRM activities, recruitment and

employee selection practices have a special role in terms

of providing required social connections to an organiza-

tion. The objective of this study is not to search how

tendency to develop social capital affects recruitment

practices in organizations. This issue has already been

examined by several authors (Granovetter, 1973; Gomez

and Sanchez, 2005; McDonald and Elder, 2006; Kim

and Cannella, 2008; Venneberg and Wilkinson 2008)

with different theoretical approaches. The main concern

of this study is to determine external and internal factors

that lead organizations to form social capital via their

recruitment and selection practices. It is quite important

to understand the factors in the external and internal

environment forcing firms to form social capital because

the findings may have a potential to reshape our under-

standing of HR practices and organizational life. This

study is based on the findings of a countrywide research

project that was conducted on 158 firms located in 18

cities. There has not been such a comprehensive research

effort examining why firms use their recruitment and

selection practices to form social capital in the relevant

literature.

C. Sozen et al.

© 2015 European Academy of Management

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