Social Capital [1 ed.] 9781608762941, 9781606929735

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Copyright © 2009. Nova Science Publishers, Incorporated. All rights reserved.

SOCIAL CAPITAL

Copyright © 2009. Nova Science Publishers, Incorporated. All rights reserved.

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SOCIAL CAPITAL

GREGORY TRIPP, MICHAEL PAYNE AND

DIMITRUS DIODORUS

Copyright © 2009. Nova Science Publishers, Incorporated. All rights reserved.

EDITORS

Nova Science Publishers, Inc. New York

Copyright © 2009 by Nova Science Publishers, Inc. All rights reserved. No part of this book may be reproduced, stored in a retrieval system or transmitted in any form or by any means: electronic, electrostatic, magnetic, tape, mechanical photocopying, recording or otherwise without the written permission of the Publisher. For permission to use material from this book please contact us: Telephone 631-231-7269; Fax 631-231-8175 Web Site: http://www.novapublishers.com NOTICE TO THE READER The Publisher has taken reasonable care in the preparation of this book, but makes no expressed or implied warranty of any kind and assumes no responsibility for any errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of information contained in this book. The Publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or in part, from the readers’ use of, or reliance upon, this material. Any parts of this book based on government reports are so indicated and copyright is claimed for those parts to the extent applicable to compilations of such works. Independent verification should be sought for any data, advice or recommendations contained in this book. In addition, no responsibility is assumed by the publisher for any injury and/or damage to persons or property arising from any methods, products, instructions, ideas or otherwise contained in this publication. This publication is designed to provide accurate and authoritative information with regard to the subject matter covered herein. It is sold with the clear understanding that the Publisher is not engaged in rendering legal or any other professional services. If legal or any other expert assistance is required, the services of a competent person should be sought. FROM A DECLARATION OF PARTICIPANTS JOINTLY ADOPTED BY A COMMITTEE OF THE AMERICAN BAR ASSOCIATION AND A COMMITTEE OF PUBLISHERS. LIBRARY OF CONGRESS CATALOGING-IN-PUBLICATION DATA

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Available Upon request ISBN: 978-1-60876-294-1 (E-Book)

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CONTENTS Preface Chapter 1

Social Capital and University Effectiveness Paul Temple

Chapter 2

Social Capital and Innovation Policy in Croatia: Scientific Community as a Source of Innovation Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

Chapter 3

Chapter 4

Chapter 5

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vii

Empowerment Orientation and Social Capital as a Basis for Occupational Well-Being in School Communities – A Research and Development Project in Finland Terhi Saaranen and Kerttu Tossavainen Do Family Entrepreneurial Businesses Benefit More from Social Capital than Nonfamily Businesses in Emerging Economies? A Comparative Analysis Moses Acquaah Social Capital and Ethics: Their Influence on Economic Performance Maria-Soledad Castaño Martínez Social Capital and the Health of Immigrant and Native-Born Respondents in Canada and the USA Cherylynn Bassani

1

15

49

67

91

103

Chapter 7

Social Capital and Public Health Practice Alice J. Hausman, Joanna Maselko and Rickie Brawer

137

Chapter 8

Social Capital, Migration and the Welfare State Gert Tinggaard Svendsen and Gunnar Lind Haase Svendsen

151

Chapter 9

The Influence of Multidimensional Social Capital and Neighborhood Context on Co-Occurring Maternal Depressive Symptoms and Behavior Problems in Six Year Old Children Maritt J. Kirst, Patricia J. O’Campo and Margaret O’Brien Caughy

173

vi Chapter 10

Chapter 11

Chapter 12

Chapter 13

Chapter 14

Chapter 15

Chapter 16

Contents Social Capital Accumulation through Building up Irrigation Water Governance in Monsoon Asia - Comparative Analysis On Policy Measures Kazumi Yamaoka, David Groenfeldt, Kota Asan and Mikiko Sugiura

189

Social Capital: A Catalyst for Social and Rural Development in Ghana? Frank S. Arku, Cynthia Arku and Glen C. Filson

213

Land Regularisation Framework: A Hidden Social Capital in Formalising Informal Settlements in Cities of Sub-Saharan Africa Magigi W, L. Shuaib and A. W. Drescher

227

The Role of Social Capital in Homogeneous Societies: Review of Recent Research in Japan Eiji Yamamura

269

Social Interaction Effect on Interleague Play Attendance: The Case of the Japan Professional Baseball League Eiji Yamamura

289

Status, Formation and Function of Social Capital in Participatory Forest Management Settings: Examples from Bangladeshi Ethnic Communities Tapan Kumar Nath and Makoto Inoue CVC as Knowledge Broker Mediator and Interventionist with a “Bird’s Eye View” – A Dynamic Social Network Perspective Christiana Weber

303

321

Short Communication Socialize the Innovation in Your Business Model through Social Capital Creation Joan Enric Ricart and David Pastoriza Copyright © 2009. Nova Science Publishers, Incorporated. All rights reserved.

Index

353 367

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PREFACE Social capital may be defined as social networks, the norms of reciprocity and trust that arise from them, and the application of these assets in achieving mutual objectives. Social capital is quite important for the efficient performance of modern economies and for the development of a stable liberal democracy. The creation of networks and trust, ideas central to mainstream thinking about social capital, seem to be fundamental in allowing change to occur smoothly. This book proposes certain designs, that appear to encourage the social interactions of sense of belonging that lie at the heart of the idea about social capital. The role of social capital in the strategic organization of family businesses are also explored. While managers at other firms and government bureaucratic officials have a positive and monotonic relationship with performance, that for social capital from politicians has a negative relationship with performance for nonfamily businesses. Chapter 1 - Social capital theory can provide insights that may help us to understand organisational change in higher education. The creation of networks and trust – ideas central to mainstream thinking about social capital - seem to be fundamental in allowing change to occur smoothly. But these matters are, I propose, associated with the design and use of space in the university: certain designs appear to encourage the social interactions and sense of belonging that lie at the heart of ideas about social capital. Understanding these interactions is of prime theoretical and operational importance for universities. Chapter 2 - This paper provides the results of the first empirical research aimed at analysing and understanding the influence of social capital on functioning and performing of innovation policy in Croatia. It is part of the wider project on social evaluation of the Croatian innovation policy and innovation system which is based on the survey conducted in 2007 and targeted at project leaders who have taken part in one of the first innovation policy programme in Croatia (HITRA-TEST programme). The programme was launched in 2001 with the aim to foster science-industry cooperation and commercialization of research results of the public research sector. It has provoked within the scientific community intensive debates concerning its efficiency, appropriate use of pubic money as well as ethical dilemmas about commodification of science that calls for shedding some lights on the innovation policy from the sociological point of view. The research starts from the presumption that project leaders within TEST programme, being the first in Croatia who applied for technology-oriented projects, are the agents of socio-cultural and institutional change that consists of the shift from the prevailing elite-type of science towards more productive use of the science. That can be identified with the shift

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Gregory Tripp, Michael Payne and Dimitrus Diodorus

from the standard science policy towards innovation policy. The investigation of their social characteristics (e.g. age, gender, institutional affiliation, area of research), attitudes towards commercialisation of science and entrepreneurial university and dimensions of social capital such as trust in institutions and value orientation provides a valuable picture of the group that responded to calls for collaboration with industry. It also gives an indication of the wider socio-cultural environment that shapes innovation policy implementation. The main hypothesis of the research is that motivation for application to TEST programme, as well as realisation of the project and satisfaction with achieved results is conditioned by: 1) set of variables of individual and scientific characteristics of the participants, 2) social capital defined as system of values and attitudes which regulate individual behaviour, attitudes toward commercialisation of knowledge, general value orientations and trust in the institutions. The four hypotheses were tested within this framework. The first hypothesis on dominantly scientific motivation for applying to TEST is confirmed. Second hypothesis that realisation of TEST projects has accomplished primarily scientific results also is confirmed while the third hypothesis that participants who have accomplished commercial results are more satisfied with the achieved results has not confirmed. Finally, the fourth hypothesis that performance of innovation policy is related to the deficit of social capital was confirmed due to findings on value structures of participants. The paper concludes that high presence of traditional values along with the attitudes toward commercialisation of science illustrates the low capability of the Croatian society for institutional change and confirms the crucial role of social capital for successful implementation of innovation policy. Chapter 3 - Background of the study: This paper describes a research and development project of school staff members and occupational health nurses titled Promotion of school community staff's occupational well-being in co-operation with occupational health nurses 2001-2004. The project was part of the extensive European Network of Health Promotion Schools (ENHPS) programme implemented in eastern Finland. The research and development project aimed at promoting school staff's occupational well-being through activities designed to maintain the ability to work. The project was realised in 12 comprehensive schools in co-operation with the schools' respective occupational health nurses. Aims of the study: One aim was to improve staff health and well-being in school communities from an empowerment and community-based (cf. social capital) perspective and report on the outcomes of the implementation phase of the project. The study also sought to develop a theoretical basis for promoting school staff's occupational well-being. Data and method: The investigation, conducted in 2002-2004, implemented methodological and data triangulation. Results: In the opinion of school staffs and occupational health nurses, the most significant resource factors in occupational well-being at school are the community's working culture, leisure activities and self-care. A community's school culture does not emerge spontaneously; school communities must consciously develop a more conversational culture that appreciates each employee with his or her own characteristics. The schools' communitybased working culture can be concretely affected by e.g. staff meetings and discussions, which, based on the study, required some development in some of the schools. For example, experiences gained from teaching staff's gatherings and meetings enable social support between employees, thereby affecting school staff's resource factors and empowerment. This

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was pursued also in the present research and development project, which aimed to promote occupational well-being particularly from a community-based point of view. This can be associated with the concept of social capital, which has been seen to have broad impacts related to well-being in the public. As a generalisation, it can be said that, in school communities, only activity that is based on mutual trust between employees, open communication, active interaction and participation and learning can increase social capital and thus promote the well-being and health of the working community. Conclusion and implications: The results of this study produced evidence-based information for occupational health nurses and school staff on how occupational well-being was promoted from an empowerment and community-based (cf. social capital) perspective in this project. The results can also benefit occupational health nurses, school staff, occupational health service administration, school administration, researchers and educators in developing measures for promoting occupational well-being. Chapter 4 - While it has been argued that social capital represents one of the most intangible and least fungible resources in family businesses, little empirical research has been conducted to examine the role of social capital in the strategic organization of family businesses. This study investigates the utilization of managerial networking relationships and ties with external entities to create social capital in family-owned and nonfamily businesses, and compares the impact of social capital on organizational performance between familyowned businesses and nonfamily businesses. Using data from 106 organizations in Ghana over two time periods, the findings show that while family-owned businesses tend to utilize managerial networking relationships and ties with community leaders, bureaucratic officials and managers at other firms to a greater extent to create social capital than nonfamily firms, nonfamily businesses utilize networking relationships to a greater extent to create social capital than family-owned businesses. The findings further indicate that the social capitals from networking relationships with community leaders, government bureaucrats, and managers of other firms have an inverted U-shaped relationship with performance for familyowned businesses. On the other hand, while the effects of the social capitals from networking relationships and ties with community leaders, managers at other firms and government bureaucratic officials have linear, positive and monotonic relationship with performance, that for social capital from politicians has a negative relationship with performance for nonfamily businesses. Overall, the findings suggest that although social capital matters, extensive utilization of networking relationships and ties to create social capital may have diminishing returns to performance for family-owned businesses. Chapter 5 - Recently, social capital has been considered as a production factor along with physical capital and human capital, that contribute to higher economic growth and also improve economic productivity. Social capital is also considered important for the efficient performance of modern economies and the sine qua non of a stable liberal democracy. It constitutes a component culture of societies that has been organized from both informal and formal institutions and legal norms and rationality. Therefore, social capital is a concept that refers to social networks and reciprocity norms associated with them and are the same as physical capital and human capital, wealth creation, as much individual as collective. This conception does not imply that the creation of norms generates in itself social capital, but rather these should lead to cooperation between groups and, therefore, they are related with virtues like honesty, commitments maintenance, duties maintenance and

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reciprocity. From this point their connection is clearly deduced from the socio-economic profitability of the ethics, also, as certain moral behaviour causes an increase in social capital in certain countries that influence positively on their economic growth and on their economic productivity. This conception of social capital and its economic function, surprise the traditional economic analysis, where the objective of the individuals is to get the maximum possible benefit that can be generated by individualist and egoist morals. So, this paper analyses the essential components of social capital, norms and shared values, reciprocity, trust, honesty, and social networks and their economic effects. After this theoretical analysis, empirical evidence from forty-three countries will be analysed. Chapter 6 - This chapter examines social capital and its influence on the health of immigrant vs. native-born respondents in Canada and the United States of America. This research is unique in a number of ways: it combines the Family and Youth social capital literatures with the Health social capital literature. In doing this, we are able to enrich the conceptualization and operationalization of social capital, thereby developing social capital theory. Randomly drawn representative data from the Joint Canada/ United States Survey of Health is used to examine health disparities between the four sub-samples. Logistic regression analysis is used to test the influence of social capital on four indicators of health. A number of interesting findings are illustrated. According to the results, social capital has a significant effect on native-born respondents, particularly those in Canada. By and large, commonly used measures of social capital were not found to influence the health of immigrant respondents in either country. The findings suggest that immigrant and native-born respondents are differently influenced by social capital and therefore future health research needs to take this and other results into consideration. Chapter 7 - Despite the theoretical appeal of social capital as a determinant of both individual and community health, empirically demonstrated causal processes have not been validated or confirmed, in part due to difficulties associated with defining how social capital is manifested and therefore measured. This paper discusses how a shift in perspective from one of causality to one where social capital is viewed as an intervention facilitator, would make it easier to demonstrate how social capital works and how this useful concept can be more fully integrated into public health practice. It also discusses how formal and explicit use of social capital principles and measures in program development and evaluation processes can provide strong evidence for universal domains using measures of markers that are tailored to the local context, thereby increasing evidence for policy while embracing practice principles of participation and local relevancy. Chapter 8 - The full potential of migrants from non-western countries has not yet been realized in the modern welfare state. Rather, parallel societies have risen, as often counteracting integration. It is however crucial to integrate migrants from non-western countries more successfully – also simply to rescue the ageing populations in Western Europe. Though the modern welfare state seems in strong need of reform within a globalized world, it nevertheless enjoys strong support among voters in its present form. Thus, an empirical puzzle exists. Given the existing institutional set-up of the modern welfare state and based on data from our ongoing SoCap project, we suggest how more bridging social capital can be established between parallel societies and the rest of society. Our ‘institutions matter’ model is tentative and needs to be tested rigorously in future empirical research.

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Chapter 9 - A growing body of research has noted the importance of neighborhood and other social contextual effects on physical and mental health outcomes. Social capital is a complex concept which captures different types and components of social network and community-based resources, and thus allows for the examination of micro/relational and macro/structural effects on health outcomes. Research has found that social capital derived from social networks and from communities can have different effects on mental health. Furthermore, neighborhood characteristics have been found to moderate the relationship between network- and/or neighborhood-level social capital and mental health in interesting ways. Such differing effects highlight the complex, contextual/interactive effects that dimensions of social capital and other contextual factors can have on mental health, and emphasize the need for further study. Thus, consideration of both levels of social capital should be incorporated into mental health research in order to comprehensively and accurately capture social contextual influences on mental health, and consider their implications for policy. Yet, there have been few studies that have considered the influence of multidimensional, network- and neighborhood-level social capital on mental health outcomes in such a comprehensive manner. This chapter discusses the value of a social consequences model approach to the study of mental health problems in which social capital at various levels and neighborhood context are examined on multiple, co-occurring mental health problems. In this discussion, the study of the effects of social network- and neighborhoodlevel social capital and neighborhood characteristics on co-occurring maternal depressive symptoms and child behavior problems is used as an illustrative example of such an approach. Chapter 10 - Water governance and irrigation dispute resolution involve a variety of interests at multiple levels. This paper focuses on irrigation systems in paddy fields in the Asian monsoon region. Farmer A and B, who cultivate adjacent paddy plots may have mutual conflicts; but at the same time, they are comrades forming a united front against other groups. The typical structure of a water supply system for paddy is an open channel gravity system which provides the most efficient and least-cost distribution of water to the tail-end of the irrigation system under normal flow conditions. Moreover, beyond the network of canal irrigation systems, ample water supplies enable water to be conveyed from higher-elevation paddy plots to lower-elevation ones, thereby extending the effective reach of the irrigation system. With this technique of "plot-to-plot irrigation", the paddy fields themselves serve as irrigation canals. This is widely developed in rain-fed paddy areas, and around the edges of traditional irrigation networks and also, even in the periphery of modern irrigation systems. Chapter 11 - Social capital in the form of friendship, mutual assistance and trust are said to be important for community and social development. This paper offers an assessment of the impact of a water project - particularly water committees - on the social capital among rural residents in the Volta Region of Ghana, and the extent to which the social capital could contribute to improving their social well-being. The findings show that although social capital has long existed, this was strengthened by the presence of the water committees that oversee water projects within the communities. The water project provided opportunities for community dialogue, and social capital was improved in the process, which encouraged cross-family support for children's education and bereaved of poor households, and development projects. The study recommends projects that improve community interaction be

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Gregory Tripp, Michael Payne and Dimitrus Diodorus

promoted to facilitate community-driven initiatives that could sustain the social well-being, hence social development of rural households. Chapter 12 - Spatial land use planning, cadastral surveys and land registration for informal settlements are prerequisite to enable local communities to secure land tenure, ensure sustainable use of land and improving livelihoods. These land regularization processes require mobilisation of financial, human and institutional resources to invoke social capital for planning, implementation and monitoring that would enhance secure tenure in the informal settlements. This contribution analyses the options for land regularisation and suggests a framework for urban land regularisation that could harness social capital in Southern African Cities using the example of Tanzania and Uganda. It discusses the driving forces, policy strategies, shortcomings, and practical needs of land regularization including consideration of the land tenure ‘continuum’ based on experiences in Dar Es Salaam and Kampala. The paper argues the process of land regularization requires building and mobilisation of local community’s assets, institutional linkages, proper and accurate information flows and communication towards formalising informal areas. Policy and legislature reconciliation, mechanisms for dispute resolution, mediation and the recognition of informal rights are needed to ensure that the poor are protected to assume a formal and participatory role in urban development. Advocating for pro-poor land regularization processes needs not to negate middle and high income groups as well, otherwise the process might lead to further marginalisation of the poor. Informal networks between local leaders, retired civil servants, planning institutions and communities have a potential to invoke the untapped social capital and enhancing community’s willingness to participate in spatial land use planning and implementation to achieve acceptable outcomes. Besides, reluctance of planning institutions to address communities’ needs, local mechanisms of conflict resolution and arbitration are serious challenges. In this contribution, we argue that for effective and sustainable urban development which aims to make poverty an end in rapidly growing African cities, social capital and networking is important in formalising informal settlements. The government and other development partners may opt working together, in order to develop a legally binding instrument in the fight against poverty specifying the roles communities. This may help balancing voices of different actors, improving land use planning practice, resolve land conflicts, enhance ethnical and relation ties of people within and outside the geographical settings for improved urban livelihood in cities of Sub-Saharan Africa. Chapter 13 - It is widely and increasingly acknowledged that social capital plays a crucial role in economic performance, which covers various facets of human behavior. A growing body of literature has sought to investigate the role of social capital mainly in heterogeneous societies such as the United States, whereas works concerning homogeneous societies have yet to be sufficiently conducted. From a comparative point of view, therefore, research on homogeneous societies is needed. In this paper I introduce research to explore how social capital has affected the socio-economic outcomes of Japan, which is considered a relatively homogeneous society. Recent preliminary empirical work provides interesting data for Japan, covering the following topics: (1) Issues for undesirable behaviors such as crime, modes of dangerous driving, and suicide; (2) lawyer demands for conflict resolution; (3) cinema and baseball attendance;(4) voter turnout, census data, and protection against natural disasters; (5) diffusion of knowledge, efficiency improvement and industrial development; (6) quality of life in terms of health; and (7) formation of trust in communities. As a whole, this data

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indicates that social capital enhances collective action, which leads to benefits, although such effects change over time. Chapter 14 - The Japan Professional Baseball League recently began interleague play, in which the Central league teams play a game with the Pacific league teams, in order to attract fan interest. The Central League is far more popular than the Pacific League. This paper explores whether the different features of the two leagues eventually result in affecting the demand behavior of fans for interleague games. The main findings are that when compared with the PL fans, the attendance of the CL fans tends to be more inelastic with respect to team performance and competitive balance but more elastic with respect to ticket prices and the existence of substitutes. Social interaction and addictive behavior appear to account for the evidence, as stated above. Chapter 15 - In recent years, there have been remarkable changes of the state policies regarding forest and other natural resource management through collective approaches. This leads to the formation of social capital at the community level for the management of natural resources. This chapter examines the status and formation of social capital, and its contribution to forest resource management and the livelihoods of the Bangladeshi ethnic people, drawing empirical data from three ethnic villages associated with two participatory forestry projects. Features of social capital—social connections, groups and networks, level of trust, social cohesion and inclusion, collective activities and participation—were associated with enhanced livelihoods of villagers and improved forest conditions. Where project authority failed, NGOs played a great role in creating social capital among villagers that facilitated to form other forms of capital including human, physical, natural and financial capital of the sustainable livelihood framework. Suggestions are made to involve NGOs along with other stakeholders for greater success of the participatory forest management. Chapter 16 - From a dynamic social network perspective, I empirically analyse the formation and transformation of the CVC’s social network as well as social capital. I investigate the resulting structural and relational changes illuminating the process of interorganisational knowledge transfer and innovation generation of CVC-programs. Using an explorative multi case analysis of 12 CVC-triads out of six CVC-programs in Germany, I base my research on 34 qualitative interviews. My findings support existing research that CVC-networks and resulting social capital can ease knowledge transfer and innovation to occur but may over time also hinder it - turning social capital into liability. My study’s core theoretical contributions are the expansion of existing literature by investigating a so far unexplored intra-inter-organisational knowledge broker configuration. Particularly, I identify additional roles of the CVC-manager with his bird’s eye view as mediator and interventionist not yet described. Short Communication - The idea of a socialized form of innovation, where all the constituents of the firm participate in the process of knowledge creation, provides an alternative way of developing the innovative capacity that organization structures are intended to create. Nevertheless, the process through which management creates this socialized innovation cannot be easily explained with the existing economic theories that dominate the business model literature. This paper argues that social capital helps to explain the creation of a socialrized form of innovation and increases the value embedded in the business model of a firm. Extending the literature of business models with social capital theory will help advance this field of research, particularly those elements of the business model that current economic theories are not fully capable to explain.

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In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 1

SOCIAL CAPITAL AND UNIVERSITY EFFECTIVENESS Paul Temple Institute of Education, University of London, UK

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INTRODUCTION Social capital theory can provide insights that may help us to understand organisational change in higher education. The creation of networks and trust – ideas central to mainstream thinking about social capital - seem to be fundamental in allowing change to occur smoothly. But these matters are, I propose, associated with the design and use of space in the university: certain designs appear to encourage the social interactions and sense of belonging that lie at the heart of ideas about social capital. Understanding these interactions is of prime theoretical and operational importance for universities. Social capital itself may be defined as social networks, the norms of reciprocity and trust that arise from them, and the application of these assets in achieving mutual objectives (Putnam, 2000: 19; Schuller, Baron, and Field, 2000: 1). Another theorist's definition focuses on the issue of intangible resources, considering social capital to be the “resources embedded in social networks accessed and used by actors for actions" (Lin, 2001: 25). Social capital theory is beset by logical and methodological difficulties: nevertheless, I share the view that it offers a means of generating new insights about complex social phenomena. Some social capital theorists also suggest that the way information is distributed and used is crucial to societal or organisational effectiveness, as access to information may reduce transaction costs and the risks involved in any new venture (Fukuyama, 1995; Szreter, 2000). The transfer of information through abstract, "expert" systems, which Giddens argues are a central feature of modernity (1991: 83), requires high levels of trust. Trust, networks and information exchange may therefore be individual features of a larger phenomenon which it is convenient to describe in terms of social capital. How are these features relevant to the university? Some writers have considered features of university organisation and management which, I suggest, might usefully be analysed in terms of social capital theory. Many of the salient features of Burton Clark's "entrepreneurial

2

Paul Temple

universities", for example, are those which might, in terms of the theory, be expected in organisations with high levels of social capital: organisational flexibility and creativity, and a willingness to take risks, for example (Clark 1998). Similarly, one might conclude from Shattock's account of effective structural forms and managerial approaches within universities that high levels of social capital are a necessary foundation for organisational success. In particular, it is surely present in the forms of trust-based collegial management and dispersed leadership which he argues are necessary to liberate the power of a university’s human resources (Shattock, 2003: 93). It therefore seems that an approach to considering university organisation and change drawing on social capital theory may be able both to offer some new insights into the nature of organisational change in universities, and perhaps help to extend the use of the theory itself. My purpose here, additionally, is to make a link between these organisational issues and consideration of the physical form of the university.

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THE FORMATION OF SOCIAL CAPITAL The idea of social capital is, however, a contested one: its very versatility has been a target of criticism, and the application of its ideas raises various difficulties. Is social capital a cause, or an effect? Is it a description, rather than an explanation? Can it be all of these? If it really is a form of capital, can it be measured, stored, and exchanged? - if it can in principle, can it be in practice? Putnam, one of the most public proponents of social capital theory, has confronted these criticisms of his and others' work, dealing notably with the measurement issue (Putnam 2000: 417). He has sought to explore the empirical possibilities and limits in studying social capital, while admitting to the many difficulties of measurement in this field. Putnam’s grading of US states according to indicators of their levels of social capital, while thought-provoking, highlights many of the methodological difficulties which arise. To connect social capital with organisational change, I propose that it is necessary to examine how it may be created. Unless we can discern the outlines of this process, the theory itself seems unlikely to offer much analytical purchase on the social, structural and developmental issues within organisations which we need to understand. I think that this is also necessary if I am to show its connections with questions of physical form. The complaint that proponents of social capital theory have failed to show how it can be used to remedy the problems which it often describes is, it seems to me, a fair one (Portes, 2000). We need, then, to know how social capital is constructed, if we are to know how it might be used. It is suggested that social capital is created most readily under conditions of "homophily", when actors have similar lifestyles or socio-economic positions. Individuals are then thought to behave in rational, quasi-economic ways, in order to maximise their access to social capital as a means of acquiring and maintaining valued resources (Lin, 2001: 30). Homophily is a similar concept to that of "bonding" social capital, which is thought to strengthen group solidarity (Putnam, 2000: 22); and its alternative form, "bridging" social capital, produced when diverse groups are linked in some way, is akin to the concept of "heterophilus" relations. Conditions within a university might at first sight be thought likely to be generally homophilus, and thus likely to be conducive to social capital formation. But these are inexact

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concepts: how similar do people need to be in terms of lifestyles or socio-economic positions for the relationship to count as homophilus rather than heterophilus, or for bridging rather than bonding to occur? Might not two people with large differences between them in terms of income and lifestyle consider themselves to have a great deal in common because of, say, a shared cultural interest? Might not people from the same ethnic community be more likely to trust one another, despite differences in wealth? If so, the analytical power of these concepts must be very weak, as virtually everything will need to be known about individuals before any predictions can be made about bonding probabilities. Furthermore, if we are interested in the way in which social capital might work within organisations, rather than in social relations more generally, then these concepts are emptied of meaning almost completely. Organisational relationships do not typically depend for their effectiveness on individuals having made similar lifestyle choices, or even having similar salaries, but on a large number of specific factors relating to that particular organisation, at that particular time – its values, communications, and the establishment of shared goals, for example. These are matters susceptible to being managed and changed, within relatively short timescales: they are not relatively fixed, as are homophily and heterophily. To explain the creation of social capital in organisations, we have, then, to look more closely at the operation of the organisation itself. Wenger's concept of "communities of practice" may help here, by throwing a more penetrating, and perhaps less deterministic, light on the dynamics of social capital formation within organisations. Wenger argues that:

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"We all belong to communities of practice. At home, at work, at school… communities of practice are everywhere… Workers organize their lives with their immediate colleagues and customers to get their jobs done. In doing so, they develop or preserve a sense of themselves they can live with, have some fun, and fulfil the requirements of their employers and clients" (Wenger, 1999: 6).

Wenger's account of communities of practice comes close to describing the process of social capital formation and use, although he does not himself use the term. Instead, he describes how people in organisations, to handle their jobs, invent informal practices that are never captured in official accounts of how things are done; and how these practices are developed and shared by informal networks within the organisation. Wenger's vignette of office life in an American insurance company, "Welcome to claims processing!" (Wenger, 1999: 18), could almost equally be used as a case study of social capital formation. Crucially, the communities of practice concept offers a way into thinking about the dynamics of social capital formation and use in organisations by, in particular, introducing learning as a key feature. For Wenger, communities of practice facilitate and "own" important types of learning (Wenger, 1999: 45). Other writers on social capital, as noted above, have drawn attention to its role in facilitating information flow: indeed, this is, ultimately, what the networks which are at the centre of much social capital theorising actually seem to do (Lin, 2001: 71). This suggests that social capital might itself be considered in relation to organisational learning, even as a form of learning - perhaps as "embedded learning", to adapt Lin’s term. Thus, in organisational change, one function of social capital might be to facilitate learning (by making it seem a low-risk option, perhaps) and to enable it to spread through the organisation by using the pre-existing networks. All these things can take place more readily under suitable physical conditions, I will argue.

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Other work exploring the relationships between social capital theory and learning by private individuals, rather than individuals in organisations, suggests that participation in learning may extend social networks, or help build new ones (Preston, 2004). The relationship is complex, however, and in the research referred to here, the direction of causation is not always apparent: individuals may be taking part in adult education as a result of involving themselves in civic affairs, for example, rather than vice-versa. Quantitative studies in this area confirm the difficulty of establishing this causal link unambiguously, and instead point to the creation of "positive cycles of development and progression" in which learning interacts with social capital formation and generally positive changes in various areas of peoples' lives - physical and mental health, tolerance, political involvement, and so on (Bynner and Hammond, 2004). Giddens considers another aspect of organisational learning when he draws attention to the way in which modern societies and organisations rely on “expert systems”: it is necessary to take on trust a great deal of technical expertise, the very existence of which one may be only vaguely aware. Giddens describes such systems as “disembedding mechanisms” because “they remove social relations from the immediacies of context” - they allow the “stretching” of the social systems which created the expert knowledge in the first place across time and space, and are thus, for Giddens, the essence of modernity (Giddens, 1991: 28). While trust, as Fukuyama (1995) argues, is central to the effective functioning of any society, it becomes a defining characteristic of modernity. In these circumstances, most organisations have to find ways of re-embedding aspects of this disembedded knowledge in their own, unique operational contexts, if it is to be applied effectively. New knowledge has to be incorporated into existing understandings and processes. Innovation, then, is as much a social process as a scientific or technological one, requiring a range of organisational competencies. Social capital structures the framework of relationships within which such embedding can occur reasonably smoothly. As with other forms of learning, innovation poses organisational challenges which have to be addressed in a social context: "much valuable knowledge is fundamentally socially embedded" (Nahapiet and Ghoshal, 1998).

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SOCIAL CAPITAL THEORY AND ORGANISATIONAL CHANGE Social capital, I suggest, is the crucial constituent that is needed to allow this reembedding, or organisational learning, to occur quickly and smoothly. This is for two main reasons. Firstly, social capital implies the high level of trust necessary to evaluate, in an openminded way, the unfamiliar, disembedded knowledge, rather than to reject it out of hand. Secondly, social capital supports the networks that allow easy exchange of information about the new knowledge around the organisation, and which may interact with external (national or global) networks to produce ideas about how it can most easily be re-embedded in existing understandings and practices (Lesser, 2000: 13). Social capital can thus reduce transaction costs and critically underpin the practices of effective innovation management - holistic perspectives, the creation of trust, networking and sharing ideas - which organisational analysts have identified in varied settings (Pettigrew, Ferlie, and McKee, 1992: 284;

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Rosenfeld and Wilson, 1999: 531). As I will discuss later, these interactions and exchanges can be helped or hindered by physical design features. Schuller (2004) approaches this question of social capital's connections with organisational change by conceptually locating social capital at one corner of a triangle, with human capital and "identity capital" (that is, an individual's self-esteem, sense of purpose, and similar "ego strengths") at the other two corners. By this means, he proposes to link social capital issues of trust and networks with human capital issues such as skills and knowledge, and with personal goals and motivations. Schuller is aiming here to show how social capital can be operationalised by identifying its connections with other aspects of organisational and personal life, as I have tried to do with the proposed link to organisational learning. Schuller admits, however, that his "model appears static…[showing only what] could be regarded as intermediate outcomes" (Schuller, 2004: 22). My aim has been to locate social capital in the continuing, dynamic life of the organisation. (I note in passing that there are a number of theoretical difficulties with the novel concept of "identity capital", including the unusual possibility, for a form of capital, that too much of it may be undesirable. The use of the term "capital" for something which by definition can only ever be located within a single person, and which is not created by foregoing any current benefit, must make the concept analytically doubtful.) The link which Schuller proposes with issues of personal identity, however, does emphasise that social capital must imply shared meanings at a personal level, or it would be unlikely to be effective in supporting learning and joint action. Or, it may help create shared meanings: it is not inconsistent to suggest that both may be true, as small initial amounts of social capital might facilitate limited joint activities, which then build shared meanings and higher levels of social capital. This provides perhaps another link with communities of practice which, for Wenger, have a central role in the "negotiation of meaning" of peoples' lives (Wenger, 1999: 53). Similarly, the need in managing change for “a shared interpretation…[to] begin the process of building commitment” to the implementation of organisational change has been emphasised in a higher education context (Middlehurst and Barnett, 1994: 63). Dill has also, somewhat earlier, proposed that "managing meaning and social integration" are the key tasks confronting managers in higher education (Dill, 1982). Perhaps a relationship between social capital, learning, meaning and organisational change might be emerging on the lines shown in figure 1.

Figure 1. Social capital in an organisational context.

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I suggest, then, that the related conceptual approaches which I have identified point to the existence of a complex web of subtle, interacting and mutually-reinforcing factors underlying institutional change. Despite the logical basis for the criticisms noted earlier of social capital theory, it nevertheless offers a framework within which these complexities may be analysed, and which is not offered by other theoretical approaches. There are pragmatic reasons for the theory's use; and it may possibly be that its apparent weaknesses are symptoms of its present relatively underdeveloped theoretical status.

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INSTITUTIONAL CULTURE, SOCIAL CAPITAL AND CHANGE What is it that allows the process of review and re-invention within most universities (true, not all – some do disappear) to carry on so remorselessly over the years, in a way that seems to elude so many other organisations? The answer must go beyond matters of structure or processes, otherwise they would have been widely copied. I propose that the answer, at least in part, is to do with the university’s ability to create and apply social capital effectively, and that the physical setting of these activities can be relevant. A number of aspects of university organisation contribute to this ability to handle change: the provisional "adhocracy" approach to organisational design, with the extremely flat structures typical of most academic departments; the emphasis on individual learning and critical approaches to knowledge; the team organisation often used for research and sometimes for teaching purposes; and, as I have noted, the disciplinary frameworks, the international knowledge system, which links academics to those similarly engaged elsewhere in the world. This gives the individual academic a "sense of belonging to his or her academic tribe" (Becher, 1989: 23) and so supports mutually-beneficial interactions. The disciplinary structure, providing a sense of order and purpose within which individuals’ intellectual labour can be organised and made sense of is particularly important in the process of social capital formation, I suggest. This is because it offers a ready-made basis of networks, trust, and sharing (of ideas and resources), on which people can draw in order to develop social capital across the institution. The networking issue may be particularly significant. Being linked to global, disciplinebased networks may make it easier for new networks to be established within the university, so enhancing its stock of social capital. It is noteworthy that one definition of the modern business corporation is “a network that is embedded within an external network” (Castells, 2000: 208), with internal corporate characteristics affecting, and being affected by, the relevant global networks. This surely also describes how university academic departments function in relation to their disciplinary networks, and the constant interplay between them helps to explain the flexibilities of university structures. These matters - networks, learning, structures - taken together, give rise to the set of values, partly institution-specific and partly internationally general, which are often thought of under the general heading of "institutional culture". Institutional culture, with its "deepseated assumptions and values far below surface manifestations…[or] officially espoused ideologies" (Pettigrew et al., 1992: 281) can, I suggest, be viewed as a representation of aspects of social capital. An organisation with a strong institutional culture (for good or ill, so far as the outside world is concerned) is likely to be rich in social capital.

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A number of writers have questioned whether institutional culture in the university can be a meaningful term of analysis (Barnett, 2000: 48; Kogan, 1999). Dill, in contrast, asserts that academic institutions do possess distinctive cultures, which are more complex than in most other organisations. This is because of the multi-dimensional nature of the university: the university as an enterprise, the disciplinary dimension, and the further dimension of the wider academic profession. Dill considers that the management of culture in this setting, which he describes as "managing meaning and social integration" to support the core values of the institution, is the key task for institutional leaderships (Dill, 1982). He notes that it is necessary to use processes which create structural bonds within the organisation (he gives the example of involving a wider range of people than might be normal in other organisations in making staff appointments) to achieve this integrative effect. We might consider that Dill is describing here an aspect of social capital production, supporting the shared representations and systems of meaning which may be signs of the existence of social capital. Other studies of higher education institutions support Dill's position, and point to what we may call organisational cultures - shared ways of doing things - as being significant in guiding the decision-making of individuals within those institutions; and that furthermore these cultures can be managed and changed over time. Indeed, those seeking to change the direction of a university may do so by consciously aiming to affect its organisational culture (Duke, 2002: 51). The impact on what are described as university cultures of external influences, such as new quality assessment processes, has also been identified (Brennan and Shah, 2000: 127). The discussion of organisational culture shares with consideration of social capital generally the risk of logical fuzziness: if "organisational culture" means little more than "what goes on in an organisation", then what would changing the culture mean? Even so, as Dill argues, there seem to be distinctive aspects of the life of universities which can usefully be classed under the "organisational culture" heading, and which are susceptible to management and change: I propose that these features are closely related to the constituents of social capital, particularly to trust, networks, and information exchange. Reviewing findings on institutional change, I do not find a great deal of evidence to support what is sometimes supposed to be the paradox of universities being the sites of production of revolutionary ideas, while at the same time being highly resistant to change themselves (Burton R Clark, 1983; Kennedy, 1997). It may be true that, from the point of view of politicians or institutional managers, change is difficult to bring about in the short term, but this is not to say that, generally speaking, universities are change-averse organisations in the usual sense. In fact, both writers cited above do not consider that universities are resistant to change in a general way, but rather that the "bottom-heavy" nature of their organisation, linked as they are to wider disciplinary networks, makes change less abrupt than in some other organisational forms: "decisions [in universities] typically take shape gradually, without the formality of agenda, deliberation and choice" (Burton R Clark, 1983: 133). Kennedy observes that, far from remaining static, “the shape of higher education in America has been repeatedly refigured in episodes of dramatic, even wrenching change” (Kennedy, 1997: 265). The idea of social capital, I suggest, provides a way of analysing and understanding much of this account of change within higher education. If it can be shown that universities are able to create and apply social capital in ways which enable them to manage change more effectively than tends to happen in other types of organisation, then we may have an

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analytical tool for understanding more about how such changes occur. This analysis may help to explain how it is that “research universities turn out to have a web of incentives subtler than those in more hierarchical institutions, but effective nonetheless” (Bok, 2003: 22). It may also point the way to classifying organisational changes in terms of their effects on social capital formation: is a departmental reorganisation, for example, likely to increase or decrease levels of social capital across the institution? Social capital also may offer a partial explanation of why the university form is so enduring: it is able both to generate endogenous change, and to handle exogenous change, more effectively than many other institutional forms because of its use of social capital. This in turn is related to its complex institutional cultures and structures, to its wider intellectual linkages, allowing enhanced scope for social capital formation, and also to its physical form. These processes together may be the basis for what Burton Clark, emphasising the social nature of change in universities, has called “the dynamics of ambitious collegial volition” (B R Clark, 2003).

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THE PHYSICAL CONTEXT OF UNIVERSITY WORK Some universities are almost defined, at least in the public mind, by their physical presence – Cambridge, Heidelberg, or Cornell, for example. But I want to argue here for an understanding of space and place in the university that goes beyond suggestions that certain ideas – scholarship, say - are somehow embodied in university architecture, or that buildings contain a narrative and help to create the university “brand”, and instead to propose how space becomes place, and how it affects the academic work of the institution. And space and place almost always have been central features in thinking about the university. Although it seems that the very earliest universities of medieval Europe had few physical attributes, consisting simply of groups of teachers and their students (thus today’s virtual universities are a re-working of an old idea), they quickly acquired a physical identity and, arguably, a sense of place. By the late twelfth century, the University of Paris was located on the left bank of the Seine near the Ile de la Cité (Cobban, 1975: 77), where much of it yet remains. How might the university’s physical form may be linked with academic effectiveness, and with the role that I have proposed for social capital? One way may be through the contribution of space to the creation of a sense of community, and thus of place – in the sense of “owned” space: space which (in higher education settings) is intimately bound up with the ways in which we live and understand ourselves, about our ideas of what is valued and validated, as well as what we (think we) know and do (Batchelor, 2006). Other writers have, somewhat similarly, suggested that a sense of place arises when “spatial stories” can help to make sense of who we are and what we do (Amin and Thrift, 2002: 48). Sennett writes of “narrative space”, space designed in ways which permit people to develop their own uses for it, so becoming “personified places” (Sennett, 1990: 190, 192). It seems possible to make a connection between these personal ideas of place, and wider understandings of institutional life and effectiveness, by reference to social capital in the way that I have described it. “Effectiveness” is itself of course a rather elastic concept. While the engineering-based idea of efficiency, involving the measurement of outputs as a proportion of inputs, is in principle at least relatively unproblematic, effectiveness carries with it the wider

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sense that processes, never an end in themselves in any setting, are being directed in ways which achieve valued goals. Measures of relative effectiveness may then be the extent to which the goal was achieved; how quickly it was achieved; or the quantity of resources used to achieve it – the latter example showing why discussions of efficiency often become about effectiveness, and vice-versa. In this case, the physical form of the university may be linked to institutional effectiveness (and indeed efficiency) indirectly, through its role in assisting in community formation. This physical support for community formation, and hence (I argue) for social capital creation, might be done in various ways. Designing a campus on a human scale is one approach, with attention to design details such as pleasant places to sit and talk, which encourage social interactions and connectivity (Chapman, 2006: 180). An account of the design of Miami University, for example, tells us that, seeking this human scale, “it was designed to feel small” (Kuh, Kinzie, Schuh, and Whitt, 2005: 106); and student learning, it is argued, may be improved through the informal interactions which result. A good standard of maintenance and cleaning will also help to make people feel that the institution cares about the people within it, so supporting a sense of belonging. The link between physical form and operational effectiveness has been studied in many settings. It has been proposed that the original layouts of human settlements, around the world, can be interpreted as various attempts to manage encounters between locals and strangers safely and efficiently, and to provide appropriate amounts of public and private space (Hillier and Hanson, 1984: 20). The form of many towns in medieval Europe was determined by the need to provide a workable marketplace - where townspeople and outsiders could come together - usually in the very centre of the town, presumably with security in mind. Designs of modern shopping malls seek, similarly, to manage commercial encounters in a secure environment – one planned, obviously, with a view to parting visitors from as much of their money as possible (Hardwick, 2004: 34). University design poses some similar questions: how to manage insider/outsider interactions (between the “resident” staff members and “visiting” students) effectively and safely; how to maximise the possibility of beneficial encounters; how to locate facilities to make them easily accessible; and, perhaps, how to use design to convey particular messages about the kind of place that one is in – how to manage “the semantic field” (Dovey, 2008: 143). We might think of these ideas as being about “encounter management”: using design features to bring people together in settings (controlled to a greater or lesser extent) where mutually beneficial interactions may occur. Modern cities have rather similarly been theorised as places which support encounters between different social networks, providing complexity and the unexpected, and so enabling the city to become “a potent generator of novelty” (Amin and Thrift, 2002: 41): the medieval marketplace, updated (if not the shopping mall). Cityregions, similarly, are the major centres of creativity, as measured in the US by Florida’s “creativity index” (2004: 245), because they “can offer abundant options.” As Florida argues, “places with diverse mixes of creative people are more likely to generate new combinations [of ideas]”. The comparison with the university space and place - interlinked networks of creative people, with a shared sense of community and high levels of social capital - is surely striking. But it would be a mistake to think of these effects as happening necessarily in a benign, supportive type of setting: it is necessary to remember that countervailing forces will be at work, ones perhaps causing the “diminishment of informal trust among workers, and

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weakening of institutional knowledge” (Sennett, 2006: 63), among other organisational dysfunctions. Certain features of place might affect some people positively (say, a researcher who wants to relax by walking round a landscaped campus) and others negatively (a member of the catering staff who is irritated by the need constantly to move around the same campus). Dealing with such conflicting requirements constitutes part of the university management challenge.

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SPACE AND PLACE, AND WHAT THEY DO Ronald Barnett and I have noted that “few conceptual frameworks exist for understanding the connections between the physical form of the institutions and their academic effectiveness – and perhaps their sense of place” (Temple and Barnett, 2007). I should like here briefly to take forward these related ideas of space and place, and link them to ideas of social capital, and other forms of “capital”. There are a range of factors that may affect what we think of as the quality of higher education space: its setting, its unique design and historical features, its scale, internal spatial relationships, what the engineers call HVAC (heating, ventilation and air-conditioning), natural and artificial lighting, decoration, and how well the space is maintained. These are all features that we may straightforwardly categorise as physical capital issues. Once the users of these spaces are brought into the picture, some different considerations arise. The idea of “encounter management” sums up the process of managing the ways in which people come into informal contact: one study suggests that for university students such encounters can be “socially catalytic” in developing relationships and supporting learning (Strange and Banning, 2001: 146). This of course is not an idea just related to universities: as I have noted, designs of human settlements through the ages can be seen in terms of managing encounters between insiders and outsiders. The idea of locational capital, which comes mainly from economic studies of firms’ and workers’ locations (for example, Gould, 2007), is useful here: that certain activities have added value when they occur in particular locations. The perhaps self-evident sense that many activities take place where they do because there are economic benefits arising from being in that precise location (software development in Silicon Valley is a well-studied example) – or conversely, that incomes are depressed when activities take place in sub-optimal locations – is well-attested empirically (Cohen and Fields, 2000; Leichenko, 2003). The creation of a particular university physical setting, with design features that stimulate high-quality interactions among teachers and students, can similarly be thought of as creating locational capital. Good campus design aims to do this, particularly through the placing of individual buildings, the ways by which they are connected, the mixing of academic and social facilities, and landscaping and other design features. These interactions, conditioned by the physical environment, give rise to the community which exists within the institution, and help to form its culture. The creation of a community and its culture turns, I suggest, the university space into a place. As a result, locational capital becomes transformed, through the mediation of an institutional culture, into social capital. Social resources become more generally available, and so more valuable, through the networks which are implied by social capital, as these resources then become available to the

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community at large. (Distinctive characteristics of social capital, in the sense that I am using it, is that it is available for use by those who have not “paid” into it; and as with networks generally - phone systems, for example - expansion of the network makes participation in it more valuable.) Social capital adds value to the intellectual resources of the university by encouraging sharing and trust, and as I have argued, supporting organisational learning and change. These are characteristics of effective organisations, especially knowledge-intensive ones. Learning and research outcomes thus emerge from the university place – which, incidentally, can be seen as defining what is now thought of as the university brand. The diagram below attempts to summarise these interconnections.

© Paul Temple 2008.

NOTES ON A MODEL OF ORGANISATIONAL CHANGE Western universities have, historically, displayed a considerable capacity for both radical changes to their core intellectual businesses, but over extended periods; and for constant, organic, readjustments of their organisational arrangements. Taking a long view, far from being the change-averse organisations sometimes portrayed, universities are in a state of constant flux and evolution. University space and place together have a complex effect on the academic life of the institution and its performance. It is a more nuanced picture than simply one of the university

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campus, or individual buildings, sending messages or telling a story, though these things do seem to go on. The connection between space and place, which I have suggested involves the creation of social capital, is consistent with the ideas of commitment, authenticity, and reciprocity that Barnett (2007) suggests support student learning. But however it happens, there is an interaction between space and the university community, during which both are changed. Physical design features, large and small, seem to be important in ensuring that this interaction is educationally positive, and although I do not suggest that design features are on their own transformative, they may have an indirect effect in supporting change. I have suggested that considering the ways in which space becomes place, through the transformation of physical capital into locational capital, and the subsequent creation of social capital, is a potentially useful way of studying this relationship. I have argued that social capital theory, and the related conceptual approaches concerned with organisational learning, point to the existence of a complex web of interacting and mutually-reinforcing factors underlying institutional change. A number of features of the typical university work to facilitate social capital formation: its relatively flat hierarchy, the critical approach implicit in much scholarship and research, and the disciplinary frameworks which encourage inter- and intra-institutional networking. The physical form of the university, encouraging the creation of a sense of place created out of mere space, can be important in supporting these interactions. Once social capital is created, it can become available to support new developments or to strengthen current activities. In short, institutional change in this model is influenced by levels of social capital within the institution, and also by a range of environmental pressures. Levels of social capital are themselves conditioned by certain characteristics of the institution itself, including physical ones, capable of being managed, and by the external factors. Feedback from institutional change may then condition the extent of further change. On this model, while external factors can be important, organisational change is susceptible to being managed internally although the processes involved are complex and subtle.

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REFERENCES Amin, A., and Thrift, N. (2002). Cities: reimagining the urban. Cambridge: Polity Press. Barnett, R. (2000). Realizing the University: in an age of supercomplexity. Buckingham: SRHE and Open University Press. Barnett, R. (2007). A will to learn: being a student in an age of uncertainty. Maidenhead: Open University Press/McGraw Hill. Batchelor, D. (2006). Becoming what you want to be. London Review of Education, 4(3), 225-238. Becher, T. (1989). Academic Tribes and Territories: Intellectual enquiry and the cultures of disciplines. Milton Keynes: SRHE and Open University Press. Bok, D. (2003). Universities in the Marketplace: The Commercialisation of Higher Education. Princeton, NJ: Princeton University Press. Brennan, J., and Shah, T. (2000). Managing Quality in Higher Education: An International Perspective on Institutional Assessment and Change. Buckingham: OECD, SRHE and Open University Press.

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Bynner, J., and Hammond, C. (2004). The benefits of adult learning: Quantitative insights. In T. Schuller, J. Preston, C. Hammond, A. Brassett-Grundy and J. Bynner (Eds.), The Benefits of Learning: The impact of education on health, family life and social capital. London: RoutledgeFalmer. Castells, M. (2000). The Rise of the Network Society. Oxford: Blackwell Publishers. Chapman, M. (2006). American places: in search of the twenty-first century campus. Westport, CT: American Council on Education/Praeger. Clark, B. R. (1983). The Higher Education System: Academic Organization in CrossNational Perspective. Berkeley and Los Angeles, CA: University of California Press. Clark, B. R. (1998). Creating Entrepreneurial Universities: Oranizational Pathways of Transformation. Oxford: IAU/Pergamon. Clark, B. R. (2003). Sustaining Change in Universities: Continuities in Case Studies and Concepts. Tertiary Education and Management, 9(2), 99-116. Cobban, A. B. (1975). The Medieval Universities: their development and organisation. London: Methuen and Co. Cohen, S. S., and Fields, G. (2000). Social Capital and Capital Gains in Silicon Valley (reprinted from California Management Review, 41, 1999). In E. L. Lesser (Ed.), Knowledge and Social Capital: Foundations and Applications. Boston, MA: Butterworth-Heinemann. Dill, D. D. (1982). The Management of Academic Culture: Notes on the Management of Meaning and Social Integration. Higher Education, 11(3), 303-320. Dovey, K. (2008). Framing places: mediating power in built form. Abingdon: Routledge. Duke, C. (2002). Managing the Learning University. Buckingham: SRHE and Open University Press. Florida, R. (2004). The rise of the creative class : and how it's transforming work, leisure, community and everyday life New York, NY: Basic Books. Fukuyama, F. (1995). Trust: The Social Virtues and the Creation of Prosperity. London: Hamish Hamilton. Giddens, A. (1991). The Consequences of Modernity. Cambridge: Polity Press. Gould, E. (2007). Cities, workers, and wages: a structural analysis of the urban wage premium Review of Economic Studies, 74(2), 477-506. Hardwick, M. (2004). Mall maker: Victor Gruen, architect of an American dream. Philadelphia, PA: University of Pennsylvania Press. Hillier, B., and Hanson, J. (1984). The social logic of space. Cambridge: Cambridge University Press. Kennedy, D. (1997). Academic Duty. Cambridge, MA: Harvard University Press. Kogan, M. (1999). The Culture of Academe. Minerva, 37(1), 63-74. Kuh, G., Kinzie, J., Schuh, J., and Whitt, E. (2005). Student success in college: creating conditions that matter. San Francisco, CA: Jossey-Bass. Leichenko, R. (2003). Does place still matter? Accounting for income variations across American Indian tribal areas. Economic Geography, 79(4), 365-386. Lesser, E. L. (2000). Leveraging Social Capital in Organisations. In E. L. Lesser (Ed.), Knowledge and Social Capital: Foundations and Applications. Boston, MA: Butterworth-Heinemann. Lin, N. (2001). Social Capital: A Theory of Social Structure and Action. Cambridge: Cambridge University Press.

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Middlehurst, R., and Barnett, R. (1994). Changing the Subject: The Organisation of Knowledge and Academic Culture. In J. Bocock and D. Watson (Eds.), Managing the University Curriculum: Making Common Cause. Buckingham: SRHE and Open University Press. Nahapiet, J., and Ghoshal, S. (1998). Social Capital, Intellectual Capital, and the Organisational Advantage. Academy of Management Review, 23(2), 242-266. Pettigrew, A., Ferlie, E., and McKee, L. (1992). Shaping Strategic Change: Making Change in Large Organizations: The Case of the National Health Service. London: SAGE Publications. Portes, A. (2000). Social Capital: Its Origins and Applications in Modern Sociology (reprinted from Annual Review of Sociology, 24, 1998). In E. L. Lesser (Ed.), Knowledge and Social Capital: Foundations and Applications. Boston, MA: ButterworthHeinemann. Preston, J. (2004). "A continuous effort of sociability": Learning and social capital in adult life. In T. Schuller, J. Preston, C. Hammond, A. Brassett-Grundy and J. Bynner (Eds.), The Benefits of Learning: The impact of education on health, family life and social capital. London: RoutledgeFalmer. Putnam, R. D. (2000). Bowling Alone: The Collapse and Revival of American Community. New York, NY: Simon and Schuster. Rosenfeld, R. H., and Wilson, D. C. (1999). Managing Organizations. Maidenhead: McGraw-Hill. Schuller, T. (2004). Three capitals: A framework. In T. Schuller, J. Preston, C. Hammond, A. Brassett-Grundy and J. Bynner (Eds.), The Benefits of Learning: The impact of education on health, family life and social capital. London: RoutledgeFalmer. Schuller, T., Baron, S., and Field, J. (2000). Social Capital: A Review and Critique. In S. Baron, J. Field and T. Schuller (Eds.), Social Capital: Critical Perspectives. Oxford: Oxford University Press. Sennett, R. (1990). The conscience of the eye: the design and social life of cities. New York, NY: Norton. Sennett, R. (2006). The culture of the new capitalism. New Haven, CT: Yale University Press. Shattock, M. (2003). Managing Successful Universities. Maidenhead: SRHE and Open University Press. Strange, C., and Banning, J. (2001). Educating by design: creating campus learning environments that work. San Francisco, CA: Jossey-Bass. Szreter, S. (2000). Social Capital, the Economy, and Education in Historical Perspective. In S. Baron, J. Field and T. Schuller (Eds.), Social Capital: Critical Perspectives. Oxford: Oxford University Press. Temple, P., and Barnett, R. (2007). Higher education space: future directions. Planning for Higher Education, 36(1), 5-15. Wenger, E. (1999). Communities of practice: Learning, meaning, and identity. Cambridge: Cambridge University Press.

In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 2

SOCIAL CAPITAL AND INNOVATION POLICY IN CROATIA: SCIENTIFIC COMMUNITY AS A SOURCE OF INNOVATION Jadranka Švarc1∗, Jasminka Lažnjak2 and Željka Šporer3 1

Institute of Social Science Ivo Pilar, Zagreb University in Zagreb, Department of Sociology 3 University of South Australia, Adelaide, Australia 2

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ABSTRACT This paper provides the results of the first empirical research aimed at analysing and understanding the influence of social capital on functioning and performing of innovation policy in Croatia. It is part of the wider project on social evaluation of the Croatian innovation policy and innovation system which is based on the survey conducted in 2007 and targeted at project leaders who have taken part in one of the first innovation policy programme in Croatia (HITRA-TEST programme). The programme was launched in 2001 with the aim to foster science-industry cooperation and commercialization of research results of the public research sector. It has provoked within the scientific community intensive debates concerning its efficiency, appropriate use of pubic money as well as ethical dilemmas about commodification of science that calls for shedding some lights on the innovation policy from the sociological point of view. The research starts from the presumption that project leaders within TEST programme, being the first in Croatia who applied for technology-oriented projects, are the agents of socio-cultural and institutional change that consists of the shift from the prevailing elite-type of science towards more productive use of the science. That can be identified with the shift from the standard science policy towards innovation policy. The investigation of their social characteristics (e.g. age, gender, institutional affiliation, area of research), attitudes towards commercialisation of science and entrepreneurial university and dimensions of social capital such as trust in institutions and value orientation provides a valuable picture of the group that responded to calls for collaboration with industry. It also gives an indication of the wider socio-cultural ∗

E-mail: [email protected]

16

Jadranka Švarc, Jasminka Lažnjak and Željka Šporer environment that shapes innovation policy implementation. The main hypothesis of the research is that motivation for application to TEST programme, as well as realisation of the project and satisfaction with achieved results is conditioned by: 1) set of variables of individual and scientific characteristics of the participants, 2) social capital defined as system of values and attitudes which regulate individual behaviour, attitudes toward commercialisation of knowledge, general value orientations and trust in the institutions. The four hypotheses were tested within this framework. The first hypothesis on dominantly scientific motivation for applying to TEST is confirmed. Second hypothesis that realisation of TEST projects has accomplished primarily scientific results also is confirmed while the third hypothesis that participants who have accomplished commercial results are more satisfied with the achieved results has not confirmed. Finally, the fourth hypothesis that performance of innovation policy is related to the deficit of social capital was confirmed due to findings on value structures of participants. The paper concludes that high presence of traditional values along with the attitudes toward commercialisation of science illustrates the low capability of the Croatian society for institutional change and confirms the crucial role of social capital for successful implementation of innovation policy.

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1. INTRODUCTION In recent years there are growing tendencies to connect the concept of the national innovation system (NIS) with the concept of social capital as an invisible social “glue” which helps economic behaviour and economic growth (cf. Nielsen, 2003; Lundvall, 2007). The tendencies are driven by the increasing need to explain the differences in efficiency of the national innovation systems and related innovation policy as the intentional instruments of governments for managing science, technology and innovation for transition to knowledge economy. The different rate of national innovativeness and dynamic in NIS implementation leads to the conclusion that the process of innovation as well as national innovation capacities are embedded in socio-cultural and political processes and therefore both are contextual, path dependent and locationally specific (Mytelka and Smith, 2002; Furman at al, 2002). The fruitful ground for such a standpoint is provided by the original concept of NIS brought by Freeman, Lundvall and Nelson1. They basically understand NIS as a process of interaction among different institutions and actors that accelerate producing, using and dissemination of innovations. The tendencies are additionally strongly supported by the emerging of the “new innovation paradigm” (Lundvall and Borras, 1997; Mytelka and Smith, 2002) that has widened and shifted the notion of innovation from its original technical and technological nature towards a complex social phenomenon (OECD, 1992). The reasons to analyse socio-cultural and political aspects of the Croatian NIS stem from the two intriguing observation. First, Croatian economy, although leading in the region, suffers slow growth and weak competiveness while technological capabilities are falling back 1

The authors defined the NIS in the following ways: “ ... the elements and relationships which interact in the production, diffusion and use of new, and economically useful, knowledge ... and are either located within or rooted inside the borders of a nation state.” (Lundvall, 1992); “... a set of institutions whose interactions determine the innovative performance ... of national firms.” (Nelson, 1993); “...the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies” (Freeman, 1987).

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Social Capital and Innovation Policy in Croatia

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rather than catching up with the EU countries. The lack of structural changes in economy towards new innovation-based companies or knowledge based sectors combined with the low innovation index (Pro-Inno Europe, 2007),) provide a platform for a thesis that Croatia failed to capitalise inherited2 scientific potentials in order to accelerate transition to knowledge economy. Although, there are standard tendencies to assign economic difficulties to the war damages that were definitely huge with a devastated impact on economy, the level of national innovation capacities and supporting factors like administrative burdens, violation of the rule of the law, etc. cannot be ascribed to the war damages alone. Rather, they are caused by some more subtle socio-cultural and political factors that slow down reforming processes of institution which, although not strictly economic, determine the pace of economic progress. Such institutions belong to different sectors of justice, law, public administration, privatisation, competition policy, etc., that suffer from the slow reforming process. Possibly, the best illustration of their sluggish institutional change is slow adaptation to the standards of “acquis” within the integration processes of Croatia with EU which already received critics from EC (European Commission, 2007). Second intriguing reason stems from the fact that Croatian government invests significant efforts, especially since 2001, to develop Croatian innovation system and innovation policy. Besides, Croatia is also a leading country in the region in research intensity since its investments in RandD and research workforce surpasses not only Western Balkan Countries (WBC)3 where Croatia is located from the geo-political point of view, but also many new EU member states and the states on South-East of Europe. The recent policy documents4 illustrate strong dedication of the line Ministry of Science, Education and Sports (MSES) to achieve Lisbon and Barcelona goals in order to transform Croatia into a country of knowledge. After all, Croatian NIS can be described as a relatively complex system of various institutions and supporting programmes while innovation policy has a track record of at least 10 years and should enter a mature phase. However, the influence of NIS and innovation policy programmes on structural changes in economy in a broad sense and, more importantly, on science system in a narrow sense is rather modest or even non-existing. For example, public RandD sector strongly dominates over technologically weak business sector, despite declarative commitment of government to transform Croatia into a knowledge based economy. State is a prime financier and performer of RandD activities with almost 80% or researchers affiliated to public institutes and universities. There are a general lack researchers, PhD students, mentors (Lučin, 2007) as well as closely related qualified workforce in the private business sector leading to the weak absorptive capabilities of companies for innovation and lack of interest for research. Marginalised position of science and innovation in economic development provides a ground for certain critics towards NIS and innovation policy and calls for identification of the reasons behind. In the context of social and institutional embedding of innovation and national innovation capacities the “reasons behind “are recognised in the “hidden” socio-cultural

2

Croatia used to be, together with Slovenia, the most advanced republic of ex-Yugoslavia from the economic and technological point of view. 3 WBC consists of Albania, Bosnia and Herzegovina, Croatia, FYR Macedonia, Montenegro and Serbia 4 Science and technology policy of the Republic of Croatia 2006-2010, adopted by MSES in June 2006 and the Action plan for science and technology policy implementation 2007-2010, accepted by MES in June 2007.

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Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

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factors that are often summed-up in the notion of social capital5. Therefore, the starting point of the research is that social capital has decisive, although not a straightforward influence on the low efficiency of the Croatian innovation system and policy. In terms of institutional and evolutionary economics that original frames the concept of NIS these social factors regards the quality of formal and informal institutions and their interplay in the process of constitution of NIS (Lundvall, 2007). The relationships between innovation policy as a “formal rules of the game” imposed by the state and informal institutions (socio-cultural factors, social capital) that shape behaviour of the main stakeholders of NIS (scientists, entrepreneurs, policy makers) we have explored through a wider research on social evaluation of the Croatian NIS within a scientific project financed by Croatian Ministry of Science, Education and Sports entitled “Social Evaluation of Croatian Innovation System in the Function of Knowledge Society” (2007-09). The research presented in this paper is part of this wider research and concerns one selected innovation policy programme, Technology-Related Research and Development Projects (TEST programme) launched by the Croatian government in 2001. The conclusions about the social shaping of TEST programme and its role in the wider institutional and socio-cultural context are drown from the attitudes and standpoints of a fraction of scientists who have taken a part into TEST programme. The value orientation and trust in institutions have been analysed with the aim to connect the elements of social capital to the role of the selected innovation policy programme and innovation policy in general. The paper is structured in the four main parts that follow the introduction. The second part is devoted to the explanation of the theoretical background of research regarding the concept of NIS and innovation policy, after which a basic relationship between innovation policy, social capital and institutions are presented. In the third part are presented research aims, design and methodology. The fourth part discusses the main results of research in the following five sub-sections: socio-demographic characteristics of respondents, motivation for participation in the TEST programme, realisation of TEST, benefits of TEST, satisfaction with the results and social capital related to the TEST programme. The latter sub-section considers respondents’ value orientations, attitudes towards research commercialisation, science-industry cooperation, traditional and entrepreneurial university and trust in institutions. The final section summarises the main findings and offers some concluding remarks.

2. THEORETICAL CONTEXT OF RESEARCH: NATIONAL INNOVATION SYSTEM AND INNOVATION POLICY Innovation policy is usually defined as an “amalgam of science and technology and industrial policy” (OECD-EUROSAT, 1997). This definition reflects, in essence, the nature 5

Some scholars tend to ascribe the difficulties of the overall post-socialist transformation primarily to insufficient or negative social capital thereby promoting the idea of a social capital with three pillars – trust, civic norms and cooperation – is central to the economic development and modernisation of the previous communistic countries. For example, the falling apart of the ex Yugoslavia is ascribed to the lack of bridging (inclusive) and surplus of bonding (exclusive) forms of social capital (Nielsen, 2003,p. 45.) while others (Knack and Keefer, 1997, p. 1267) ascribed it to the instability of trust and civic norms. For an annotated bibliography on social capital in the Central and Eastern European countries see Mihaylova (2004).

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Social Capital and Innovation Policy in Croatia

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of innovation as a phenomenon that integrates scientific knowledge, its technological application and commercial exploiting. The final task of innovation policy is to foster innovation by capitalisation of science through productive use of national scientific and technological potentials. In the simplest way, it consists of public policy programmes that foster commercial application of science and assist technology transfer through scienceindustry links. The best impression of the scope and variety of the innovation supporting programmes is provided within the INNO-Policy Trend Chart that offers a database of innovation policy measures across 33 European countries (European Commission, 2004)6. The most appealing feature of NIS’s analytical approach comes from its underlying message that economic growth is not an economic spontaneous process simply driven by the “hidden hand” of market which is beyond the reach of socio-economic agents, such as strategic policy visions, management skills and governance competences. For small and developing countries like Croatia, NIS brought rather encouraging implication by pointing that competitiveness of a nation does not depend on the scale of RandD but rather “(…) upon the way in which the available resources are managed and organised, both at the enterprise and at the national level” (OECD, 1992:80). Therefore, efficient NIS is a result of governance of innovation process and management of knowledge resources through appropriate institutional set-up. The ability of society for social and related institutional change towards such an institutional set up which would facilitate productive use of knowledge points out the utmost importance of socio-cultural factors of economic growth. The concept of NIS has an astonishing take-up and has been rapidly adopted by the national governments around the world as an analytical framework and practical tool on how to manage innovation processes in local economies (Albert and Laberge, 2007; Mytelka and Smith, 2002; Lundvall, 2007). In times it emerged, in the mid 1980ties, NIS brought forward science and technology as main competitive factors in the globalised economy, contrary to the dominant neoclassical perspective which based competitiveness on standard methods of cutting down production costs and prices (Lundvall, 2007). Framed by the evolutionary economic perspectives (Nelson and Winter, 1982), NIS presents a radically different approach form the laissez faire option of the neo-classical economy. It emphasises the endogenous character of business development arguing that pace of technological and economic progress is decisively determined by managing and organisational abilities of socio-economic actors to create innovation-conductive intuitional environment. Contrary to the conventional wisdom that basic prerequisite for healthy economy is the retreatment of the state from economic processes the proponents of the NIS suggests the crucial role of proactive innovation policy of national government in fostering innovation. The deliberate policy action and political wisdom of national political elites to establish appropriate institutional set-up – the national innovation system - appeared a critical factor of economic success and social well-being7. 6

Trend Chart is only a segment of the PRO-INNO Europe, a complex project of EU devoted to innovation system and policies (http://www.proinno-europe.eu/index.cfm?fuseaction=page.home 7 Economic sociology and political economy views markets and states as strongly related, emphasizing the role of states in structuring markets and creating. Largely, these studies are inspired by Karl Polanyi’s analysis of the social construction of a market society in the 19th century and his message that self-regulating markets do not emerge ex nihilo, but there is a crucial role of the state in their creation. As Polanyi (1944: 139) writes, “there was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course… laissez faire itself was enforced by the state”.

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Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

Obviously, institutions are increasingly being recognized as the central for explanation of differing growth performances (Freeman, 1995). According to Lundvall (1992) a distinction can be made between a narrow and a broad definition of the intuitional set up of an innovation system. As Freeman stresses (Freeman, 2002) the narrow approach concentrates on those institutions which directly and deliberately promote the acquisition and dissemination of knowledge such as RandD departments, technological institutes and universities. The “broad” approach recognises that these “narrow” institutions are embedded in a much wider socio-economic systems in which political and cultural influences as well as economic policies help to determine the scale, direction and relative success of all innovative activities.

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2.1. Explaining the Linkages between Innovation Policy, Social Capital and Institutions The ambitions to understand the performance of national innovation system and implications of innovation policy as rooted in the nation specific organisational and political competences bring the topic of social capital and the topic of innovation system together. It is rather plausible to claim that social capital is essential for efficient NIS since positive social capital by definition facilitate useful interactions and connections among people; it helps to overcome differences in norms and values to undertake collective actions, etc. Shortly saying, without sharing common trust, norm and networks, the essential categories of social capital, both the NIS as a system of institutional interaction and innovation policy as a deliberate collective action in fostering innovation are hardly possible. However, to explain how social capital influences innovation policy and institutional change is not a simple and straightforward task. The reasons behind them stem from still “elastic” and broad approaches to the concepts of both the social capital and institutions. Their influence on the national innovation capabilities and governments’ capacities to manage innovation processes are yet under exploration faced with the problem how these social and institutional influences can be determined and measured. The idea that productive resources could reside not only in physical capital and human labour but also in social relations among people i.e social capital is pioneered by James Coleman (1988) and Robert Putnam (1993). Coleman was primarily responsible for introducing the concept of social capital to educational research (OECD, 2001, p. 23) while Putnam found trust and civil engagement could be positively correlated with economic growth. Putnam compared the North and Southern Italy and founded evidence that stronger social capital expressed in social trust, norms and networks enabled North to achieve significantly better levels of governance, institutional performance, and economic development than South (OECD, 2001). However, the social capital in Putnam’ sense collapses numerous aspects of socio-cultural and political factors of economic behaviour and growth to only three categories: trust, norms and network (Nielsen, 2004). It certainly enables measuring of social capital but in a rather broad sense and on the aggregate levels of households, states and regions. Typical research of this kind correlates social values to social

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Social Capital and Innovation Policy in Croatia

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development such as World values studies, European values surveys8, World Bank studies on poverty and social exclusion, act. The Putnam’s and Coleman’s research gives rise to the growing body of literature9 on social capital. It is a research topic of many scientific disciplines, primarily of anthropology, sociology, economy and political sciences, which significantly differs in definition, scope and methods of analysing social capital (OECD, 2001, p 40). For example, from the economic point of view the contribution of social capital to innovation is achieved by reduction of the transition costs between firms and between firms and other actors such as research institution (cf. Akcomak, and Ter Weel, 2006, p.7). By contrast, political scientists emphasis the role of informal institutions in shaping innovation like personal networks, clientelism, corruption, traditional culture and a variety of legislative, judicial, and bureaucratic norms (Helmke and Levitsky, 2004). Some scholars correlate and measure the impact of social capital and economic growth (Knack and Kefer, 1997; Zak and Knack,2001; Akcomak and Ter Weel, 2006; Parts, 2004) government performance (Ritzen et al., 2000, Tavits, 2006; Knack 2002 ), innovation (Landry at al. 2000, Fountain, 1998), etc. However, in order to analyse the impact of social capital on the efficiency of NIS and innovation policy, the most useful theoretical framework is provided by those conceptual approaches that channel the influence of social capital on innovation through institutional environment and the quality of governance. Institutions are the critical factors by which countries’ innovation systems differ since the quality of institutions, the pace of their improvements and dynamic of change determine the national innovation capabilities and related economic growth. On the other hand, the abilities of state administration to create and coordinate the appropriate institutional frameworks by different policy actions and public programmes are central to determine the successfulness of NIS. The institutional quality and quality of governance are often closely related partly because they are strongly correlated and partly because they are overlapping. For example, successful capitalisation of science through university spin-off companies assisted by technology transfer centres or science parks is a combination of appropriate institutions and policy measures which can be hardly delineated. Therefore, successful NIS like one in Finland is always an amalgam of policy actions and institutional factors and their synergic interplay (Schienstock, 2007). The most promising theoretical framework for connecting social capital, governance and NIS is provided by Mosses Abramovitz’s concept of “social capability” for institutional change. As Freeman stresses (Freeman, 2002) Abramovitz (1986) coined the expression of “social capability” to describe the capacity of a society „ …for institutional change, and especially for those types of institutions which facilitate and stimulate a high rate of technical change, e.g. innovation system”. Therefore, social capability for institutional change turned out to be a decisive factor for establishment of efficient NIS as an instrument of policy making for economic growth in globalised knowledge based economy. For example, a lack of social capability to create institutions like functional market, rule of law, property rights, secularism, productive exploitation of science, civilian egalitarianism etc. will greatly hinder economic progress and overall well being. However, social capability is a diffuse concept, not 8 9

The comparative study on social values in Croatia and EU is provide in Rimac and Štulhofer (2004). See, for example, the Social Capital Gateway availiable at the: http://www.socialcapitalgateway.org/NV-engmeasurement.htm

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Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

easy to capture and measure. It encapsulates dispersed social dimensions of interaction and relationship between formal and informal institutions which compose NIS. In search for theoretical concepts that would explain institutional differences of NIS, as a social category, economists often bring into play social theories such as theory of social capital, theory of social networks10 and social interactivity or simply look for socio-cultural factors of shaping innovations. A solid ground for social studies involvement in innovation system analyses is provided by the established interpretation of a NIS as a set of formal and informal institutions, with the latter being socially rooted (Lundvall, 2007). The formal institutions are tangible institutions (organisations) that constitute the technological infrastructure such as universities, science parks, business clusters, etc. while informal institutions are intangible and can be understood, as Lundvall stressed (Lundvall 2007, p. 14) in a “broad sociological sense as informal and formal norms and rules which regulates how people interact”. To understand how these informal institutions (norms and values) shape the way formal institutions and organisations function and how they interact with other parts of the innovation system is certainly most relevant for the understanding of the system as a whole and for understanding the differences among the systems. Within the institutional context innovation policy can be defined as a set of formal institutions or “rules of the game” devised by the government in order to change informal “societal” and cultural institutions or rules of behaviour of the main actors of NIS. Changes in informal institutions should influence changes in tangible organisations as an institutional setup of NIS. For example, government programme for fostering innovation in Croatia like the HITRA-TEST programme (a target of our research) is a set of government devised formal rules with the aim to make changes in behaviour of the main stakeholders of the Croatian NIS – scientists, mangers and policy makers. Changes in stakeholders’ behaviour should result in changes of the institutional (organisational) landscape of the Croatian NIS and their efficiency.

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3. RESEARCH AIMS AND DESIGN Basic starting point of our research on social evaluation of the Croatian innovation policy is the thesis that deficiency of social capital is one of main obstacles for innovation policy to fulfil its mission. Since trust in institutions, values and norms are standard measures of social capital we have measured in our research these dimensions of social capital in relation to (dis)function and to the efficiency of innovation policy in Croatia. The research of social dimensions of IP is performed through the analysis of the one selected innovation policy programme entitled Technology-Related Research and Development Projects (TEST programme) as an example of innovation policy practice in Croatia. TEST programme were launched by the Croatian government in 2001 as an essential part of the first innovation policy programme entitled “Croatian Program for Innovative Technological Development” - HITRA. HITRA was developed after a period of policy learning on innovation policy trends and rationalities strongly influenced by knowledge transfer from the neighbouring counters (Italy and Germany), OECD literature and European

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Social Capital and Innovation Policy in Croatia

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policy on innovation (Švarc, 2004). It was designed rather ambitiously adopting the task to mobilise the scientific research potentials for structural adjustment to knowledge economy by accomplishing the three main goals fostering science-industry cooperation, reviving industrial RandD and encouraging commercialization of the research results. However, in practice, HITRA was soon transformed into two interactive-type of programmes (TEST and RAZUM11) rather narrow in scope, tailored to provide a framework for direct cooperation between entrepreneurs and researchers and commercial application of research results. In addition to TEST and RAZUM, HITRA provides support for technological infrastructure technology transfer centres as a wider institutional set up of NIS. Since 2003 HITRA was extend by the new sub-programmes “Jezgre” aimed at supporting scientific services and STIRP aimed at complex technological projects in cooperation of at least three partners form science and industry. Although HITRA has been largely extended and reformed over time towards more comprehensive innovation system, the TEST programme has been running since its beginnings till nowadays in almost unchanged manner. The procedures of application, evaluation and monitoring of technology projects as well as raison d’être of the whole programme remains the same as in the initial stages which provides a useful ground for evaluation of the programme and different kinds of empirical research. By definition, TEST programme (MSES, 2002) is focused at development of new technologies (products, processes, services) prior to their commercial use up to the stage of original solutions (prototype/pilot stage). It is especially designed to encourage commercial application of research results and science-industry cooperation. Therefore it and provides a framework for direct cooperation between entrepreneurs/industry and public research institutions. Both individuals and legal entities, researchers and enterprises, are eligible for the Program TEST but research should be carried out at registered scientific research institutions since they have adequate resources (staff and equipment) and is coordinated by principal investigator who must have a scientific rank (qualification). TEST/ HITRA have introduced a range of completely new instruments and organizational and institutional novelties to science policy like the Technology Council, the regulations on intellectual property rights (IPR), the new methods of evaluating and monitoring of projects, etc. In spite of these novelties, there is a common attitude that HITRA and TEST have not changed much science policy and do not have influence innovation and technological development. Moreover, by time, the disputes of the role, efficiency and functionality of the programme and technological infrastructure have risen. The fruitful ground for the critics is provided by the lack of the standard performance evaluation of the TEST programme. It was expected that TEST would generate collaboration between companies and public research organisations since companies would take advance of the programme by financing their RandD needs through research organisations. It is expected also, that programme would produce results, such as: commercialisation or research results via interested companies, new patents/licences, new products/processes/services eligible for commercialisation, new contract research between research organisation and industry, 10 11

For more information about social innovation network see Taatila at al. (2006) RAZUM programme is a sub-programme of the HITRA programme aimed at supporting university spin-offs and knowledge based companies It assumes commercial application of the results of the TEST programme through start-up companies or companies’ expansion

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Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

additional investment of companies in the follow up phase of the project, new projects initiated by companies (industry), start-up companies within RAZUM programme. However, the performing-based evaluation of the programme has not been made in spite TEST comprises almost 300 granted projects and covers almost 7-years span (Table 1). Table 1. Overview of the number of the TEST projects 2001

2002

2003

2004

2005

2006

Submitted projects

184

105

61

62

72

121

Accepted projects

95

54

35

28

25

37

Percentage of acceptance

51,7

51,4

57,3

45,1

34,7

30,5

2007

Total 605

24

298 49,2

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Source: Risović, 2008.

The evaluation deficit of TEST is not driven so much with the potential lack of the results12 but mainly by the lack of evaluation competences of the public administration which runs the programme. Evaluation incompetence complemented by the lack of awareness of the importance and role of evaluation produced a negative feedback on the programme itself and innovation policy in a whole. It gives a rise to the disputes about the transparency of the programme, its efficiency, effectiveness, granting policy, and corruption of both the administration and researchers. These disputes were strongly supported by ethical dilemmas on commodification of science and its orientation to business that threats scientific excellence and autonomy13. Innovation policy as a mechanism by which science could be translated into technological and economic progress has been faced with the strong opposition which argue separation of science and innovation, research form commercialisation, university from industry. The clash between mode 1 and mod 2 of knowledge production (Gibbons at al, 1994) and antagonism towards the “Triple helix model” (Etzkowitz, 2003) has been and still is strongly present. Finally, it should be stressed that research of social aspects of innovation policy implementation and success, so called social-evaluation studies are regularly substituted by the performing studies based on quantitative indictors that remain easy to identify and measure. Evaluation studies of NIS and innovation policies usually employ performing indictor on research/innovation inputs (investments in research, research personnel, training) or outputs (number of patents, science-industry contract research agreements, university spinoffs companies, number of business centres, etc.). The outcomes or the influence of the policy measures on the wider policy context, and the feedback effects, with a view of producing strategic changes in NIS or innovation policy is rarely a scope of policy analyses14. Therefore, this research is a pioneering attempt to connect social capital with government policy and its influence on intuitional change within the innovation system in Croatia. 12

A range of commercially viable results coming from the TEST projects ready for commercialisation or already commercialised were presented in t the presentation of the President of the technological council, a MSES body responsible for assessment and monitoring (Risović, 2008) 13 Majority of discussions are available at the Connect portal, an Internet forum of the Croatian scientists (http://portal.connect.znanost.org/) 14 For more details about the strategic role of evaluation studies of innovation policy and interplay between evaluation and strategy see: Kuhlmann, 2003

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3.1. Defining the Main Hypotheses Here is presented part of the research from our project that tried to correlate performance of innovation policy as instrument of government policy with social capital. Our research starts from the main hypothesis that motivation for application, as well as realisation of the project, and satisfaction with achieved results of the TEST project is conditioned by: 1) set of variables of individual and scientific characteristics of the participants, 2) social capital defined as system of values and attitudes which regulate individual behaviour, attitudes toward commercialisation of knowledge, general value orientations and trust in the institutions.

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Hypothesis 1 (H1): Application for TEST programme was lead by scientific motivation of the participants because they are primarily scientists and performing scientific research is their main professional activity; Hypothesis 2 (H2): Realization of TEST projects has accomplished primarily scientific results and not commercial results. Therefore, partial success of TEST programme can be observed as the change of scientific community’s perception of the role of the science and commercialisation; Hypothesis 3 (H3): Participants who have accomplished commercial results within their projects are more satisfied with TEST programme. Hypothesis 4 (H4) – The measured dimension of social capital (trust in institutions, value orientations, attitudes towards science and commercialisation) influence low performance of the TEST programme. This hypothesis has faced us with the dilemma about the performance of the TEST programme which was a pioneering action of both, the government and scientists, to connect science and technology in Croatia. Could we interpret the results of the TEST programme as a failure or success? Since the standard performing evaluation is missing, the thesis about the low performance is based primarily on data about the results of the project and their use collected by our questionnaire. These results (number of publications, patents, use of the results for commercial purposes) suggested that outcomes of TEST are primarily used for scientific research. In spite of the fact that performance of the TEST should be a matter of further discussion, we concluded that TEST has relatively low performance. Besides, the more general outcome of TEST in terms of its impact on more intensified science-industry cooperation (number of contract research, university-spin offs, innovative companies, etc.) is not present or at least was not analysed and elaborated in Croatia. The following socio-cultural characteristics of the researchers are analysed as independent variables: • • • • •

social characteristics (e.g. age, gender, institutional affiliation, area of research, publishing record); value orientations (e.g. traditionalism, anti globalism, statism); trust in institutions (e.g. science, education, polices, army, government, parties); attitudes towards commercial application of science and science-industry cooperation attitudes towards traditional and entrepreneurial university.

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Jadranka Švarc, Jasminka Lažnjak and Željka Šporer Dependent variables are: • • •

•

motivation for participation in TEST; benefits from participation in TEST; realisation of the project: o results of the project o use of the results benefits of participation in the TEST for personal career, scientific research and cooperation within industry.

3.2. Methodology and Sample

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The analysis is based on the questionnaire-based survey conducted in 2007 that targeted the project leaders who have taken part in TEST programme. The information about the project and project leaders have been identified from the web-based Inventory of the TEST projects provided by MSES15. Only project leaders of the completed projects have been included in the questionnaire. Data were collected by self-administrated questionnaire sent by mail and with return control.

Sample Structure The research starts from the presumption that project leaders within TEST programme, being the first in Croatia who applied for technology-oriented projects, are the agents of socio-cultural and institutional change. The change consists of the shift from the prevailing elite-type of science (mode 1 of knowledge production) towards more productive use of the science which is characteristic for the mode 2 of knowledge production. This shift can be also identified with the shift from the standard science policy towards innovation policy. They represent the most educated part of the Croatian labour force which has demonstrated the openness toward the new ideas and toward new models of collaboration among scientific organizations. They also see the need for technological development. As such, they are carriers of certain socio-cultural values and attitudes towards commercialisation of science and science–industry cooperation that are country specific. The investigation of their social characteristics, dimensions of social capital and attitudes towards commercialisation of science and entrepreneurial university provides a valuable picture of the group that responded to calls for collaboration with industry but it also gives an indication of the wider socio-cultural environment that shapes innovation policy implementation and functioning. However, it should be bear in mind that they present a sort of self-selected group of respondents who posses intrinsic motivation to answer the questionnaire. The motivations are probably stemming from their satisfaction with the programme as such as well as their own results. On the other side, this self-selectiveness underlay their main feature as the carriers of new ideas and institutional changes. Unfortunately we had no access to heads of failed or uncompleted projects which would give us valuable insight in many important aspects related to project failures and different barriers in realisation. In the interpretation we 15

Available at: http://tprojekti.mzos.hr/

Social Capital and Innovation Policy in Croatia

27

took into account the fact that our sample is not representative for all applicants to TEST and that collected data have limited reliability. In this light we have expected to get the opinions which are more positive to the whole HITRA – TEST project. In the period 2001-2007 there were 605 applied projects, out of which 298 were accepted for financing (Table 1). Our sample included heads of the 212 technological projects which were completed till year 2005. 120 researchers have responded to the questionnaire, making a response rate of almost 57%. 65% of respondents are male and 35% are female researches. The sample presents a self selected purposive sample of successful applicants to TEST projects.

4. DISCUSSING THE RESULTS 4.1. Socio-Demographic Characteristics of Respondents

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Majority of respondents in our sample are coming from university departments (76%), while only 17% are coming from public institutes (Figure 1). This proportion reflects the dominant position of universities in the Croatian research system since, in terms of total researches in Croatia, about 60% are employed at universities, 25% at institutes and 15% in private industrial sector (Švarc and Račić, 2007). The involved scientists form public institutes are mainly coming from the Institute “Ruđer Bošković”, the largest and world-known institute in Croatia in natural sciences. 7% of researchers are coming from other institutions like hospitals, computing centres, or they are in retirement.

Figure 1. Respondents by employment.

Some of the respondents ( 7.5% ) posses their own company while some of them (9.2%) are working parallel in another firm or institution (Figure 2). It illustrates that some Croatian researchers are quite familiar with entrepreneurship.

28

Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

Figure 2. Additional (part time) jobs of respondents.

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Figure 3. Respondents by area of research.

Figure 4. Respondents by age.

Social Capital and Innovation Policy in Croatia

29

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Majority of researchers are in technical sciences (45%), then in biotechnical sciences and biomedicine (28%) while 14% of respondents are affiliated to natural science and 10% to agronomy and veterinary. A small proportion of 4% of respondents are coming for social sciences, primarily economy and psychology (Figure 6). Majority of respondents belong to rather mature group of scientist since 57.5% is over 56 year old and 21.7 % of them is over 66 (Figure 4). However this is not unexpected since Croatian scientific community is rather old in general and, on the other side, older scientists have some advantages in comparison to younger researchers when technological activities are concerned. First of all, due to their long working experience they have had more opportunities to establish contacts and cooperation with industry (some are dating from socialism) or generate some "tangible" research results which applicability they wish to "test" under the TEST programme. Further on, they usually have established their personal network of researchers research teams- capable of carrying on complex projects like technological ones. Finally, they have more "spare" time that could be invested in activities additional to core activities (teaching and scientific research). Researches in the most productive period of life, ages from 36 to 55, are more engaged with standard research and teaching activates and their involvement in TEST programme is probably more depending on their perception of personal benefits from TEST. As analysis revealed the contribution of TEST to their personal carrier is not very high. In situation when the greatest benefit form EST is additional material resources and equipment for scientific research (which should be provided anyhow), a rather high level of enthusiasm is needed to add time and energy consuming TEST project to the standard engagements of "science" and "teaching". The scientific production of respondents consists, apart from studies and analysis, primarily of scientific papers in international journal, as well of papers in the Croatian journals and books (Figure 5).

Figure 5. Type of publications (mean).

30

Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

Technological outputs like patents are not an important activity of respondents since 83% of respondents have not declared any registered patent. The remaining 17% of respondents declared altogether 44 patents. However, the distribution of patent production per researchers is very uneven; for example, eight respondents (approx.7%) declared one patent each, while one respondent (approx. 1%) declared 8patents alone (Figure 6).

Figure 6. Absolute number of registered patents by respondents prior to TEST projects (in %).

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4.2. Motivation to Apply for TEST Projects The principle motives for applying to TEST programme are defined by the MSES, within the goals of the TEST programme announced in the Public call for project submission. They consist in developing new technologies (products/processes/services) feasible for commercialisation. Both, the research institutions and business companies or individual innovators are invited to apply for project financing. The latter should apply via research institutions. The analysis reveals that all the projects were proposed by researchers while participation of entrepreneurs were only indirect as the providers of initial project ideas Such projects which which were initiated by the ideas coming from industry/companies are 16% while remaining were inspired by the ideas of researchers themselves. It illustrates that programme, although intended for both, innovators from business and researchers sphere, was largely dominated by scientists and serves their purposes. Therefore, the intention of this research was to go beyond the “officially” defined motives and to find out the hidden interests of researchers which made them to apply to TEST programme. These motives are not necessarily connected with presumed technological outputs and their commercial exploitation. Indicator for hidden motivation to apply to TEST programme was the question: “Apart from developing new technology what was your additional motives to apply for TEST project?” Since the multiple choices in answering were allowed, we were able to identify the three main types of motivations, as follows: 1) science-driven motivation that consists of intention of researchers to buy new research equipment and to get additional financial resources for their research work;

Social Capital and Innovation Policy in Croatia

31

2) industry cooperation driven motivation that consists of wish of researchers to develop their capabilities for cooperation with industry and to acquire new funds for research with industry 3) profit-driven motivations that consists of the intention to gain initial capital for startup firm and the intention to sell patent/license 4) mixed motivation that consist of both the elements of the science-driven and industrycooperation driven motivation. Most of the participants, almost 60% of applicants to TEST were guided by “mixed” motivation while 20% stated that their main motives for participation was “scientific” since they wanted to buy new research equipment and gain additional financial resources for the scientific research. Only 12,3 % were motivated by cooperation with industry while 4,4 % were “profit” oriented and try to get initial capital for start-up firm and for selling patent/license. The frequencies indicating the hidden intentions for applying to TEST are given in Table 2. Domination of “mixed” motivation indicates the ambiguous way researchers understand possibilities of research commercialisation. They prefer to combine their scientific research with possible industrial application and commercial exploitation. Their prime interest is, in essence, to secure additional funding and equipment for their scientific research while cooperation with industry and “money making” is a welcome ingredient but rarely their prime motive. Since funding of the science projects in Croatia is rather modest and insufficient for more ambitious research undertakings, the TEST programme was recognised by research community as a channel for additional financial inflow for scientific research provided by the government. Table 2. Motives for applying to TEST programme

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Science-driven Industry cooperation-driven Profit-driven Mixed motivation Total

N

%

Cumulative %

24 14 5 71 114

21,1 12,3 4,4 62,3 100,0

21,1 33,3 37,7 100,0

Table 3. Importance of commercialisation of project results when applying to TEST N

%

Cumulative %

I was thinking about commercialisation but it was not in the first plan I have indented to commercialise but without concrete plan I had detailed plan of commercialisation

56

46,7

48,3

42

35,0

83,3

20

16,7

100,0

Total

120

100,0

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Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

Such a conclusion is confirmed by their answers related to the importance of commercialisation (Table 3) and commercialisation plans (Table 4) for submitting project proposal. The possibility of commercial exploitation of research for submitting project proposal was important only to a minority of respondents, to about 17 % of respondents who have developed concrete plan of commercialisation prior to project submission. The remaining 83 % had a vague ideas of commercialisation, out of which 35 % was just “thinking about commercialisation” while another 45% expressed intentions to commercialise research results but conceiving no concrete plans. Majority of those who has developed some kind of commercialisation strategy based their commercialisation plans on the enlarging the contract research with industry (21%) and developing business services like testing or quality control (16,7%) (Table 4). Table 4. Commercialisation plans

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Valid

N

%

Cumulative %

0 Enlarging contract research with business

49 26

40,8 21,7

40,8 62,5

Developing business services (testing, quality control, etc.) Lunching production within a firm I am working for

20

16,7

79,2

6

5,0

84,2

Launching production in strategic partnership

14

11,7

95,8

Selling patent/license

2

1,7

97,5

Launching my own company

1

,8

98,3

Something else Total

2 120

1,7 100,0

100,0

The next preferable commercialisation plan consists in launching production either with strategic partner (11.7%) or within companies researchers are working partially (5%). A few respondents wanted to sell a patent/license and launch their own company. However, almost a half of respondents (49%) have not responded to this question at all stressing, thus, that commercialisation was not really a priority for majority of respondents. In the analysis of the results of TEST program and their use we were interested in how really important was commercialisation of the results. We supposed that motivation was different among participants in the programme depending on significance to commercialize and on existence or non–existence of commercial strategy developed by participants prior to project submission. Considering the share of actually commercialised results from TEST we have also tried to find out are there any differences in the motivation depending on age, gender, level of education, professional position and type of the institution. After a regression analysis for motivation to apply to TEST as a dependent variable significant explanatory factor was only the level of education (higher the level of education – higher the motivation), while professional position, involvement in other projects, number of publications, previous engagement in different projects, and importance of commercialisation of the results were not significant.

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33

The analysis of motivation and the role of commercialisation for project submission confirm the first hypothesis (H1) that participation in the TEST programme was driven primarily by scientific interests. Participants in TEST are scientists whose main interest is performing scientific research since it determine their carrier and professional status. The ambiguous “mixed” motivation of the majority of respondents illustrates that researches wanted to combine their scientific work and possible technological application, that was quite natural from their perspective. The “hidden” motives are, from the scientists point of view highly justified since their intentions were focused on strengthening scientific activities.

4.3. Realisation of TEST Program Following the structure of the “Final report for TEST projects” determined by the MSES, the results of the TEST projects are classified in the three main groups as given in the Table 5. The research results of the nine projects (7.5 %) serve for submission of project proposal to the RAZUM programme, a follow-up phase of the TEST programme aimed at establishing a start-up company (university spin-off). 19.2 % of projects produced the feasibility studies while majority of TEST projects (72,5%) ended up with the project Final report. Final report contains description of research results or technologies developed within a project, e.g. prototypes, production processes, software, working or measuring procedures, new services, etc. However, it does not indicate either the commercial “maturity “of the research results or the stage of their commercialisation (e.g. industrial application, market exploitations, etc.) Therefore, a question about the use of the research results after project completion was asked16. Since the multiple choices were allowed, we summed up the use of the results into the three groups: scientific, commercial and “another project use” (Table 6). Majority of respondents (67%) used the results for the scientific purposes, i.e. for the continuation of their scientific projects or for participation in international projects, 39% use the results for commercial purposes and 4% use the results for new projects within HITRA programmes – Jezgra and STIRP.

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Table 5. Results of the TEST projects by the main three groups

Valid

N

%

Cumulative %

0 Submission of the project to the RAZUM programme

1 9

,8 7,5

,8 8,3

Feasibility study Final report on new technologies 1

23 87

19,2 72,5

27,5 100,0

Total

120

100,0

Commercial use of the results includes researchers’ attempts to establish start –up company by submission of project proposal to HITRA-RAZUM programme, 16

The question is put in the following way: What have happened with research results after project completion?

34

Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

commercialisation through different existing companies (e.g. Tena, CROSCO, Dukat, Hedna, Lik-Kem, TLM) or commercialisation in another way (e. g on-line education, selling the patent, etc.). Table 6. Use of project results within TEST programme Use of the research results Scientific use Commercial use Another project use

All respondents N 80 47 5

Percentage of Total =120 67 % 39 % 4%

When respondents compare achieved results with the results they expected to obtain prior to project submission, almost 70% of them are very satisfied or satisfied with the obtained results (Table 7). There is no significant difference in satisfaction with the results between the groups of respondents who have and who have not commercialised their research results. Table 7. Satisfaction with realised results considering planed results

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Not satisfied at all Not satisfied Partly satisfied Satisfied Very satisfied

N

%

2 4 30 49 35

1,7% 3,3% 25,0% 40,8% 29,2%

This outcome disapproves our Hypothesis 3 that participants who have accomplished commercial results are more satisfied with the achieved results. However, it is in compliance with the Hypothesis 1 that participation in the TEST programme was led primarily by scientific motives. Participants in the programme are scientists by vocation and achieving the results which contribute to their “core business” - scientific work - make them rather contented. Potential commercial application which was requested by the TEST programme is inherent, to a certain degree, to the all obtained results. We can suppose that this possible applicability was sufficient to justify each researcher’s participation in the programme even if the results were more scientific than technological. As analysis revealed, satisfaction with realised results is not significantly correlated with none of the independent variables such as age of respondents, number of publications or patents, type of institutions, etc. The analysis of published results generated within TEST projects shows that scientific outputs largely overwhelmed technological outputs like patents. Eleven respondents protected their research results by patents and produced altogether 21 registered patents on analysed projects (Figure 7). For comparison, scientific outputs includes 417 published works, primarily scientific papers (66%) published in foreign (48%) and Croatian journals (18%). Professional papers contribute with 28% and books with 6% to total scientific publishing (Table 8).

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35

Figure 7. The structure of published outputs and patents from projects.

Table 8. Scientific publications coming from the projects Scientific publishing results Total scientific papers 1.1. in foreign journals 1.2 in Croatian journals Total professional papers 2.1 in foreign publications 2.2. in Croatian publications Books

Publications 278 203 75 112 42 70 27

Publications (in %) 66 % 48 % 18 % 28 10 18% 6%

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Published outputs of TEST programme reflects, in essence, the general ratio between scientific and technological publishing in Croatia since Croatian scientists publish about 100 papers per one registered patent (MSES , 2006).

4.4. Benefit from Participation in TEST Programme and Satisfaction with the Results The benefit from participation in TEST program was measured by scale of 13 statements. After performing of factor analysis three main dimensions of benefits were identified (Table 10):

1. Benefits for scientific research; 2. Benefits for cooperation with industry 3. Benefits for the personal carrier.

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Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

The analysis revealed (Table 9) that researchers estimate that their main advantage of participation in the TEST programme is related to their cooperation with industry. Participation in TEST enables researchers to establish new contacts with final users/entrepreneurs and to gain additional experience in cooperation with industry. Testing of new ideas, a variable offered in the questionnaire, has not appeared as significant in scale construction but is perceived by researchers as the most significant among all the offered alternatives of benefits (mean 4.0). Table 9. Researchers’ benefits from participation on the TEST programme

Benefits for scientific research Benefits for cooperation with industry Benefits for the personal carrier Valid N (listwise)

N 116

Minimum 1,00

Maximum 5,00

Mean 3,1608

Std. Deviation ,83956

108

1,00

5,00

3,7176

,91044

102

1,00

5,00

3,0147

1,18459

98

The benefit for scientific work was a second most important benefit for researchers since TEST programme provided them with: (a) additional financial resources for scientific research, (b), new research collaborators, (c) new scientific equipment, (d), enabled them to attend scientific conferences and (e), serves a source for publishing new scientific papers. TEST programme was the least important for development of personal carrier since the participation in the TEST programme has a rather modest impact on researchers’ expert image and scientific promotion.

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Table 10. Scale of the benefits from projects Scale: Benefits Benefits for scientific research Additional financial resources for scientific research Procurement of the scientific equipment Gaining additional research collaborators Attending international conferences Publishing new scientific papers Attending conferences in Croatia Benefits for cooperation with industry Making new contacts with final users/entrepreneurs Gaining additional experience in cooperation with industry Benefits for the personal carrier Contribution to my expert image Contribution to my scientific promotion

Cronbach's Alpha .687

.768

.604

There are no significant differences in benefit from TEST concerning gender, age, number of publications, area of researach or type of institutions of researchers. However,

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37

there is weak positive correlation (Pearson Correlation .273, Sig. (2-tailed .003) between scale of “benefit for scientific research” and satisfaction with achieved results (Table 7). The participants who benefitted in scientific research were slightly more satisfied with results. Once again we might interpret this result as the indicator of the hidden motivation in extra funding for scientific research. Other interpretation might indicate that there are shortcomings in TEST programme which didn’t facilitate full commercialisation as expected.

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4.5. Social Capital and TEST The central hypotheses that we have tested in our research concerns the influence of social capital on the performance of TEST programme as a certain instrument of innovation policy in Croatia (H4). As we have stated before the role of institutions (formal and informal) was recognised as a crucial factor for explanation differences in economic growth rate and entering knowledge based economy/ society in general. Implementation and success of innovation policy as an instrument of public policy depends on government actions, i.e. formal and informal norms and rules of the government programmes as well as on sociocultural factors which shape, as Lundvall (Lundvall, 2007) stressed, how people interact and the how the institution of NIS function. The important aspect of socio-cultural factors are values, norms and trust that commonly form standard indicators of social capital in sociology. It is well known that Croatia, as all transition countries, suffers from deficit of social capital (Rimac and Štulhofer, 2004) as a lack of cooperation and networking, on the one side, and the domination of the traditional values (statism, traditionalism, anti-globalism) on the other side. In our research of social aspects of TEST as an instrument of innovation policy, we tried to identify the general value orientation and trust in institutions of the Croatian research community as well as their attitudes towards commercialisation of science. Since our sample is self selected group of scientist who successfully applied and completed technological projects (explicitly designed for commercialisation) we might expect to find in this population higher presence of values and attitudes that are more inclined to commercialisation of knowledge, entrepreneurial university and more intensive cooperation between science and industry. Also inclusion in such governmental programmes as TEST which serves as the incentive for entrepreneurship could indicate certain higher trust in institutions. Our hypothesis 4 is that the measured dimensions of social capital influence the low performance of TEST programme. The dimensions of social capital we have operationalized as: − − − −

attitudes toward commercialisation of science; attitudes toward traditional and entrepreneurial university; general value orientations; trust in institutions in Croatia.

4.5.1. Attitudes toward Science, University, Commercialisation and Value Orientations One of the hypothesis in the project considers values as a part of socio-cultural heritage of socialism as important factor that produce a long-term impact on behaviour of actors in the system, thus, it determines the social capabilities for knowledge capitalisation and transition

38

Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

to knowledge society in the long run. The dimensions from socio demographic profile such as gender, position in organisation, type of professional career, area of research were correlated with different types of values like egalitarianism, traditionalism, statism, openness and international integration, and market orientation. Two separate scales of attitudes towards the role of science and university regarding commercialisation, science–industry cooperation and academic entrepreneurship were constructed. The first scale “Attitudes toward commercialization of science” (Scale 1) was intended to measure differences in attitudes toward commercialisation of research and science-industry cooperation while the second scale “Traditional and entrepreneurial university“(Scale 2) consider the role of university with the stress on the new type of entrepreneurial university which assumes new relationship between universities, industry and government (Triple helix paradigm). The scales of attitudes toward commercialisation of science and toward traditional and entrepreneurial university were constructed after factor analysis for each of the scales (Principal component and Varimax rotation) suggested factor solutions. Reliability of scales (Cronbach’s Alpha) is shown along each scale (Scale 1 and Scale 2).

Scale 1. Attitudes toward Commercialisation Factor analysis of 13 components resulted in 5 factors solution. Since the last factor is saturated only with one component we have added this component to third factor because it concerns the quality of science. Finally, the first scale consists of four dimensions toward science commercialisation and science-industry cooperation, as follows: 1. 2. 3. 4.

Industry not interested in cooperation with science Elite science Inert and low quality science Deficit in technology transfer (infrastructure)

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Scale 1. Attitudes toward commercialisation of science Scale: Attitudes toward commercialization of science 1. Industry not interested in cooperation with science Big business doesn't recognize use of our research The number of entrepreneurs – enterprises which are interested in cooperation with scientific institutions is too small Foreign business owners are not interested in to use Croatian science and research and development keep in their countries 2. Elite science Scientists and university professors don't want commercialize scientific results and cooperate with business because the results doesn't matter in scientific career advancement. In Croatian academia dominates the culture of elite science, «Current contents» and «Wos» Government haven't started big development programs which would include business –science cooperation (technological platforms, research consortiums). 3. Inert and low quality science Scientists and university professors are often inert and don't have enough incentives for commercial projects and business cooperation

Cronbach’s Alpha .724

.544

.584

Social Capital and Innovation Policy in Croatia Business is not satisfied with the performance of Croatian research institutes and universities In Croatia there is no mobility of researches between science and business sector which doesn't enable flow of knowledge In our scientific community prevails the attitude that it is not ethical to sell scientific results and making business from science as public activity 4. Technology transfer deficit (infrastructure) There is lack of agencies – offices by research institutes and universities which would actively support commercial use of research (patenting, finding partners) Existing technology infrastructure in Croatia (technology centres, business innovation centres) is not functional

39

.625

Participants mostly agree with attitudes about the deficit of technology transfer infrastructure (Table 11). Lack of infrastructure that should help commercialization is followed by inert industry that does not initiate the cooperation with science. Coming from academia the scientists seems to think that the least problem of commercialization is in the low quality of science. Table 11. Attitudes toward commercialization of science by statistical means Attitudes toward commercialization of science Industry not interested in cooperation with science Elite science Inert and low quality science Deficit technology transfer (infrastructure)

Mean 3.8739 3.7871 3,4804 4.1134

Scale 2. Attitudes toward Traditional and Entrepreneurial University Factor analysis of 20 components suggested 2 factors solution. The first factor we named traditional university because this factor is highly sutured with attitudes stressing inappropriateness of university-industry cooperation and academic entrepreneurship. Second factor is satured with the attitudes in favour of entrepreneurial university and university industry cooperation as a source of new ideas and financial means.

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Scale 2. Attitudes toward traditional and entrepreneurial university Traditional university: The main task of universities and pubic institutes is to conduct basic research in order to enlarge the national knowledge stock Public institutes and universities should be financed exclusively from public resources Financing of public institutes and universities by business companies is harmful since it undermines scientific autonomy (“tuning” of research results) Business should not finance scientific research at public institutes and universities since it restricts scientific freedom and objectivity Commercialisation of research is not a regular activity of public institutes and universities Scientist can be a businessman only exceptionally

Cronbach’s Alpha ,721

40

Jadranka Švarc, Jasminka Lažnjak and Željka Šporer Scale 2. (Continued)

Academic entrepreneurship is not a good idea since one is allowed to establish a company and make profit by using public resources Scientific and academic institutions do not need to deal with business since another institutions should take care of it (e.g. technology transfer centres, etc.). The whole idea about science commercialisation is essentially wrong since science is not an entrepreneurial activity The idea about protection of intellectual property over research results is wrong since it prevents free knowledge flow Entrepreneurial university The main task of universities and pubic institutes is to conduct not only basic research but also applied research and development The main task of universities and pubic institutes is to conduct research with the direct practical application Public institutes and universities should be financed partly from business companies The idea of Lisbon agenda that 2/3 of investment for science should be provide by business is a good and it should be implemented in Croatia The idea of Lisbon agenda that 2/3 of investment for science should be providing by business is a good but its implementation in Croatia is not realistic All the public institutes and universities should take care about commercialisation of research results (e.g. patents and licenses). Academic entrepreneurship is useful since it enables scientist to become an entrepreneur and make of profit from his/her research Cooperation between scientific institutions/universities and business is welcome as a source of new ideas and knowledge Cooperation between scientific institutions/universities and business is welcome as a source of additional financial resources The idea about protection of intellectual property over research results is good since it enables scientists to make profit from their research

,595

Table 12. Traditional and entrepreneurial university scale by statistical means

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Traditional university Entrepreneurial university

Mean 2.5766 3. 8623

In the attitudes toward university – industry cooperation participants in TEST program are as expected much more in favour of entrepreneurial university (Table 12). ANOVA (analysis of variance) of differences among groups and value orientations showed that our sample represents a relatively homogenous population that shares common values and norms. All our respondents are generally in favour of commercialisation of science, the result we have expected having in mind our sample of self selected researchers who applied for “commercial” technological projects. Nevertheless, since our analysis of motivation to apply for TEST program tried to “uncover” other motivation beneath declarative “commercial orientation” we looked for other factors that might be related to value systems characteristic for scientists. There were no significant differences regarding the type of institutions where participants are employed although we expected that researchers from institutes might be more in favour

Social Capital and Innovation Policy in Croatia

41

of commercialisation and cooperation with business than scientists from the universities. Also satisfaction with results of TEST programme was not significant variable. Some differences that were significant are backing up previous results. Researchers in the area of engineering and biotechnology agree more with the deficit of technology transfer infrastructure. Since in this area of research commercialization is more developed than in others it is expected result. The group with detailed plan of commercialisation is more in favour of entrepreneurial university and more critical toward traditional university. We have also found in the same scale (traditional and entrepreneurial university) statistically significant difference between group who commercialize the results of their projects within TEST programs and group who used results for scientific use (further scientific projects). “Pro commercial” group is more in favour of entrepreneurial university and more critical toward traditional one and vice versa.

Scale 3. General value orientations Scale of the general value systems was constructed after value analysis ran on 37 components suggested four factor solutions. We have merged first and the fourth component in the first scale – traditionalism and globalism. Second scale is commercialisation of knowledge ad third one is statism.

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Scale 3. General value orientations Scale: Value orientation

Cronbach's Alpha

Scale: traditionalism and anti globalism Peasant is the most reliable support of our nation Worker is the carrier of our economic development Croatia should restrict import products to protect domestic market Foreigners should not be allowed to buy real-estate in Croatia Big international companies do more and more harm to local Croatian companies International organizations take to much authority from Croatian government Growing exposure to foreign films and music is harmful for national culture

.812

Scale: commercialization of knowledge Knowledge should be commercialized- to free human creative potentials Knowledge should be commercialized- to accelerate Croatian development Knowledge should be commercialized- to enable competitiveness of Croatian economy

.887

Scale: statism State should have a leading role in overall financing science and research State should have a leading role in fostering entrepreneurship Government should stimulate a partnership between research and industry Government should define the role of science in industrial and social development Government should solve problems in management and organization of science

.632

All respondents have relatively high score on orientations of traditionalism and antiglobalism but also they are highly in favour of statism in their value orientation which means that they still think that government needs to regulate everything (Table 13).

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Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

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Table 13. Value orientations by statistical means Value orientations

Mean

N

Traditionalism and anti globalism

3,0666

116

Commercialization of knowledge

3,9479

118

Statism

4,3103

116

High positive score on orientation toward commercialisation seem to be contradictive to that. There are to possible interpretation of this contradiction. Respondents don’t see the connections between globalization (opening of market) and more opportunity to commercialize knowledge. In fact they are looking for protection for themselves by advocating closed market. They are more inclined toward protectionist role of government that would protect them since the market in that sense has never developed .The positive attitudes toward strong role of the state in their value systems are the consequence of domination of statism in socialism which protected them from market competition. Government in previous regime “protected” scientists by giving certain privileged status to science but also kept them in isolation from market mechanisms and influence of industry. Here we must mention that in former socialistic self management system (which was rather specific for ex-Yugoslavia) a specific science –industry cooperation existed but regulated and controlled by the government. Therefore, it is not commercialisation of knowledge in contemporary terms. Regardless the principles of cooperation, existing science-industry links and networks still relies on the old alliances that were established in former regime. Since today there is no market for their research and from industry destroyed by privatization there is no cooperation, the only way to keep science alive is by protective role of the state and by restrictions – closed market. Other explanation is not contradiction but supplement to the first. The fact is that there are no structural improvements in changes and adaptation of old institutions toward new institutional structures in society in general and in science system particular. For example, there is lack of legal instruments and agencies to protect innovations in science which would strongly support market philosophy in science. Instead of innovative culture which dominates in knowledge society for our scientific research the dominant culture remains the “survival culture” where protectionist role of government is critical (there is no trust in legal system or market). This interpretation supports our hypothesis of important relationship between deficit of social capital and low commercialisation rate in science.

4.5.2. Trust in institutions Trust in formal institutions is an important indicator of social capital. It indicates the satisfaction of individuals with the socio-political institutions in an a given society which is closely related to the readiness of individuals to use the institutions for meeting their needs. Otherwise, they will try to avoid the institutions and “rules of the game” implicit to the given socio-political institutions and try to satisfy their needs in another, very probably, in a much more informal way. Low trust in institution should be an important indicator to the government that something is “rotten” in the system and should be changed.

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43

The analysis reveals, quite expectedly, that scientist have the greatest trust in science and education systems while the least trust is in judiciary system and political parties (Table 14). Table 14. Trust in institutions Not at all Science

Not very much

Medium

Quite a lot

A great deal

Mean

Stand. Dev.

6

25,6

50,4

17,9

3,8

0,801

Education

0,8

7,6

39,8

42,4

9,3

3,52

0,803

Army

6

11,2

50

25,9

6,9

3,16

0,932

Health system

2,6

18,8

42,7

33,3

2,6

3,15

0,843

Police

4,3

25,9

47,4

19

3,4

2,91

0,87

Government Public administration

6,9

26,7

44

19

3,4

2,85

0,926

16,4

42,2

35,3

4,3

1,7

2,33

0,863

Judiciary system

35,9

39,3

21,4

1,7

1,7

1,94

0,893

Political parties

36,8

42,7

18,8

0,9

0,9

1,86

0,808

Political parties are a phenomenon for themselves since almost 80% of respondents do not have trust at all or not very much. Trust in army, health system, police and government is about “medium”. If we take that higher trusts is determined by 50% of respondents belonging to the categories “quite a lot” and “a great deal” than only science and education system are worth of trust while all others are not. As previous research revealed, a similar low trust in institution is a characteristic for the majority of citizens in Croatia. The earlier investigation of social capital in Croatia (Sekulić and Šporer, 2006) showed that Croatian citizens shares the same level of trust as our respondent in judiciary system (mean 2,19:1,94), government (mean 2,16:2,85), police (mean 2,5:2,91) and political parties (mean 1,85:1.86) However, differently from scientists, the citizens of Croatia have the highest trust in army and police as well as in church (trust in church was not measured in this research).

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CONCLUSIONS Research presented in this paper is as a part of wider project on social evaluation of innovation policy, where we tried to explore how certain dimensions of social capital are correlated with the implementation of TEST programme as an instrument of innovation policy. TEST program as part of the first innovation policy in Croatia have raised growing debate about its role and challenges despite lacking standard performing evaluation of the programme that could justify its usefulness and efficacy. Driven by such lack of standard evaluation a social evaluation of the TEST programme has been undertaken within a separate scientific project. It should have explored how some aspects of informal institutions, understood in a broad sense of socio-cultural factors including social capital, influence implementation of TEST as an example of the “formal” innovation policy measure.

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44

Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

Dimensions of social capital like values and attitudes were not a subject of standard evaluations of innovation policies despite the growing recognition of socio-cultural embeddedness of national innovation capacities and innovation systems (Lundvall, 2007; Furman at al, 2002; Freeman, 2002). Besides, it should have a strong learning and strategic – orientated function since it help to identify the bottlenecks, institutional or social obstacles to successful implication of the innovation policy and provides the direction for its improvements. We started with main hypothesis that motivation for submission project proposal, realisation of the project, and satisfaction with the achieved results within the TEST projects are related to, apart from set of variables of individual and scientific characteristics of the participants, also to social capital. Social capital was defined as system of values and attitudes which regulate individual behaviour toward TEST programme. Social capital was operationalized thorough the respondents’ general value orientations, trust in institutions, as well as through their attitudes toward commercialisation of science and traditional/entrepreneurial university. Hypothesis 1 (H1): Application for TEST programme was lead by scientific motivation of the participants because they are primarily scientists and performing scientific research is their main professional activity. The analysis of motivation to apply to TEST project has confirmed our first hypothesis. Analysis of “additional motivation” of respondents who applied for TEST programme having commercialization plans and who highly ranked the importance of commercialization indicates that participants in the programme preferred combination of scientific research with its possible commercialization. TEST programme, due to its similarity in application procedure with scientific projects typical for science system and eligibility only for applicants affiliated with research institutions, seemed to be recognized mainly by scientists as a right opportunity to provide additional funding and equipment which is regularly insufficient in academia. The involvement of the innovators from the business sphere was performed mainly through the provision of the initial idea of the project. It stresses, therefore, the importance of inter-sectoral networks between scientists and entrepreneurs. Hypothesis 2 (H2): Realisation of TEST projects has accomplished primarily scientific results and not commercial results. Therefore, partial success of TEST programme can be observed as the change of scientific community’s perception of the role of the science and commercialization. The analysis of the results of projects within TEST programme confirms our second hypothesis. Realisation of the TEST program is one simple and straight forward indicator of the performance of the innovation policy measure and its functionality when implemented in society. All our respondents successfully completed their projects and the outputs have formally satisfied requirements of the programme. Nevertheless, majority of them used the results of project for continuation of scientific research projects (almost 70% of all the respondents). The outputs of projects are mostly publications and only a relatively small number of them are patents (5%). However, it should not be neglected that almost 40% of all the respondents used the results also for commercial purposes which could serve as an argument of relatively good performance of TEST. Insight in the structure of the values hold by participants in TEST programme might back up second part of the same hypothesis. High scores on attitudes toward commercialization of science and entrepreneurial university proves that at least one part of academia (although not

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Social Capital and Innovation Policy in Croatia

45

insignificant part) is aware of the necessity for traditional science to change and turn closer to cooperation with industry in order to survive unavoidable international competition. Hypothesis 3 (H3): Participants who have accomplished commercial results within their projects are more satisfied with achieved results. Third hypothesis was not confirmed because there is no significant difference in satisfaction with the results between the groups of respondents who have and who have not used their research results for further commercialisation. Majority of participants are satisfied with the results that were accomplished within project realisation. Taking into account the findings about motivation of the participants, rejection of the third hypothesis seems to logically follow these results. If the motivation to submit “technological project” was not primarily commercially driven, or it was driven by “mixed” motivations (as it was a case for more than 60% of all respondents), the accomplishment of the scientific results has met the expectations of the respondents. As stressed before, all the formal requirements determined by the Call for project proposal were fulfilled contributing to the personal satisfaction of participants. Hypothesis 4 (H4) – The measured dimension of social capital (trust in institutions, value orientations, attitudes towards science and commercialisation) influence low performance of the TEST programme. Our fourth hypothesis is confirmed due to structure of values that we have found in our sample. Significant presence of traditional value system (statism, antiglobalism and egalitarianism) among academia as well as in the society in general affected the instruments of innovation policy not to realise intended results like cooperation of science and industry and commercialisation of research through new technologies. However, they also expressed high appreciation for the commercial application of knowledge in order to accelerate Croatian development and competitiveness of the economy. Although their values might look like eclectical mixture of traditionalism looking for protection of the old privileged science and embracing, at the same time, new role of science in building knowledge based society, it clearly points to the social capital as critical variable in implementation of innovation policy. We can conclude that the full commercialization of projects within TEST programme didn’t come through due social capital deficit, lack of social and business cooperation, lack of networking or lack of what in theory of innovation system is called knowledge flow between sectors. In order to really commercialize the innovative ideas government needs, apart from establishing formal institutions (e.g. interface institutions like technology parks), to foster socio-cultural norms and system of values which prefer productive use of science through university-industry links and other forms of research application. The change in value system and behaviour is needed not only in scientific community, but primarily in the business sector that showed warningly lack of interest for cooperation with researchers. To find a strategic partner from business was one the main barriers recognised by scientists for researcher commercialisation. However, higher level of social capital in terms of trust in institutions (e.g. government) and values in favour of individualism, risk taking and entrepreneurship are needed. The petrified system of values which dominates the most educated part of the Croatian society, “the carriers of the new ideas” as we have named them, illustrates that Croatian society suffers from the low social capability for institutional change. Informal social institutions i.e. social capital consisted of norms, values and trust have not changed much since period of socialism. The low social capability for institutional change presents,

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Jadranka Švarc, Jasminka Lažnjak and Željka Šporer

therefore, the main obstacle, not only to the better performance of innovation policy but also to faster economy development and social progress in general. In order to identify the factors that would accelerate social capability for institutional change the further investigation focused on informal institutions such as traditional culture, civil society, personal networks, clientelism, corruption and a wide variety of legislative, judicial, and bureaucratic norms will be needed.

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LITERATURE Abramovitz, M. (1986.), Catching up, forging ahead and falling behind, Journal of Economic History, 46, 385-406. Akcomak, I. S., and Ter Weel, B. (2006), Social capital, innovation and growth: Evidence from Europe, Working paper series #2006-040, UNU-MERIT, Maastricht University. Albert, M. and Laberge,S. (2007), The Legitimation and Dissemination Processes of the Innovation System Approach: The Case of the Canadian and Québec Science and Technology Policy, Science, Technology and Human Values, 32; 221-249 (available on line: http://sth.sagepub.com/cgi/content/abstract/32/2/221). Coleman, J.S. (1988), Social Capital in the Creation of Human Capital, American Journal of Sociology Supplement 94 (1988): S95-S120. Etzkowitz, H. (2003), Learning from transition: The Triple Helix as an innovation system, in: Švarc, J., Lažnjak, J., Šporer, Ž., Polšek, D. (eds.), Transition Countries in the Knowledge Society: Socioeconomic Analysis. Institute of Social Sciences, “Ivo Pilar”, Zagreb, str.39-61. European commison (2004), TrendChart - Innovation Policy in Europe. EC, DG-Entreprise and Industry, Brussels European commission (2007), Croatia 2007 - Progress Report, Commission Staff Working Document, SEC (2007) 1431, Brussels. Fountain, J.E. (1998), Social capital: its relationship to innovation in science and technology, Science and public Policy, No. 2, April 1998, pp. 103-115. Freeman, C. (1987) Technology, policy and economic performance: Lessons from Japan. Pinter Publishers, London. Freeman, C. (1995), The “National System of Innovation” in historical perspective, Cambridge Journal of Economics, 19, 5-24. Freeman, C. (2002.), Continental, national and sub-national innovation systems Complementary and economic growth, Research Policy 32, 191-211. Furman, J.L., Porter, M.E., Stern S., (2002.), The determinants of national innovative capacity, Research Policy 31, 899-933. Gibbons, M. at al (ed.), (1994), New Production of knowledge: Dynamics of Science and Research in Contemporary Societies, SAGE Publications Ltd. pp. 171. Helmke, G., Levitsky, S.(2004), Informal Institutions and Comparative Politics: A Research Agenda, Perspectives on Politics, December 2004, Vol. 2/No.4, 725-740. Knack, S. (2002) ‘Social Capital and the Quality of Government: Evidence from the States’, American Journal of Political Science 46 (4): 772–785.

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Knack, S., Keefer, P. (1997), Does social capital have an economic payoff? A cross-country investigation, The Quaterly jouranal of eceonomci, 112 (4), November, 1997, 1251 – 1288 Kuhlmann, S. (2003), Evaluation as a source of „strategic intelligence“, in: Shapira. P. and Kuhlmann, S. (eds.), Learning from science and technology policy evaluation, Edward Elgar Publishing Limited, UK i USA, str. 352-381. Landry, R., Amara, N., Lamari, M. (2000), Does social capital determine innovation? To what extent?, Paper prepared for the 4th international conference on technology policy and innovation, Curitiba, Brasil, August 28-31, 2000. Lučin, P. (2007) Strategic framework for science development, The Second Congress of Croatian Scientists from the Homeland and Abroad, Split, 7 -10 May 2007 (in Croatian). Lundvall, B.A. (1992), National system of innovations, towards theory of innovation and interactive learning”, Pinter Publishers, London. Lundvall. B.A. (2007), National Innovation System: Analytical Focusing Device and Policy Learning Tool, Working paper, R2007-004, Swedish Institute for Growth Policy Studies, Östersund, Sweden. Lundvall, B.A, Borras, S., (1997), The globalizing learning economy: Implications for innovation policy. Report based on contributions from seven projects under TSER Program. DG XII, Commission of the European Union. MSES (2002), Croatian Program for Innovative Technological Development (HITRA): Collected Programmatic Papers, Ministry of Science, and Technology of the Republic of Croatia (MSES), Zagreb MSES (2006), Science and technology policy of the Republic of Croatia 2006-2010, Ministry of Science, and Technology of the Republic of Croatia (MSES), Zagreb. Mihaylova, D. (2004.), Social capital research in Central and Eastern Europe and the Former Soviet Union: An annotated bibliography, Centre for Policy Studies, Budapest, Hungary. Mytelka, L.K., Smith, K. ( 2002), Policy Learning and Innovation Theory: An Interactive and Co-evolving Process. Research Policy 31, 1567-1479. Nelson, R. (ed.) (1993), National Innovation Systems. A Comparative Analysis, Oxford University Press, New York/Oxford. Nelson, R.R. and Winter S.G. (1982), An evolutionary theory of economic change, The Belknap Press of Harvard University Press, str. 437. Nielsen, K .(2003), Social capital and systemic competitiveness, in: Dolfsma, W. and Dannreuther, C. (eds), Globalisation, Social Capital, and Inequality: Contested Concepts, Contested Experiences, Northampton, Mass.: Edward Elgar. 2003, p. 33 – 52. OECD (1992), Technology and economy. The key relationships, (TEP Report) OECD, Paris. OECD-EUROSTAT, 1997. Oslo Manual. Proposed Guidelines for Collecting and Interpreting Technological Innovation Data, 2nd ed. OECD, Paris. OECD,(2001), The Well-being of Nations: The role of human and social capital, OECD , Paris. Polanyi, K. (1944), The Great Transformation: The Economic and Social Origins of Our Time. Boston: Beacon Press. Pro-Inno-Europe (2007), European Innovation Scoreboard 2007, Comparative analysis of innovation performance, EC, Brussels. Parts, E. (2004), The role of social capital in economic development of transition countries, Ekonomika, 68, 1-14.

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Putnam, R. (1993) Making Democracy Work: Civic Traditions in Modern Italy. Princeton: Princeton University Press. Rimac, I., Štulhofer, A. (2004), Socio-cultural values, economic development and political stability as correlates of trust in the European Union, In: Ott, K. (ed.), Croatian accession to the European Union, Institutional challenges, Institute of Public Finance, Zagreb, 301327. Risović, S. (2008), Application of the TEST programme in business, paper presented at the conference: Innovation society and technological development, CROSS and the Croatian chamber of commerce, Zagreb April 24, 2008 (in Croatian). Ritzen, J., Easterly, W., Woolcock, M. (2000), On “Good” Politicians and “Bad” Policies: Social Cohesion, Institutions and Growth, Working Paper, No. 2435. The World Bank Development Research Group. Schienstock, G. (2007), From path dependency to path creation; Finland on its way to the knowledge based economy, Current Sociology, Vol. 55 819, 92-109. Smits, R., Kuhlmann, S. (2004.), The rise of systemic instruments in innovation policy, Int. J. Foresight and Innovation Policy, Vo.1, Nos. 172, pp. 4-32. Sekulić, D., Šporer, Z. (2006) Trust in institutions of the citizens of Croatia, in the book: (ed. Horvat V.) Which EU do we want? In search for the reasons of democratic deficits, Henrich Boll Stiftung, Zagreb 2006 (in Croatian). Švarc, J. (2004.), Innovation policy in Croatia: the first 10 years, Proceedings of the 65th Anniversary Conference of the Institute of Economics, Institute of Economics, Zagreb, November 18-19, 2004, pp. 379-402. Švarc, J., Račić, D. (2007.), The role of tertiary education in research and innovation, Chapter five, in: Dujić, Ž. i Lučin, P. (ed.), OECD Thematic review of tertiary education: Country background report for Croatia, MZOS, April 2007, p.54-69. Tavits, M. (2006), Making democracy work more? Exploring the linkage between social capital and government performance, Political Research Quarterly 2006; 59; 211-225. Taatila, V.P., Suomala , J. Siltala, R., Keskinen.S (,2006), Framework to study the social innovation networks, European Journal of Innovation Management, Vol. 9 No. 3, pp. 312-326. Zak, P. J., and S. Knack (2001): “Trust and Growth,” Economic Journal, 111(470), 295–321.

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Chapter 3

EMPOWERMENT ORIENTATION AND SOCIAL CAPITAL AS A BASIS FOR OCCUPATIONAL WELL-BEING IN SCHOOL COMMUNITIES – A RESEARCH AND DEVELOPMENT PROJECT IN FINLAND Terhi Saaranen and Kerttu Tossavainen University of Kuopio, Department of Nursing Science, Kuopio, Finland

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ABSTRACT Background of the study: This paper describes a research and development project of school staff members and occupational health nurses titled Promotion of school community staff's occupational well-being in co-operation with occupational health nurses 2001-2004. The project was part of the extensive European Network of Health Promotion Schools (ENHPS) programme implemented in eastern Finland. The research and development project aimed at promoting school staff's occupational well-being through activities designed to maintain the ability to work. The project was realised in 12 comprehensive schools in co-operation with the schools' respective occupational health nurses. Aims of the study: One aim was to improve staff health and well-being in school communities from an empowerment and community-based (cf. social capital) perspective and report on the outcomes of the implementation phase of the project. The study also sought to develop a theoretical basis for promoting school staff's occupational well-being. Data and method: The investigation, conducted in 2002-2004, implemented methodological and data triangulation. Results: In the opinion of school staffs and occupational health nurses, the most significant resource factors in occupational well-being at school are the community's working culture, leisure activities and self-care. A community's school culture does not emerge spontaneously; school communities must consciously develop a more conversational culture that appreciates each employee with his or her own characteristics. The schools' community-based working culture can be concretely affected by e.g. staff meetings and discussions, which, based on the study, required some development in some

50

Terhi Saaranen and Kerttu Tossavainen of the schools. For example, experiences gained from teaching staff's gatherings and meetings enable social support between employees, thereby affecting school staff's resource factors and empowerment. This was pursued also in the present research and development project, which aimed to promote occupational well-being particularly from a community-based point of view. This can be associated with the concept of social capital, which has been seen to have broad impacts related to well-being in the public. As a generalisation, it can be said that, in school communities, only activity that is based on mutual trust between employees, open communication, active interaction and participation and learning can increase social capital and thus promote the well-being and health of the working community. Conclusion and implications: The results of this study produced evidence-based information for occupational health nurses and school staff on how occupational wellbeing was promoted from an empowerment and community-based (cf. social capital) perspective in this project. The results can also benefit occupational health nurses, school staff, occupational health service administration, school administration, researchers and educators in developing measures for promoting occupational well-being.

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INTRODUCTION This research and development project (Promotion of school community staff’s occupational well-being in co-operation with occupational health nurses 2001-2004) was part of the broader the European Network of Health Promoting Schools (ENHPS) programme in Finland (cf. Rasmussen and Rivett, 2000; Turunen, Tossavainen, Jakonen, Salomäki, and Vertio, 2000; Tossavainen, Turunen, Jakonen, and Vertio, 2004a; Tossavainen, Turunen, Jakonen, Tupala, and Vertio, 2004b). The ENHPS programme is an international programme for the promotion of school health initiated in 1991 by the WHO’s European regional office, the European Council and the European Commission, to which more than 40 countries belong (Rasmussen and Rivett, 2000). During 2001-2004 the project focused particularly on the occupational well-being of school staff and development of co-operation and partnership between schools and occupational health nurses and among occupational health nurses from a community-based, broad point of view (cf. social capital). The ENHPS programme changed its name in 2007; it is now the School for Health in Europe (SHE). The aim of the SHE is to continue to act as the European platform for school health promotion (Schools for Health in Europe, 2008). A total of 12 school communities from eastern Finland, accompanied by their occupational health nurses, participated in this research and development project on the occupational well-being of school staff in 2001-2004. The development activity was carried out as participatory action study by school staff, occupational health nurses and researchers. The activity was based on a positive resource-focused and community-based (cf. social capital) definition of health promotion (Jakarta Declaration, 1997; Bangkok Charter, 2005) in the school community. The occupational health nurses were particularly important collaborators with the school staff in developing their occupational well-being from the viewpoints of the individual, the working community, professional competence and working conditions by implementing diverse activities to maintain the ability to work. The occupational health nurses developed their work to better meet the needs of the school staff by educating themselves in community-based health promotion (cf. Bangkok Charter, 2005). Improving the network of co-operation between health centre occupational health nurses

Empowerment Orientation and Social Capital as a Basis for Occupational Well-Being… 51

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working alone and sharing each others’ expertise were seen as important factors in promoting nurses' professional skills and self-reflection (cf. Poskiparta, 1997). Planning, carrying out and evaluating actions were connected to each other as an integrated process throughout this research and development project. The research and development project was initiated with training of occupational health nurses in eastern Finland (Phase I; November 2001-March 2002) in co-operation with the Department of Nursing Science at the University of Kuopio (Figure 1). The aim was to deepen occupational health nurses' knowledge of community-based and holistic promotion of occupational wellbeing through activities that maintain the ability to work in working communities. The promotion of occupational well-being by means of activities that maintain the ability to work consisted of comprehensive development that included maintenance, prevention and promotion in four different sectors. (Saaranen, Tossavainen, Turunen, and Naumanen, 2007a). A total of 22 occupational health nurses from 14 municipalities in eastern Finland took part in the training. Out of the 22 occupational health nurses, 12 nurses and their 12 comprehensive school communities agreed to take part in Phase II of the project (April 2002 – December 2004), i.e. promotion of school community staff’s occupational well-being in cooperation with occupational health nurses. These 12 occupational health nurses and their school communities (management, teachers and other staff representatives) formed their own research and development project (Promotion of school community staff’s occupational wellbeing in co-operation with occupational health nurses), which aimed at promoting school community staff’s occupational well-being by means of activities that maintain the ability to work.

Figure 1. Phases I and II of the research and development project in 2001-204 (Saaranen, 2006).

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Terhi Saaranen and Kerttu Tossavainen

The staff of each school and their occupational health nurse co-operatively planned their own school project based on the results of the planning and beginning phase and the school staff’s and occupational health nurse’s expertise, views and ideas. The planning and beginning phase resulted in a written plan of action concerning development needs and activities required to maintain the ability to work, complete with schedules for 2002-2004. One occupational health nurse took care of the staff of one school (Phase II). The schoolbased subprojects were thus formed under the overall development project, in which the particular school’s staff and occupational health nurse participated together with the researcher. According to the standard Finnish procedure, all the occupational nurses participating in the project also had other workplaces to attend to. One occupational health nurse working at a Finnish public health centre is, on average, responsible for approximately 1100 clients (Räsänen, 2002). There were altogether 271 staff members working at the schools (n = 12) at the beginning of Phase II of the research and development project in 2002. At the end of the project in the autumn of 2004 the number of staff members was 320. The school staff was comprised of principals / school directors, subject teachers, primary school teachers, school assistants, school nurses, kitchen staff, cleaning staff and persons working with similar occupational titles. The increase in the total number of staff from 2002 to 2004 arises from organisational changes, in other words, two schools that started in the project in 2002 expanded into a larger school community during the project. The inclusion of all the staff members of the participating schools (n = 12) in the beginning and final phase surveys was justified, as the present study was an action study in which it was crucial to have everyone participate in the research and development activity.

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EMPOWERMENT ORIENTATION AND SOCIAL CAPITAL AS A BASIS FOR PROMOTION OF OCCUPATIONAL WELL-BEING Occupational well-being can be examined from the viewpoint of either the individual or the working community (Nakari, 2003). In this research and development project the theoretical base for examining the school staff’s occupational well-being is empowerment orientation; empowerment is seen as both a social and a personal process for the school staff, which means that efficacy and resources cannot be directly given to another individual (Siitonen and Robinson, 1998; see also Bell and Gilbert, 1994, 1996; Rodwell, 1996; Ritchie, Parry, Gnich, and Platt, 2004). The health and well-being of school staff has generally been approached more from the angle of work exhaustion and workload factors (e.g. Viinamäki, 1997; Chan, Lai, Ko, and Boye, 2000; Chan, 2003), rather than by considering empowerment and resource factors (e.g. Edwards, Green, and Lyons, 2002; Siitonen, Repola, and Robinson, 2002). With resources we mean here the factors that reduce the number of straining situations and the experiencing of workload by producing more effective methods of management. Job management includes, among other things, the employee’s possibilities of affecting working conditions, the content of the job, possibilities of taking part in decision-making regarding their own work and the diversity of work (cf. Karasek and Theorell, 1990). Reasonable workload is a positive and inevitable part of occupational well-being. Overly long-lasting or intensive underload or

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Empowerment Orientation and Social Capital as a Basis for Occupational Well-Being… 53 overload is, on the other hand, harmful workload (Mäkinen, 1998). Examples of workload factors may be overloading with work, time pressures at work and role conflicts (cf. Karasek and Theorell, 1990). Empowerment is based on self-interest and an individual's own abilities, which enable him or her to make desired choices (cf. Ball, 1993; Rodwell, 1996). The conditions of the working environment are significant in making the empowerment process successful, and for this reason making meaningful choices and empowerment in this way may be more likely in one particular environment than in another (Ball, 1993; Siitonen and Robinson, 1998). Edwards et al. (2002) have investigated the factors affecting teachers’ personal empowerment and efficacy; one area of interest was school culture, which the principals can affect by promoting a working atmosphere in which the teachers feel safe and are able to work co-operatively and professionally. According to Grimmet (1996a), if teachers lack a supporting and challenging working community, they can quickly become exhausted by stress stemming from e.g. renewal of schoolwork and curricula. The challenge is, therefore, to try to create a school community and environment that enables empowerment and where individuals’ and the community’s resource and workload factors are suitably balanced. Theoretical discussion affecting the creation of well-being and empowerment has also brought up the concept of social capital, which has been seen to have a wide impact on the politics of well-being in the public (e.g. Putnam, 1993; Campbell, 2001; Hyyppä and Mäki, 2001a, b, 2003; Eng, Rimm, Fitzmaurice, and Kawachi, 2002; Hyyppä, Mäki, Impivaara, and Aromaa, 2006, 2007; Poortinga 2006). The concept of social capital is multidimensional and can be approached in several ways. For example, Bourdieu's (1986) and Putnam's (1993) views on social capital differ considerably. Bourdieu’s view on social capital comprises support networks whose origin and availability are defined by class background, and they also define belonging to a class. Putnam’s (1993) definition is based more on the properties of the community. He combines social capital with particular dimensions of social structure, such as social networks, norms and trust, which promote interaction between the network members and thus boost the realisation of goals or economical activity of the individuals. In this study social capital is considered on the basis of the properties of the community (cf. Putnam, 1993). As a basic principle it can be considered that school community networks can create social capital, but networking as such is not a guarantee of an increase in social capital and development of the school community. Poortinga (2006) has also found out his study that social capital does not automatically lead to better health. The benefits of social capital seem to be generated through interaction between individuals and their social environment, which fits the conceptualisation of social capital as a social resource (Poortinga, 2006). Thus, social capital is based on the spirit of solidarity that comes from networks of interaction between people under certain conditions (cf. Putnam, 1993). As a generalisation, it can be said that, in school communities, only activity that is based on mutual trust between employees, open communication, active interaction and participation and learning can increase social capital and thus promote the well-being and health of the working community. Social capital has also been criticised. In other words, a failure in co-operation may give rise to communities and networks that are isolated (e.g. criminal gangs) or separated (e.g. selection of places of education based on social class and parents’ will) and thereby work against the benefit of the society (Portes and Landolt, 1996; see also Ball, 1993; Thrupp, 1995; Campbell, 2001). Therefore, the reasons behind isolation and separation of

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Terhi Saaranen and Kerttu Tossavainen

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communities and networks must also be considered (cf. Ball, 1993; Thrupp, 1995) and the negative effects of social capital need to be studied and theorise, too (Campbell, 2001). Figure 2 was created on the basis of previous research information by applying the factors affecting school staff’s occupational well-being. School staff’s occupational wellbeing can be studied as interaction between resource and workload factors, in which successful feeling of community, i.e. social capital, has a positive effect. Correspondingly, if a feeling of community is not achieved between school community employees, this may become a workload factor. When an adequate balance exists between the resource and workload factors, which are affected by the employees’ health and resources, the functionality of the working community and organisation, professional competence and work and working conditions, empowerment is enabled and occupational well-being can be reached at both the individual and community levels. This thinking is in accordance with the health promotion declarations and strategies of the WHO (Jakarta Declaration, 1997; Kickbush, 2003; Bangkok Charter, 2005).

Figure 2. Factors affecting a school community staff’s occupational well-being based on previous literature and research information (applying e.g. Mäkinen, 1998; Peltomäki et al., 2002b; Siitonen et al., 2002; Hyyppä and Mäki, 2003).

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Empowerment Orientation and Social Capital as a Basis for Occupational Well-Being… 55 Procedures that support individuals’ and communities’ well-being are needed in order to develop school community staff’s occupational well-being (Siitonen et al., 2002). The activities needed to maintain the ability to work can therefore be approached from either an individual or a community-based point of view. The individual-based interpretation highlights the employee’s own responsibility for their health, professional competence and their entire occupational well-being, where the aim of the activities that maintain the ability to work is to improve and support the employee’s occupational well-being both at work and during free time (cf. lifelong learning: see Sarala and Sarala, 1996). The community-based activities that maintain the ability to work emphasise the promotion of a community-based school culture that emerges from community members’ culture-related trust, open communication, interaction, participation and learning (cf. Siitonen et al., 2002). The community-based interpretation takes into consideration the school community and the continuous change occurring in its structures, so that both the employee as an individual and the entire organisation as a whole must adjust and learn in order for the school community to remain functional and competitive. This results in a learning organisation (Sarala and Sarala, 1996; Hayes, Christie, Mills, and Lingard, 2004; Tossavainen, 2004), where learning takes place when learning by individuals and teams can be combined. One successful trait in a learning organisation is reliable and co-operative psychosocial work conditions: employees are committed and receive support in taking initiatives and risks; school functions have clear goals and school management and staff are ready for continuous learning (cf. Silins and Mulford, 2002). The school management has a particularly significant position, as a skilful school community leader enables the creation of resources for both individuals and the entire working community and in this way also the development of occupational well-being (cf. Grimmet, 1996a, b; Edwards et al., 2002; Hayes et al., 2004). A skilful leader is also able to utilise other support networks and service systems (e.g. occupational health care) when needed, if there is not enough competence and resources for the development of occupational well-being within the school community itself. Clientoriented work in health promotion thus highlights the partnership between specialists in different fields, individuals and communities, and also emphasises the strengthening of resources (cf. Courtney, Ballard, Fauver, Gariota, and Holland, 1996; Whitehead, 2001). The main responsibility of the activities that maintain the ability to work lies, however, with the school communities, but the role of occupational health care is significant in initiating, carrying out and evaluating these activities at workplaces (Peltomäki et al., 2002a; Peurala and Räsänen, 2002). In this research and development, individual and community-based activities were used in developing occupational well-being in school communities. Development in school communities was targeted at enhancing working conditions (for example; physical working environments; physical, biological and chemical factors and safety at work; working postures and equipment) and the functionality of the working community and organisation (for example: work management and organisation, leadership, social support, information). A further aim was to develop individuals' health and resources and work (for example; individuals' health and resources and the factors affecting them, such as work guidance and rehabilitation and the mental and physical workload) and promote the staff's professional competence (for example: promotion of professional competence by education). (Saaranen et al., 2007a).

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AIMS OF THE STUDY The aim of this study in the planning and beginning phases of the above-mentioned project was to describe school staff members’ occupational well-being and activities aimed at maintaining their ability to work as evaluated by school staff and occupational health nurses. A further aim was to report on the outcomes of the implementation phase of the project. The study also sought to develop a theoretical basis for promoting school staff's occupational well-being: this study empirically examined the functionality and structure of the theoretical Content Model for the Promotion of School Community Staff’s Occupational Well-being in explaining school staff’s well-being at work.

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DATA AND METHOD The investigation, conducted in 2002-2004, implemented methodological and data triangulation. In the planning phase of the project in the spring of 2002, group interviews of school staff members (11 groups; n = 66) and telephone interviews of occupational health nurses (n = 12) were employed to collect the informants' evaluations of their occupational well-being and activities aimed at maintaining the ability to work. The data were analysed with inductive content analysis. The beginning phase of the project in the autumn of 2002 involved planning and developing the implementation in schools. The Well-being at your work index questionnaire directed to school staff (n = 211) was used to examine school staff members' occupational well-being and design activities that maintain their ability to work (Saaranen, Tossavainen, Turunen, and Naumanen, 2006). The data were analysed with statistical methods (descriptive statistics, factor analysis, sum variables of factors, χ2 test, Mann-Whitney and Kruskal-Wallis tests, kappa coefficient, percentage of agreement, Cronbach’s alpha coefficients) and a structural equation model. Possible changes in occupational well-being and the existing activities that maintain the ability to work were investigated during the implementation phase. The data were acquired using the Well-being at your work index questionnaire in 2002 and 2004 (Saaranen et al., 2007a). The same 141 persons took part in both surveys. The data were analysed with statistical methods (descriptive statistics, sum variables of factors, Wilcoxon test, MannWhitney and Kruskal-Wallis tests and Cronbach’s alpha coefficients). A structural equation model of the school staff’s occupational well-being was produced empirically in 2002 and tested and further developed in 2004. The target group consisted of staff members of 12 comprehensive schools in eastern Finland in 2002 (n = 211) and 2004 (n = 266), recruited using the Well-being at your work index questionnaire at both times (Saaranen, Tossavainen, Turunen, Kiviniemi, and Vertio 2007b).

RESULTS In the planning phase of the project school staff members’ and occupational health nurses’ definitions of occupational well-being yielded the following four generic categories:

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Empowerment Orientation and Social Capital as a Basis for Occupational Well-Being… 57 positive atmosphere of the working community; motivation to work and quality of working conditions; professional skills and adequate education; and conditions of private life. The community’s working culture, leisure activities and self-care were identified as resource factors for school staff members. Based on the results in the planning phase of the project, the focus was placed on actions that maintain school staff members' individual and physical ability to work. In the beginning phase of the project a quarter of the respondents reported dissatisfaction with the occupational well-being activities available in their working community; 31 % of the respondents thought the occupational well-being activities were good, 44 % moderate and 25 % poor. Satisfaction with occupational well-being activities available for each person was a bit higher than satisfaction with occupational well-being activities available for the working community: 42 % of the respondents thought their personal occupational well-being activities were good, 34 % moderate and 25 % poor. The different aspects of occupational well-being (working conditions, working community, worker and work, professional competence) were also evaluated in more detail by asking the staff members’ opinion and need for development of each individual variable in each aspect. The following is a summarised account of the results of the aspects of occupational well-being (the different aspects are reported in more detail in the article Saaranen et al., 2006). The most problematic factors related to working conditions were considered to be working space, working posture and equipment (45 %) (Saaranen et al., 2006; Table 4). In the working community aspect, the most problems occurred in malfunctions related to work management and use of time (13 %) and inadequacy of cooperation and communication (11 %). Only 4 % of the staff felt that the atmosphere at work and appreciation of others’ work were not good and that there was a lot of need for development. Thus, the results from the working community aspect were, on the whole, quite good. In the worker and work aspect, the most problematic factors in both opinions (58 %) and needs for development (40 %) were the urgency and pace of work. In addition, 49 % of the staff stated that there were not enough activities to support personal resources and 39 % of them also saw much need for development there. The most dissatisfaction related to professional competence was associated with the adequacy of education (45 %) and IT skills (40 %), and both were also considered to be in great need of development (36 % and 35 %). The two years of development (the implementation phase) saw a significant increase in the staff’s satisfaction with activities aimed at maintaining their work ability. Positive development was also detected in the different aspects of occupational well-being. The staff members’ opinions indicate that positive change occurred with regard to, in particular, working space, posture and equipment (Saaranen et al., 2007a; Table 3). Improvements in the working community included co-operation and communication at the schools (Saaranen et al., 2007a; Table 4). In the aspect of worker and work, the staff felt that the workload, urgency and pace of work had slightly increased from 2002 to 2004 (Saaranen et al., 2007a; Table 5). However, there was a significant increase in the staff’s satisfaction with activities supporting resources during the project. When considering professional competence, the staff found that positive change had taken place, particularly in the adequacy of education and satisfaction with IT skills (Saaranen et al., 2007a; Table 6). Satisfaction with IT skills was improved, especially in individuals who had been working in the same school community for 11-20 years. Substantive competence

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and interaction skills were the strongest factors in the aspect of professional competence at both survey times as evaluated by the staff. The theoretical Content Model for the Promotion of School Community Staff’s Occupational Well-being was created in the planning phase of the project on the basis of the results and earlier literature. The model functioned as a framework for the planning, implementation and evaluation of the entire research and development project. Its functionality and structure were tested with the structural equation model (Saaranen et al., 2007b). The results of the structural equation model confirmed the hypothesis that, in order to promote school staff’s occupational well-being, the following four aspects must be considered according to the content model: worker and work, working community, professional competence and working conditions. Based on the results, however, the working atmosphere and appreciation of others' work explained most of the school communities' well-being and was significant to the employees' subjective occupational well-being in this model, too.

CONCLUSION

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Creation of Occupational Well-Being at Both the Individual and Community Levels Based on research conducted in the planning phase, both the school staff and occupational health nurses described very similar creation of occupational well-being, i.e. an empowerment process at both the individual and community levels (cf. Siitonen and Robinson, 1998), where these levels are intertwined. Based on the results, occupational wellbeing consisted of a positive atmosphere in the school staff’s working community, motivation to work and the quality of working conditions, adequacy of professional abilities and education and the conditions of employees’ private lives (cf. Figure 2). Information concerning the resource and workload factors affecting the participants’ occupational well-being was sought in the planning phase of the project. The results indicated that occupational well-being is formed from interaction between resource and workload factors, where a reasonable workload is positive and essential (e.g. work has to be challenging). It has been stated in previous studies that a harmful workload is created by excess underload or overload in comparison with available resources (e.g. Mäkinen, 1998; cf. also Karasek and Theorell, 1990). School staff’s excess workload was caused particularly by the psychological stress factors of school work: more complicated demands of the working environment, unbalanced work, tight economy of schools, loneliness of work and the need to work at different locations. School staff can be quickly exhausted by these workload factors if the conditions are not improved or if there is not enough focus on the school staff’s resource factors. The existence of excess workload in teaching work has already been established in numerous studies (e.g. Chan, 2003; Piirainen et al., 2003), and the problem is that all workload factors (e.g. tightening of school economy) cannot be removed even if there is a desire to do so. Therefore, the particular focus on promoting school staff’s resources based on the research information obtained in the planning phase was justified, not only in this project, but also in a wider sense in order to develop occupational well-being at schools.

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Empowerment Orientation and Social Capital as a Basis for Occupational Well-Being… 59 It is important for a development project focused on occupational well-being at schools to consider the most essential targets of development at each school, as everything cannot be done simultaneously because of, for instance, limited resources (e.g. time and money). In the school staff’s and occupational health nurses’ opinions, the most significant resource factors in occupational well-being at school are the community’s working culture (cf. social capital), leisure activities and self-care. A community’s school culture does not emerge spontaneously; school communities must consciously develop a more conversational culture that appreciates the characteristics of each employee. To promote a community-based school culture, the school director and staff need to develop the school according to the principles cogitated by the learning organisation (cf. Sarala and Sarala, 1996; Hayes et al., 2004; Tossavainen, 2004). A reliable and co-operative working environment must be created to support the employees in taking initiatives and risks and thus also committing themselves to the activities of the working environment. In addition, the functions of the school must have clear goals and the school management and staff have to be prepared for constant learning (cf. Silins and Mulford, 2002). The schools' community-based working culture can be concretely affected by e.g. staff meetings and discussions, which, based on the study, required some development in some of the schools. For example, experiences gained from teaching staff’s gatherings and meetings enable social support between employees, thereby affecting the school staff’s resource factors and empowerment (cf. Grimmet, 1996a, b; Edwards et al., 2002). This was pursued also in the present research and development project, which aimed to promote occupational wellbeing particularly from a community-based point of view. This can be associated with the concept of social capital (Putnam, 1993; Campbell, 2001; Hyyppä and Mäki, 2001a, b, 2003; Hyyppä et al., 2006, 2007), which has been seen to have broad impact on well-being in the public. Although many researchers (Putnam. 1993; Campbell, 2001; Hyyppä and Mäki, 2001a, b, 2003; Eng et al., 2002; Hyyppä et al., 2006, 2007) have described social capital as playing an important role in people's health and well-being, there is considerable disagreement about whether social capital is a collective attribute of communities or societies, or whether its beneficial properties are associated with individuals and their social relationships (Poortinga, 2006). In the future, the mechanisms of social capital must be investigated more, for example by means of longitudinal studies, to which need some researchers have awakened (e.g. Hyyppä et al., 2006, 2007; Lindström and The Malmö Shoulder-neck Study Group, 2006). For example, Hyyppä's et al. (2007) longitudinal study partially confirms that active participation in organised groups and associations and engagement in leisure activity are important predictors of survival in both men and women, and interpersonal trust proved predictive of all-cause and cardiovascular mortality, independent of age. The results of this study indicate that employees also receive resources for work from social bonds outside the workplace, such as family, friends and hobbies, so these can be expected to have an effect on occupational well-being. Previous studies (e.g. Hyyppä and Mäki, 2001b, 2003; Eng et al., 2002; Hyyppä et al., 2006, 2007) have also brought up the fact that those with social bonds, free-time activities with other people and work in voluntary organisations are healthier than those who lack such bonds. Although research results support the view that active leisure time (e.g. social life and hobbies) is a significant resource source in occupational well-being, it is also important to reserve time for oneself. As shown in this study, for school staff members this could mean e.g. spending time in nature or arranging

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peace and free time for oneself in some other way. Employees also have the main responsibility for their own empowerment and occupational well-being, particularly in their free time, such as taking care of their health and fitness, i.e. by strengthening their physical, psychological and social resources. Thus, in this study school staff's occupational well-being can be seen as a collective attribute, where individual empowerment processes interact (cf. Campbell, 2001; Poortinga, 2006.

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Occupational Well-Being by Means Both of Individual and Collective Activities that Maintain the Ability to Work The purpose of the study was to develop occupational well-being by means of activities that maintain the ability to work, which in the planning phase of the project created interest in whether these maintenance activities could be used to develop occupational well-being, how such activities had been implemented before and how they could be developed in order to promote occupational well-being. The results show that the contents of work ability maintenance and occupational well-being were seen in a very similar way, which meant that work ability maintenance could be viewed as an appropriate means for promoting occupational well-being in a school community. However, in the planning phase of project the focus of the work ability maintenance of the school staff that participated in the project was on individual-based and physical activities that maintain the ability to work. School staff members' being in good physical condition and having ergonomically good working conditions and postures (e.g. Sandmark, Wiktorin, Hogstedt, Klenell-Hatschek, and Vingård, 1999; Perkiö-Mäkelä, Mäkitalo, and Nevala, 2002; Ritvanen, 2006) are important in terms of the school community’s occupational well-being, but they are only a part of the holistic support and development of occupational well-being. Work ability maintenance activities must be more broadly targeted at the contents of occupational well-being (employees' health and resources, functionality of the working community, professional competence and work and working conditions), taking into account the needs and the promoting and preventing factors at each school. School management’s supportive leadership, school staff’s active participation and the targeting of adequate resources (e.g. time and money) for the developmental needs of occupational well-being along with encouragement and support from occupational health care (e.g. improvement of workplace visits and school community meetings by occupational health care) can be thought of as the background for positive change occurring in work ability maintenance in the project. Also the factors mentioned in previous studies, such as the school director’s supportive role (e.g. Edwards et al., 2002), school staff’s active participation and co-operation (e.g. Tossavainen, Turunen, and Vertio, 2005) and the targeting of adequate resources have been established as significant in successful development (e.g. Germann and Wilson, 2004). The occupational health nurses and schools were already familiar with the activities that maintain the ability to work. The activities are also based on occupational health care legislation (see Occupational Health Care Act, 2001). In the planning phase of the project, the activities established at the schools were directed at individuals and focused on physical activity. The implementation phase of the research and development project clearly provided work ability maintenance with help in systematic planning and evaluation data based on evidence. As a result, the participants were able to see maintenance of work ability

Empowerment Orientation and Social Capital as a Basis for Occupational Well-Being… 61 as a broader entity than before, as something in which the significance of the worker and work, the working community, professional competence and working conditions with respect to occupational well-being were taken into consideration. In addition, the results of the structural equation model in this study confirmed the hypothesis that, in order to promote school staff's occupational well-being, the four aspects (worker and work, working community, professional competence and working conditions) must be considered according to the content model (Saaranen et., 2007b). The systematic planning and evaluation data of work ability maintenance also facilitated arrangement of resources (e.g. time and funds for work ability maintenance) and correct targeting of scarce resources in this project. The systematic planning and evaluation data of the project also encouraged the participants to more actively participate and engage in cooperation, which promoted successful implementation of development work. As a final conclusion, the result of this research and development support the idea of developing the occupational well-being of the school community's staff from an empowerment and community-based (cf. social capital) perspective. A good working atmosphere and appreciation of the work of others, in particular, are important factors related to the promotion of both the working community's and worker's own occupational well-being. School communities must consciously pursue a more conversational culture by creating a supportive infrastructure, such as regular teaching staff education and meetings. Thereby the staff can feel that their work is appreciated, that there is an emphasis on trust, open communication, learning and participation in the interaction between staff members.

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Health Sciences. Studies in Sport, Physical Education and Health 46. Jyväskylä: Jyväskylä University Printing House. Putnam, R. D. (1993). Making democracy work. Civic traditions in modern Italy. Princeton: Princeton University Press. Rasmussen, V. B., and Rivett, D. (2000). The European Network of Health Promoting Schools – an alliance of health, education and democracy. Health Education, 100(2), 6167. Ritchie D., Parry O., Gnich W., and Platt S. (2004). Issues of participation, ownwership and empowerment in a community development programme: tackling smoking in a lowincome area on Scotland. Health Promotion International, 19(1), 51-59. Ritvanen, T. (2006). Seasonal psychophysiological stress of teachers related to age and aerobic fitness. University of Kuopio, Department of Physiology. Kuopio University Publications D Medical Sciences 379. Kuopio: Kopijyvä. Rodwell, C. M. (1996). An analysis of the concept of empowerment. Journal of Advanced Nursing, 23(2), 305-313. Räsänen, K. (Ed.). (2002). Työterveyshuolto Suomessa vuonna 2000 – 1990 -luvun kehitystrendit (Occupational health care in Finland in 2000 – trends of development in the 1990s, in Finnish). Helsinki: Sosiaali- ja terveysministeriö, Työterveyslaitos. Saaranen, T. (2006). Promotion of School Community Staff's Occupational Well-being in Cooperation with Occupational Health Nurses. Participatory Action Research in Eastern Finland in 2001-2004. Kuopio University Publications E Social Sciences 135. Kuopio: Kopijyvä. Saaranen, T., Tossavainen, K., Turunen, H., and Naumanen, P. (2006). Development of occupational wellbeing in the Finnish ENHP Schools. Health Education, 106(2), 133154. Saaranen, T., Tossavainen, K., Turunen, H., and Naumanen, P. (2007a). Development project (2001-2004) of school staff and occupational health nurses as a promoter of occupational wellbeing – staff’s evaluations. Educational Research and Evaluations, 13 (1), 17-52. Saaranen, T., Tossavainen, K., Turunen, H., Kiviniemi, V., and Vertio, H. (2007b). Occupational wellbeing of school staff members: a structural equation model. Health Education Research, 22, 248-260. Sandmark, H., Wiktorin, C., Hogstedt, C., Klenell-Hatschek, E-K., and Vingård, E. (1999). Physical work load in physical education teachers. Applied Ergonomics 30, 435-442. Sarala, U., and Sarala, A. (1996). Oppiva organisaatio. Oppimisen, laadun ja tuottavuuden yhdistäminen. (Learning organisation. Combining learning, quality and productivity, in Finnish). Helsingin yliopiston Lahden tutkimus- ja koulutuskeskus. Tampere: TammerPaino. Schools for Health in Europe. (2008). Aim of SHE. Retrieved June 27, 2008, from http://www.schoolsforhealth.nl/index.cfm?act=esite.tonenandpagina=27. Siitonen, J., and Robinson, H. A. (1998). Empowerment: links to teachers’ professional growth. In: R. Erkkilä, A. Willman, and L. Syrjälä (Eds.), Promoting teachers’ personal and professional growth (pp.165-191). University of Oulu, Department of Teacher Education. Acta Universitatis Ouluensis E 32. Oulu: Oulu University Press. Siitonen J., Repola, H., and Robinson, H. (2002). Havahtuminen työhyvinvoinnin mahdollistamiseen. Empowerment-kulttuuri työhyvinvoinnin edistämisessä – tutkimushankkeen tulosten esittelyä. (Awaking into the possibility of well-being at work.

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Empowerment culture in promotion of occupational well-being – results of a research project, in Finnish). Projects Reports of Work Science Laboratory University of Oulu Finland No. 16. Oulu: Oulu University Press. Silins, H., and Mulford, B. (2002). Schools as learning organisations. The case for system, teacher and student learning. Journal of Educational Administration, 40(5), 425-446. Thrupp, M. (1995). The school mix effect: the history of an enduring problem in educational research, policy and practice. British Journal of Sociology of Education, 16(2), 183-203. Tossavainen, K. (2004). Tiimiyhteisön johtaminen kouluissa – henkilöstö voimavarana muutoksessa (Leading a team community in the school setting – staff as a resource in the process of change, in Finnish). Promo, 34, 25-28. Tossavainen, K., Turunen, H., Jakonen, S., and Vertio, H. (2004a). Health promotional education: differences between school nurses’ health counselling and teachers’ health instruction in the Finnish ENHPS. Children and Society, 18(5), 371-382. Tossavainen, K., Turunen, H., Jakonen, S., Tupala, M., and Vertio, H. (2004b). School nurses as health counsellors in Finnish ENHPS schools. Health Education, 104(1), 33-44. Tossavainen, K., Turunen, H. and Vertio, H. (2005). Collaboration as a learning and research method in promotional and participatory action research in the Finnish ENHP Schools. In: S. Clift, and B. B. Jensen (Eds.), The Health promoting school: international advances in theory, evaluation and practice (pp. 271-290). Copenhagen: Danish University of Education Press. Turunen, H., Tossavainen, K., Jakonen, S., Salomäki, U., and Vertio, H. (2000). Improving health in the European network of health promoting schools in Finland. Health Education, 100(6), 252-260. Viinamäki, T. (1997). Opettajien ja sosiaalityöntekijöiden psyykkinen rasittuneisuus (Psychic distress among teachers and social workers, abstract in English). University of Kuopio, Department of Social Sciences. Kuopio University Publications E. Social Sciences 50. Kuopio: University. Whitehead, D. (2001). Health education, behavioural change and social psychology: nursing’s contribution to health promotion. Journal of Advanced Nursing, 34(6), 822-832.

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In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 4

DO FAMILY ENTREPRENEURIAL BUSINESSES BENEFIT MORE FROM SOCIAL CAPITAL THAN NONFAMILY BUSINESSES IN EMERGING ECONOMIES? A COMPARATIVE ANALYSIS Moses Acquaah∗ Department of Business Administration Bryan School of Business and Economics University of North Carolina at Greensboro Greensboro, North Carolina, USA 27402

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ABSTRACT While it has been argued that social capital represents one of the most intangible and least fungible resources in family businesses, little empirical research has been conducted to examine the role of social capital in the strategic organization of family businesses. This study investigates the utilization of managerial networking relationships and ties with external entities to create social capital in family-owned and nonfamily businesses, and compares the impact of social capital on organizational performance between familyowned businesses and nonfamily businesses. Using data from 106 organizations in Ghana over two time periods, the findings show that while family-owned businesses tend to utilize managerial networking relationships and ties with community leaders, bureaucratic officials and managers at other firms to a greater extent to create social capital than nonfamily firms, nonfamily businesses utilize networking relationships to a greater extent to create social capital than family-owned businesses. The findings further indicate that the social capitals from networking relationships with community leaders, government bureaucrats, and managers of other firms have an inverted U-shaped relationship with performance for family-owned businesses. On the other hand, while the effects of the social capitals from networking relationships and ties with community leaders, managers at other firms and government bureaucratic officials have linear, positive and monotonic relationship with performance, that for social capital from ∗

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Moses Acquaah politicians has a negative relationship with performance for nonfamily businesses. Overall, the findings suggest that although social capital matters, extensive utilization of networking relationships and ties to create social capital may have diminishing returns to performance for family-owned businesses.

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INTRODUCTION Although it has been argued that the family is the “oxygen the feed the fire of entrepreneurship” (Rogoff, Kay and Heck, 2003, p. 559), very little attention has been accorded family businesses in the entrepreneurial process. Family businesses dominate the business landscape in emerging economies and are widely recognized as playing a significant role in these economies both in terms of their contributions to employment, entrepreneurship, societal development, and economic growth. Moreover, the success of most entrepreneurial ventures, which are predominantly family businesses, depend on their ability to obtain and leverage financial, human and other resources for the strategic organization of activities. Until recent studies (e.g., Anderson and Reeb, 2003), the long held belief in the family business literature was that family businesses underperform nonfamily businesses. This has been attributed primarily to the differences in resources and capabilities endowment and utilization between family-owned and nonfamily-owned businesses. While family businesses have been described as being “unusually complex, dynamic, and rich in intangible resources” (Habbershon and Williams, 1999, p. 3), and that the active involvement of the family in the management responsibilities is positive for the firms (Anderson and Reeb, 2003), they are also considered to be poor in financial resources and have ineffective management systems (Martinez, Stohr and Quiroga, 2007). Thus, familyowned and nonfamily businesses differ not only in terms of their intangible resources, capabilities, and access to financial capital, but also in organizational structures, entrepreneurial orientation, risk taking, and innovation (Naldi et al., 2007; Schulze et al., 2003a, 2003b). This is especially pronounced in emerging economies where most familyowned businesses face huge obstacles in obtaining resources and capabilities for the strategic organization of their activities when compared with nonfamily businesses. Emerging economies are characterized by shortage of managerial and technical skills and expertise, funding sources, technology, and there exist high levels of market imperfections. They also suffer from what Khanna and Palepu (1997) call “institutional voids” – the absence of market-supporting institutions, specialized intermediaries, contract-enforcing mechanisms, and efficient transportation and communication networks. These resources, institutional and structural obstacles in emerging economies have differential effect on the strategic activities and performance in family-owned and nonfamily businesses, with the brunt of the adverse impact falling on family-owned businesses. One way of garnering the necessary resources and capabilities to navigate the complex and uncertain institutional and business environment in emerging economies by family-owned businesses is the utilization of networking relationships and ties (Dubini and Aldrich, 1991). The social networking approach to creating social capital is predicated on the notion that economic actions are embedded in social networks of interpersonal relationships and social ties (Granovetter, 1985; Uzzi, 1997). Although a myriad of studies have examined the performance implications of social capital derived from networking relationships in emerging economies (e.g., Acquaah, 2007; Li,

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Poppo, and Zhou, 2008; Li and Zhang, 2007; Peng and Luo, 2000), none have done so in the context of family-owned and nonfamily-owned businesses. For most entrepreneurial familyowned businesses the utilization of external social capital obtained through social networking relationships is a means of acquiring the requisite financial, human, and other strategic resources and capabilities, but there has been relatively little attention devoted to the comparative analysis of the use and benefits of social capital between family-owned businesses and nonfamily businesses. There is therefore the need for empirical research that examines and compares the benefits family-owned and nonfamily businesses in emerging economies derive from the social capital derived from cultivating social networking relationships with external entities. It has been argued that social capital represents one of the least tangible and least fungible resources in the context of family businesses and the process by which these resources create value for family businesses are little understood and therefore merit further research (Steier, 2001). We fill this research gap by extending current social capital theory to the family business literature by arguing that not only are there differences in the extent to which familyowned and nonfamily businesses use networking relationships to create social capital, but the benefits they derive from networking relationships also differ. Thus, in this chapter we seek answers to the following questions using data from Ghana, and emerging economy in SubSaharan Africa: (1) Do family-owned businesses utilize social networking relationships more than nonfamily-owned businesses to create social capital that enables them to obtain strategic resources for the organization of their activities? (2) How different is the impact of social capital on organizational performance between family-owned businesses and non-familyowned businesses? The chapter contributes to the family business literature in a number of ways. First, the study examines and compares how managers in family-owned and nonfamily business utilize personal and social networking relationships to develop social capital and how the social resources engendered create value for their businesses. Second, by using data over two time periods, this is one of the few studies to examine the relationship between external social capital derived from networking relationships and firm performance by comparing familyowned and nonfamily businesses. Thus, this chapter overcomes some of the perceived difficulties with relying purely on cross-sectional data in family business research. The next sections present our theory and hypotheses, and explain the data and methods used to test the hypotheses. We then present the results, discuss the findings and conclude the study.

THEORY AND HYPOTHESES Social Capital Social capital has been defined as “the sum of resources, actual or virtual, that accrue to an individual or a group by virtue of possessing a durable network of more or less institutionalized relationships of mutual acquaintance and recognition” (Bourdieu and Wacquant, 1992, p. 119). While a variety of the definitions of social capital exists, social capital is considered a resource embedded in organizations, communities or individuals that are derived from personal and social relationships or ties. Just as human capital is acquired

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through education, training and/or experiences, social capital is developed through forging close interpersonal networks and connections of mutual acquaintances (Coleman, 1988; Lin, 2001). It is the social resources inherent in networking relationships that may be used to pursue economic ends (Arregle, Hitt, Sirmon and Very, 2007; Burt, 1992; Coleman, 1988). Social capital can be either internal or external. While internal social capital focuses on the structure and social networking relationships among actors (individual members) within a system or organization, external social capital focuses on the structure and social networking relationships between an actor or organization and its important external stakeholders (e.g., an organization’s customers, suppliers, competitors; officials of government political and bureaucratic institutions; leaders of community organizations and institutions; and leaders of trade or employee associations). Nahapiet and Ghoshal (1998) have argued that there are three dimensions of social capital: structural, relational, and cognitive. The structural dimension of social capital refers to the overall pattern of connections or relationships between actors. This dimension involves the value derived from a network structure as a result of the extent to which actors within an organization and between organizations are connected. The relational dimension of social capital refers to the assets created and leveraged through social relationships or cohesive ties. It reflects the benefits that accrue to individuals or organizations as a result of affective interpersonal relationships. These relationships are characterized by trust and trustworthiness (Fukuyama, 1995; Tsai and Ghoshal, 1998), norms and sanctions (Coleman, 1988; Putnam, 1995), and identity and identification (Hakansson and Snehotta, 1995; Merton, 1968). Finally, the cognitive dimension refers to the resources which provide shared representations, interpretations, and systems of meaning among actors. It is concerned with how the relationships among actors create a commonly shared perspective or understanding (Bolino, Turnley, and Bloodgood, 2002). Of these three dimensions of social capital, more attention has been devoted to examining the structural dimension which has been operationalized as the extent to which organizations are embedded in either a densely or sparsely connected networks (e.g., Baker, 1990; Burt, 1992, 1997). It has, however, been argued that the investigation of social capital should be extended to cover the relational and cognitive dimensions (Adler and Kwon, 2002). Since social capital is a relational construct that by nature is developed through interactions among individuals and groups in a particular context, Leanna and Pil (2006, p.354) have argued that “social capital is not just the network itself, nor the links among people that comprise it, but the resources that are created by the existence and character of those links such as information sharing and trust.” It should also be noted that the structural dimension of social capital which focuses on an actor’s position and connection in a social network is difficult to entangle in many emerging economy environments such as those in sub-Saharan Africa since managers are wary of disclosing such information. Although early usage of the concept of social capital focused on how the resources acquired by an individual through the development of close social relationships and networking influences his/her behavior, the argument has been extended to organizations (e.g., Baker, 1990; Burt, 1982; Gulati, 1995). An organization can develop social capital through a variety of social and economic relationships with other constituents of the organization. These include relationships with suppliers, customers, competitors, trade or employee associations, government political and bureaucratic institutions, and community organizations and institutions. In this study, we focus on the relational dimension of external

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social capital which is developed by an organization’s leadership through the development of personal and social networking relationships and ties with external entities. Interpersonal and social relationships are the predominant means of cultivating social capital by firms in subSaharan Africa. The relational dimension of external social capital is usually operationalized as the connections and ties held by top managers in organizations with external entities because top managers are the key boundary spanners in organizations (Collins and Clark, 2003; Geletkanycz and Hambrick, 1997). While there have been numerous studies empirically examining the contributions of external social capital to organizational outcomes (e.g., Acquaah, 2007, Keister, 1998; Kostova and Roth, 2003; Lee, Lee and Pennings, 2001; Leanna and Pil, 2006; Li and Zhang, 2007; Park, and Luo, 2001; Peng and Luo, 2000; Yli-Renko et al., 2001), little attention has been paid to the role of external social capital in family-owned businesses. We must admit that there have been some interest in theorizing about the role of social capital in family firms (e.g., Arregle, Hitt, Sirmon, and Very, 2007; Lester and Cannella, 2006; Nordqvist and Goel, 2008). From a conceptual point of view, Lester and Cannella (2006) have asserted that community-level social capital which is generated by a network of family-controlled businesses is an important determinant of the survival and persistence of individual family businesses. Arregle et al., (2007) argue that family social capital influences the creation of social capital for the family firm through factors such as organizational identity and rationality, human resource practices, and social network overlaps. They further contend that factors such as stability, interactions, interdependence, closure, along with family’s size, commitment and ability to provide critical resources for the firm, which underlie family social capital influences the creation of organizational social capital for the family firm. At the same time, Nordqvist and Goel (2008) assert that the family firm is embedded in a network of social relationships with competing claims to its resources which is crucial in understanding its governance. They therefore argue that social networks should be used as a governance mechanism, in addition to agency and stewardship theories, in family firms because social networks emphasize relational aspect of governance. In family firms, the main governance mechanisms are social characteristics such as personal affection, trust, shared norms and values, mutual reciprocity, and reputation. These conceptual studies indicate that the family plays an important role in the creation of social capital. Furthermore, that social capital could be used to create value for family firms by using it as a governance mechanism, and to obtain resources such as information, knowledge, and legitimacy from the external entities for the strategic organization of its activities to improve performance and chances of survival. Despite the renewed interest in applying social capital theory to family business research, empirical studies examining the role of social capital in family firms is very scanty (Steier, 2001; Young and Tsai 2008). Steier studied how social capital is transferred to, created, and managed by next-generation entrepreneurs within family firms in Canada. The findings indicated that within family firms, social capital is transferred to next-generation entrepreneurs through several modes: unplanned sudden succession, rushed succession, natural immersion, and planned succession and transfer of social capital. Moreover, Steier (2001) identified several means by which next-generation entrepreneurs in family firms manage social capital: deciphering existing network structures, deciphering the transactional content of network relationships, determining the relationships that are the most critical for firm survival and success, attaining legitimacy, clarifying the optimal role in the management of the firm (technical, managerial, stewardship, or a combination of all three), managing ties

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through delegation and division of labor, and striving for optimal network configuration by reconstituting network structure and content. Young and Tsai (2008) studied the role of CEO external social capital in determining the compensation of family CEOs and nonfamily CEOs in Taiwan. They found that CEO social capital is an important determinant of CEOs pay level for nonfamily CEOs but not for family CEOs. It should be noted that none of these studies examined the value or benefit of social capital to family-owned businesses. Thus, there is a dearth of studies investigating how family-owned businesses and nonfamily businesses utilize networking relationships with external entities to create social capital and its impact on organizational outcomes despite the heterogeneity of the resource configurations and organizational characteristics in these two types of firms. Therefore more research is needed to examine the value of social capital to family-owned businesses and how they compare with nonfamily businesses.

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Social Capital in Family-Owned and Nonfamily Businesses Social capital theory postulates that networking relationships provide value to actors (e.g., individuals, organizations, or communities) by allowing them to tap into the resources embedded in such relationships for their benefit (Lin, 2001). The top managers of both family-owned and nonfamily businesses in Ghana develop social capital through a variety of personal, social and economic relationships with their constituencies that could be used for the benefit of their organizations. These include the managerial personal and social relationships with suppliers, customers, competitors, leaders of government political and bureaucratic institutions, and leaders of community organizations’ and institutions. It is well established in the family business literature that family businesses are “rich in intangible resources” (Habbershon and Williams, 1999, p. 3) in the form of relationship building within the family and with external entities, trust, loyalty, commitment, patient capital, and the ability to motivate employees to achieve business goals. These advantages that exist in the family business environment has been termed “familiness” to denote the unique bundles of resources that reside in family that could be used to create competitive advantage (Tokarczyk et al, 2007). However, family-owned businesses face a lot of challenges in the strategic organization of their business activities in Ghana and many emerging economies. The challenges they face include lack of financial, human resources, and managerial and technical competencies and capabilities. These challenges are exacerbated by the complexities and uncertainties in the business environment in Ghana because of the absence of effective market-supporting institutions, weak legal enforcement mechanisms, and the inability to effectively foster economic exchange through arms-length transactions. Thus the social capital developed through relational ties and connections with external parties are used by top managers of family-owned businesses to circumvent the complexities of the business environment and obtain the necessary resources and exploit the opportunities in that business environment for the benefit of their organizations. In this study, we focus on the social capital that is developed by a firm’s top management of both family-owned businesses and nonfamily businesses through personal and social networking relationships with their peers in other businesses, leaders in government political and bureaucratic institutions, and community organizations’ and institutions. The social capital developed through these networking relationships function as conduits for the

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transmission of information, resources and opportunities which could be leveraged to a firm’s advantage (Gargiulo and Benassi, 2000). Previous studies in emerging economies have demonstrated that because of the high levels of complexity, uncertainty, market imperfections and lack of “institutional voids” (Khanna and Palepu, 2006), top managers in organizations in emerging economies develop and exploit networking relationships with top managers of other firms, government political leaders, government bureaucratic leaders in civil and public service institutions, and community leaders to secure access and facilitate the exchange of resources, information and knowledge for the strategic organization of their activities leading to improved performance (e.g., Acquaah, 2007; Li and Zhang, 2007). However, family-owned and nonfamily businesses have different resources, information and knowledge needs. Most nonfamily businesses in Ghana are former state-owned enterprises, joint ventures with multinational corporations, or subsidiaries of multinational corporations which, tend to be more established, resource-rich and powerful. They are also stable, have acquired institutional legitimacy, and established long-standing relationships and connections with political leaders, bureaucratic officials, community leaders, and their peers for resources and knowledge acquisition and exploitation. They therefore have more resources that could be used to develop competitive advantage and improve firm performance. Thus they are less likely to emphasize the development of networking relationships and ties with these external entities when compared with family-owned businesses. Family-owned businesses, on the other hand, have been found to exhibit some capabilities such as the abilities to engender trust; inspire, motivate, and develop commitment among the workforce; develop customer relationships; and demonstrate flexibility in decision making (Tokarczyk et al, 2007). Nevertheless, family-owned businesses in Ghana lack the necessary resources such as financial resources and access to external funds, managerial expertise, technical know-how, and/or knowledge about new market or customer segments, which could be exploited to overcome the complexities and uncertainties in the business environment. Furthermore, family-owned businesses typically lack legitimacy that is necessary for navigating the uncertain institutional and economic environment to obtain the resources needed for their survival and growth. Thus family-owned businesses will make considerable investment in building social networking relationships and ties with external entities when compared with nonfamily businesses. This is a way for family-owned businesses to obtain resources and gain legitimacy to traverse the complex and uncertain business environment. Family-owned businesses, therefore, utilize their capabilities of flexibility in making decisions and building trust to emphasize the development social networking relationships to garner the resources required for mitigating their institutional and strategic disadvantages. We therefore hypothesize that: Hypothesis 1: Family-owned businesses and nonfamily businesses will exhibit different levels of managerial networking relationships utilization to create social capital. In the Ghanaian business environment, personal and social networking relationships with politicians and bureaucrats by both family-owned businesses and nonfamily businesses can provide them with access to financial resources (from government controlled financial institutions), offer opportunities by awarding government projects and contracts, certify products as meeting government standards, and providing information about new and impending regulations which may affect their strategic activities (Acquaah, 2007).

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Networking relationships with community leaders facilitate the firm’s legitimacy and promote access to resources and information as the community leaders endorse the organization and its activities in their communities, while connections and ties with top managers of other businesses provide access to new business practices, new technological processes, quality raw materials, fast and reliable deliveries, and customer and brand loyalties. These networking relationships and ties may enable both family-owned and nonfamily businesses to obtain access to resources such as sources of financial resources, favorable leases to land for construction or agricultural purposes, new market segments and new customers, and/or technological know-how (Acquaah, 2007; Kuada and Buame, 2000). We therefore argue that social capital developed from networking relationships and ties with external entities can create value for both family-owned and nonfamily businesses in Ghana. However, we argue that while the impact of social capital on performance for nonfamily businesses would be positive and monotonic, those for family-owned businesses would exhibit a curvilinear (inverted U-shaped) relationship with firm performance. Family-owned businesses and nonfamily businesses are fundamentally different in their organizational structures, cultural norms, the availability of managerial skills and expertise, and technical know-how. These differences may affect the ability with which the social capital derived from networking relationships and ties with developed with external parties may be utilized to create value and the benefits that would be derived from that social capital. Family-owned businesses in Ghana are characterized by an environment that encourages personal affection, trustworthiness, commitment, mutual reciprocity, and focus on the longterm decision making horizons (e.g., Dunn, 1995, Lyman, 1991). It is also interesting to note that neither growth nor efficiency have been emphasized by most family-owned businesses in Ghana with most top executive positions decided on particularism criteria. Because of their tendency to be patient in waiting for long-term outcomes and the strong norms of trustworthiness and reciprocity, family-owned businesses over-extend the connections and ties they develop with external entities and reciprocate the favors to the extent that the benefits they receive from the networking relationships begin to erode after a certain level. In fact having a high disposition to developing and utilizing networking relationships and ties may produce negative effects after a certain level as it compromises the quality of relationships and the attendant resources and information obtained from such relationship. In such cases, the relationship between managers in family-owned businesses and politicians, bureaucrats, and community leaders may suffer from “overembeddedness” which results in redundant information exchange and decreased benefits from social capital (e.g., Uzzi, 1997). Moreover, given the power and control exercised by politicians, government bureaucratic officials in civil and public institutions, and community leaders, they may be able to extract more rents they helped family-owned businesses generate from the use of their connections through excess reciprocity of favors. This has the potential of limiting the benefits familyowned businesses could derive from networking relationships after a certain threshold. On the other hand, because nonfamily businesses tend to be former state-owned enterprises, joint ventures with multinational corporations, or subsidiaries of multinational corporations they are more selective in building networking relationships to obtain resources and information. They also tend to have short-term decision making horizons and are resultoriented. Because of their short-term and results-oriented focus, nonfamily businesses are more efficient and effective in utilizing the resources and information derived from the networking relationships and ties with external entities to create value. They are more likely

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to gain from regulatory and licensing procedures, government contracts, absorption of new technological and market knowledge, and favorable access to land for business activities. In short, nonfamily businesses are more likely to continually benefit from networking relationships and ties with their peers, politicians, government bureaucrats, and community leaders than family-owned businesses. Moreover, due to lack of the necessary managerial and technical skills and expertise, lack of employee talent due to the small labor pool, and inadequate employee training, even if family-owned businesses are more proactive and assertive in utilizing social networking relationships to acquire the resources, information and knowledge needed to deal with uncertainty in the business environment, they may not be as efficient and effective as nonfamily businesses in utilizing the resources and information they obtain from the connections to create value. Due to the inefficiencies of the organizational structures, and the lack of managerial and technical expertise, family-owned businesses are likely to experience diminishing returns from the social capital they develop from the networking relationships with external entities in Ghana. We therefore hypothesize: Hypothesis 2a: For family-owned businesses, social capital will have an inverted U-shaped relationship with organizational performance, such that the positive effect decreases after a threshold level. Hypothesis 2b: For non-family businesses, social capital will have a positive and monotonic effect on organizational performance.

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METHODS The hypotheses were tested with data collected from senior executives (e.g., chief executive officers (CEOs)), and the chief financial officers) of family-owned and nonfamily businesses operating in Ghana in 2002 and again in 2005. The sample consisted of the 200 largest companies selected from the 2001 edition of the Ghana Business Directory. The CEOs of the selected companies were sent letters in the latter part of 2002 requesting their participation in the study. To ensure a high response rate and the provision of reliable and accurate responses, the CEO’s were promised that information about the respondents and the company will be kept in strict confidence. They were also promised a summary of the results of the study if they included their company’s address on the survey. Several weeks after the letters were sent to the selected companies’, personal visits were made to the companies. The CEOs were given the questionnaires and a mutually agreed upon date to collect the completed questionnaires was determined. After several visits to the companies, responses from 115 firms were received with 106 being useable for a response rate of 53 percent. In 2005, we collected a follow-up data from the 106 firms using the same questionnaire survey that was administered in 2002. All the firms completed the survey administered in 2005, but only 100 of the 106 firms provided complete responses to all the questionnaire items. Thus the total observations collected in the two time periods are 206. In order to check for potential response bias and common method variance problems, the data were collected from individuals occupying senior management positions. On average, the respondents had worked for their companies for 12 years and had held their respective

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managerial positions for over nine (9) years. Common method variance was examined through two methods during the survey design and administration, and one post-hoc statistical test was run. First, information on managerial networking relationships developed with external entities were solicited for the three-year periods 1998-2000 for data collected in 2002 and 2001-2003 for data collected in 2005, while information on organizational performance was solicited for the following two-year periods: (a) 2001-2002 for data collected in 2002; and (b) 2004-2005 for data collected in 2005. Second, information on the independent variables was obtained from the CEOs and their deputies, while the performance information was collected from the heads of the accounting/finance function. Third, a factor analysis of the items on the performance and social capital variables yielded six factors with eigenvalues greater than one, with the first factor accounting for about 20 percent of the variance. Thus, common method variance is minimized (Harman’s (1967).

DEPENDENT AND INDEPENDENT VARIABLES

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Organizational Performance Organizational performance was measured by focusing on return on assets (ROA). Selfreported performance data was collected from the head of the accounting and finance function in each organization. The respondents were asked to rate their organizations on ROA relative to the major competitors in their industry for the two-year periods 2001-2002 and 2004-2005. ROA was measured on a scale ranging from (1) ‘much worse’ to (7) ‘much better’. The use of perceptual measures is common in situations where objective data are either not available or difficult to obtain. Moreover, Wall et al. (2004) have demonstrated that there are convergent, discriminant, and construct validities between perceptual measures of performance which are used as substitutes for objective measures of performance. While the use of perceptual performance data may introduce measurement errors and the potential problem of monomethod bias, a second set of respondents were used for the performance information to minimize these problems. Furthermore, there are precedents for using perceptual measures of performance in social capital studies in emerging economies (Park and Luo 2001, Peng and Luo 2000). The correlation between the ROAs over the two time periods is 0.85, p < 0.001. We further obtained objective measures of ROA from the annual reports of 12 of the businesses (these businesses were all nonfamily businesses) in our sample that were listed on the Ghana Stock Exchange. The correlation between the objective measure of ROA and the subjective measure of ROA using the pooled data for the 12 businesses was 0.79, p < 0.001.

Social Capital Social capital was measured by examining the development of interpersonal and social networking relationships by top managers of family-owned and nonfamily businesses in Ghana with (1) government political leaders; (2) government bureaucratic officials; (3) community leaders, and (4) top managers of other firms. The respondents were asked to assess the extent to which (1) top managers have used personal and social networking

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relationships (USED); and (2) how such relationships have benefited their firms through (a) access to information that could be used to the firm’s advantage (INFORM); (b) access to valuable resources (RESOURCE); and (c) acquisition and exploitation of knowledge (KNOWLEDGE), for the three year periods 1998 - 2000 and 2001-2003 respectively on a seven-point scale, ranging from (1) “very little’ to (7) ‘very extensive’. The social capital developed as a result of the managerial networking relationships for each of the three variables were operationalized by using the average responses to the items as follows: Social Capital = [(USED x INFORM) + (USED x RESOURCE) + (USED x KNOWLEDGE)]/3 Social capital developed from managerial networking relationships with political leaders (α = 0.80) were measured using four items: social networking relationships with city council politicians (mayor and council members), district council politicians (the district chief executive and members of district council assembly), regional government politicians, national government politicians’ (e.g., ministers and parliamentarians). Social capital from managerial networking relationships with bureaucratic officials (α =0.82) was measured using two items: civil/public service officials in regulatory and supporting institutions (e.g., Internal Revenue Service, the Central Bank, Environmental Protection Agency, etc.), and officials in investment and industrial institutions (e.g., Investment Board, Export Promotion Council, the Stock Exchange, etc.). Social capital from managerial networking relationships with community leaders (α = 0.85) was measured using two items: social networking relationships with local kings, chiefs and/or their representatives, and leaders of religious organizations (e.g., pastors, priests, traditional religious leaders, and imams). Social capital from managerial networking relationships with top managers of other firms (α = 0.78) was measured using three items: personal and social relationship with suppliers, buyers, and competitors.

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Family-Owned Business Fundamental to the operationalization of family-owned and nonfamily businesses is the definition of a family business. While there are several definitions of a family business (e.g., Anderson and Reeb, 2003; Chrisman, Chua, and Sharma, 2005; Westhead and Cowling, 1998), we define a family business as a firm that is owned and controlled by a specific family, and where family members are involved in the firm’s management and decision-making processes. This definition is effective for this study because in the Ghanaian business environment, a business is considered a family business if it is 100 percent owned by a specific family. We therefore operationalized family-owned and nonfamily businesses by asking the respondents to indicate whether or not their firm is a family-owned business (“yes” or “no”). We also asked the respondents to indicate with a “yes” or “no” response whether family members (1) controlled the business, and (2) were involved in the business as directors or employees. All respondents (100 percent) who answered “yes” to whether the business is family-owned also responded “yes” to the other two questions – control and involvement. Family-owned business was, therefore, operationalized as a dummy variable coded 1 for

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“yes” responses to the above questions, while nonfamily business was coded 0 for a “no” responses to the above questions. This operationalization was then used to separate the sample into the family-owned businesses and nonfamily businesses mini-samples.

Control Variables The control variables included in the study are firm age, firm size, business sector, year dummy, and market competition. Firm age was measured as the number of years since the formation or incorporation of the firm. Firm size was measured as the logarithm of the number of employees. Business sector was operationalized using a dummy variable, coded 1 for manufacturing firms and 0 for service firms. Because we pooled two periods of data, we included a dummy variable, Year dummy, which was coded 1 if an observation corresponds to a data collected in 2002 and 0 if an observation corresponds to a data collected in 2005 to pick up any fixed effects that varied between the two periods. Industry competition (α = 0.76) was operationalized with six items. The respondents were asked to indicate the extent to which the following activities have taken place in their firm’s industry within the three-year periods 1998-2000 and 2001-2003: (a) increase in the number of major competitors; (b) use of package deals for customers; (c) frequency of new product or service introductions; (d) the rate of change in price manipulations; (e) increase in the number of companies which have access to the same marketing channels; and (f) frequency of changes in government regulations affecting the industry(Mia and Clarke, 1999). These activities were measured on a seven-point scale ranging from (1) “very little” to (7) “very extensive.”

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Statistical Analysis To establish causality, which is difficult in cross-sectional studies, a pooled time series and cross-section (TSCS) regression model with a time lag between the dependent and independent variables was used to examine the relationship between social capital from managerial networking relationships and firm performance (e.g., Mosakowski, 1993; Wiklund and Shepherd, 2003) for both the family-owned business and nonfamily business samples. The social capital variables in the study deal with the utilization of personal and social networking relationships with external entities for the three-year periods 1998-2000 and 2001-2003. The performance variable, return on asset (ROA), on the other hand, was measured using the average of the responses for the two-year periods 2001-2002, and 20042005 for data collected in 2002 and 2005 respectively. A pooled TSCS regression model was used because only two periods of data from 106 firms were available.

RESULTS Table 1 provides the means, standard deviations and the correlations among the variables. It shows significant correlations among some of the variables, especially between familyowned business and firm size (r = -0.65).

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Table 1. Descriptive Statistics and Correlation Matrix of Variables (N=206) Variables 1. Return on Assets (ROA) 2. Social capital from community leaders 3. Social capital from politicians 4. Social capital from bureaucrats 5 Social capital from managers at other firms 6. Firm size a 7. Business sector b 8. Family-owned business c 9. Industry competition 10. Firm age

1

2

3

4

5

6

7

8

9

0.39 0.07 0.34 0.48 0.13 -0.19 -0.17 0.36 0.06

0.85 0.23 0.24 0.27 0.23 -0.17 0.16 0.15 -0.06

0.80 0.32 0.26 0.25 -0.34 -0.14 0.03 0.13

0.82 0.47 0.23 -0.16 0.18 0.27 0.11

0.78 0.17 -0.23 0.16 0.23 0.17

-0.23 -0.65 0.03 0.47

0.04 -0.11 -0.12

0.03 -0.34

0.76 -0.01

Mean Standard Deviation Minimum Maximum

4.67 1.38 1.00 7.00

11.12 7.71 1.50 36.00

13.43 9.54 1.33 44.67

25.47 9.94 2.00 49.00

28.04 7.53 7.00 42.67

1.97 0.48 1.00 3.30

0.83 0.38 0.00 1.00

0.51 0.50 0.00 1.00

4.88 1.32 2.00 7.00

The values in diagonals are Cronbach alphas. a Log of number of employees. b Manufacturing firms are coded 1, service firms are coded 0. c Family-owned businesses are coded 1, nonfamily businesses are coded 0. Significance levels: For r > 0.16, p < 0.10; r > 0.19, p < 0.05; r > 0.26, p < 0.01; and r > 0.34, p < 0.001.

10

23.97 15.61 4.00 87.00

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This indicates that most family-owned businesses in Ghana are small firms. The variance inflation factors (VIFs) of the hypothesized variables were, however, all less than 10 indicating that multicollinearity is not a problem (Neter et al., 1996). The validity of the econometric model was further examined through several tests. The assumptions of equality of variance, independence of the error terms, and the normality of the residuals were all met. The Durbin–Watson statistics also indicated that autocorrelation is not a problem and thus the pooled cross-section and time series model is adequate (Gujarati, 2003). Hypothesis 1 examines the degree of utilizing managerial social networking relationships to create social capital between family-owned businesses and nonfamily businesses. As can be seen from Table 1, the correlation between social capitals from community leaders, bureaucratic officials, and top managers of other firms are all significantly related to family businesses which imply that the degree of managerial networking relationships utilization to create social capital may be different between family-owned businesses and nonfamily businesses. We also examined the degree of managerial networking relationships utilization between family-owned business and nonfamily businesses for each of the social capital constructs by using a t-test to compare the means of the variables. The results of the t-test of the means of the social capital variables, which are presented in Table 2, reveal that familyowned businesses utilize managerial networking relationships to create social capital more than non-family-owned business with community leaders (mean, family-owned = 11.86; mean, nonfamily = 10.39; t = 3.82, p < 0.001); bureaucratic official (mean, family-owned = 27.25; mean, non-family = 23.73; t = 8.06, p < 0.001), and top managers of other firms (mean, family-owned = 28.87; mean, non-family = 27.22; t = 4.32, p < 0.001). However, nonfamily businesses utilize managerial networking relationships to create social capital more than family-owned businesses with politicians (mean, family-owned = 11.79; mean, nonfamily = 15.09; t = -7.72, p < 0.001). Thus hypothesis 1 is supported.

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Table 2. Means, Standard Deviations, and Test of Differences between the Social Capital Variables Family Firms (N = 104)

Non-Family Firms (N=102)

T-test1

Social Capital

Mean

S.D.

Mean

S.D.

T-value

Community Leaders Politicians Bureaucratic Officials Managers at other firms

11.86 11.79 27.25 28.87

7.16 8.91 9.79 7.74

10.39 15.09 23.73 27.22

8.18 9.91 9.83 7.28

3.82*** -7.71*** 8.06*** 4.33***

1

Test of differences between the mean values of family-owned businesses and nonfamily businesses’ social capital variables. * p < 0.05; ** p < 0.01; *** p < 0.001.

Table 3 presents the standardized results of the pooled TSCS regression models examining Hypotheses 2a and 2b. In Models 1 we present the results from the overall sample to ascertain whether there are performance differences between family-owned businesses and nonfamily businesses, and also examine the impact of social capital on ROA.

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Table 3. Standardized Regression Analysis of the Relationship between Social Capital and Return on Assets (ROA)1

Variables Controls Firm age Firm size 2 Business sector 3 Industry competition Year Dummy 4 Family-owned business 5 Social Capital Community Leader Community Leaders Squared Politician Politicians Squared Bureaucratic Officials Bureaucratic Official Squared Managers at other firms

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Managers at other firms Squared Adjusted R2 Change in Adjusted R2 F-test for change in R2 Model F Durbin-Watson Statistic 1

All Firms (N = 206) Model 1 β (S.D.)

Family Firms (N = 104) Model 2 Model 3 β (S.D.) β (S.D.)

Nonfamily Firms (N=102) Model 4 Model 5 β (S.D.) β (S.D.)

0.004 (0.058) 0.093 (0.093) -0.024 (0.055) 0.305*** (0.054) 0.035 (0.050) 0.194* (0.084)

-0.058 (0.085) -0.115 (0.104) -0.284** (0.094) 0.506*** (0.084) -0.054 (0.093)

0.077 (0.100) 0.202* (0.101) 0.001 (0.094) 0.387** (0.091) 0.044 (0.090)

0.299** (0.116) -0.207+ (0.116) -0.295* (0.127) 0.161 (0.127) 0.358** (0.102) -0.329* (0.102) 0.523*** (0.113) -0.272* (0.113)

-0.127* (0.064) 0.003 (0.824) -0.229** (0.072) 0.440*** (0.062) 0.022 (0.067)

0.305*** (0.084) -0.183* (0.090) -0.105 (0.080) -0.124 (0.095) 0.264*** (0.074) -0.143* (0.066) 0.415*** (0.068) -0.138* (0.066)

0.338*** (0.094) -0.008 (0.075) -0.216* (0.089) 0.040 (0.087) 0.067 (0.108) 0.217* (0.108) 0.447*** (0.103) -0.143 (0.106)

0.507

0.296

0.647 0.351

0.192

0.545 0.353

16.03*** 1.834

9.67*** 2.357

15.52*** 2.027

5.81*** 1.946

10.29*** 2.100

Coefficients are standardized coefficients. Log of the number of employees. 3 Manufacturing firms coded 1, service firms coded 0. 4 Data collected in 2002 coded 1, data collected in 2005 coded 0. 5 Family-owned businesses coded 1, nonfamily business coded 0. Significance levels: + p < 0.10; * p < 0.05; ** p < 0.01; *** p < 0.001. 2

0.176* (0.078) -0.006 (0.085) 0.020 (0.077) 0.182* (0.079) 0.118+ (0.072)

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The effect of the family-owned business variable (β = 0.194, p < 0.05) on ROA also indicates that in general family-owned businesses perform better than nonfamily businesses. The result from Model 1 further shows that the social capitals from networking relationships with bureaucratic officials, community leaders, and top managers of other firms are significant and have a curvilinear relationship with ROA (note that both the linear and the squared terms of these social capital variables are significant with a positive linear terms and a negative squared terms). However, the social capital from networking relationships with politicians is significant and has a linear and negative relationship with ROA. Models 3 and 5 in Table 3 present the results of the effects of social capital on ROA for family-owned businesses and nonfamily businesses respectively. Hypothesis 2a predicts that the effect of social capital on performance for family-owned businesses will have an inverted U-shaped relationship, such that the positive effect decreases after a threshold level. As can be seen from Model 3 in Table 3, social capitals from community leaders, bureaucratic officials, and top managers of other firms all have positive linear impact on ROA for familyowned businesses (community, β = 0.305, p < 0.001; bureaucratic officials, β = 0.264, p < 0.001; and top managers, β = 0.415, p < 0.001). Social capital from politicians is not significantly related to family-owned businesses’ ROA. Moreover, social capitals from community leaders squared (β = -0.183, p < 0.05), bureaucratic officials squared (β = -0.143, p < 0.05), and top managers at other firms squared (β = -0.138, p < 0.05), are all negative and significantly related to ROA for family-owned businesses. These findings indicate that a curvilinear (inverted U-shaped) relationship exists between social capital and ROA for family-owned businesses, implying that there is a diminishing returns to high levels of social capital from the relationships from these external entities. Again, social capital from politicians squared is not significantly related to family-owned businesses’ ROA. Therefore, a curvilinear (inverted U-shaped) relationship exist between social capital and ROA for familyowned businesses providing support from hypothesis 2a. Hypothesis 2b predicts that the effect of social capital on performance for nonfamily businesses will be positive and monotonic. The results in Model 5, Table 3, show that social capital from community leaders and top managers at other firms are positively related to ROA, but their squared terms are not significant. Thus social capitals from community leaders and top managers at other firms have positive and monotonic relationship with nonfamily businesses’ ROA (community, β = 0.338, p < 0.001; and top managers, β = 0.447, p < 0.001). At the same time, social capital from bureaucratic officials squared is significant and positively related to performance (bureaucratic officials squared, β = 0.217, p < 0.001; and top managers β = 0.415, p < 0.001), though the linear effect of social capital from bureaucratic officials is not significant. Hypothesis 2a is therefore partially supported. With the exception of the findings from social capital from politicians, the results in Table 3 clearly indicate that while nonfamily businesses experience positive and monotonic benefits from social capital developed from managerial networking relationships with external entities, family-owned business encounter a decline in the positive effects of social capital from relationships with external entities on ROA after a certain level.

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CONCLUSION Existing theoretical and empirical research in the social capital literature shows that social capital created from the networking relationship and ties with external parties function as conduits for the transmission of information, resources and opportunities which could be leveraged to a firm’s advantage and facilitate firm performance (e.g., Acquaah, 2007; Adler and Kwon, 2002, Li and Zhang, 2007; Nahapiet and Ghoshal, 1998). Recent theoretical formulations in the family business literature have also noted the importance of social capital as a governance mechanism, and a means to obtain resources to enhance the legitimacy and survival of family-owned businesses (e.g., Lester and Cannella, 2006; Nordqvist and Goel, 2008). That is, social capital matter for both family-owned and nonfamily businesses. Despite social capital’s intrinsic importance to family-owned businesses, little empirical work has directly examined how family-owned businesses develop social capital and how the social capital they develop is used to create value and enhance performance. To advance extant literature in the family business area and provide insight into the role of social capital in the strategic organization of family-owned businesses’ activities, this chapter examined the utilization of networking relationships to create social capital among family-owned and nonfamily businesses and then compared the impact of social capital on organizational performance between family-owned and nonfamily businesses. Specifically, we hypothesized that family-owned and nonfamily businesses will exhibit different levels of networking relationships and ties utilization to create social capital. Moreover, while the impact of the social capitals developed from the managerial social networking relationships with politicians, bureaucratic officials, community leaders, and managers at other firms on firm performance will exhibit a curvilinear (inverted U-shaped) relationship for family-owned businesses, that relationship will be linear, positive and monotonic for nonfamily businesses. These hypotheses were tested using survey data collected over two time periods from 106 family-owned and nonfamily businesses from Ghana. In general, the results indicate that while social capital matter, its benefit is contingent on organizational type. Specifically, the results show that while family-owned businesses in Ghana tend to utilize managerial networking relationships and ties with community leaders, bureaucratic officials and managers at other firms to a greater extent to create social capital than nonfamily firms, nonfamily businesses utilize networking relationships to a greater extent with politicians to create social capital than family-owned businesses. We also find that family-owned businesses experience diminishing returns to performance (i.e., an inverted Ushaped relationship) from social capitals developed through networking relationships with community leaders, government bureaucrats, and managers of other firms. However, the impact of social capital developed through networking relationships with politicians is not significantly to performance for family-owned businesses. For nonfamily businesses, the findings indicate that they experience a linear, positive and monotonic performance benefit from social capitals developed through networking relationships with community leaders, managers at other firms and government bureaucratic officials. The findings for nonfamily businesses further indicate that the social capital developed from the networking relationships with politicians is linear but negatively related to performance. It should be noted that the effect of social capital from politicians on performance for the overall sample is negative and significant (see Model 1, Table 3). This may imply that there are indeed considerable costs to

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be incurred in cultivating relationships with politicians so as to obtain access to resources, information, contracts, etc., and these costs adversely affect the ROA of nonfamily businesses more than that of family-owned businesses. There are some interesting and intriguing findings from the study. First, although familyowned businesses use personal and social networking relationships to a greater extent with external entities (community leaders, bureaucratic officials, and managers at other firms) to create social capital than nonfamily businesses do, family-owned businesses experience a competitive disadvantage in benefiting from these networking relationships when compared with nonfamily businesses. The social capitals from networking relationships with community leaders, bureaucratic officials and top managers at other firms have a linear positive effect on ROA for nonfamily businesses, but a curvilinear (inverted U-shaped) effect on ROA for family-owned businesses implying that the benefits they receive from social capital dissipates after a certain threshold level. The competitive advantage enjoyed by nonfamily businesses over family-owned business in the utilization of social capital from these external entities to create value in Ghana may be due to the differences in the organizational cultures and the availability of managerial and technical abilities, skills and expertise between these two organizational types. The “familiness” nature of family-owned businesses to relationship building, which is characterized by personal affection, trustworthiness, commitment, loyalty and mutual reciprocity (Habbershon and Williams, 1999; Lyman, 1991) make them susceptible to overextending their connections thus suffering from “over-embeddedness”. This results in excess reciprocity of favors and also provides external entities the ability to extract more from the benefits family-owned businesses derive from the social capitals these external entities help to provide. The differences between family-owned and nonfamily businesses in their possession and leverage of managerial and technical abilities, skills and expertise also affect the effectiveness and efficiency with which the resources, information and knowledge acquired from the social capitals are use to create value and improve performance. The lack of managerial and technical abilities, skills and expertise in family-owned businesses minimizes their ability to effectively use the resources and information they acquire from networking relationships, thus eroding the benefits obtained from social capital after a certain threshold leading to diminishing returns from such social capital. Second, while the finding from the overall sample indicates that the social capital from networking relationships and connections with politicians has a linear and negative effect on ROA, this finding hold true only for nonfamily businesses. That is, while social capital from politician has no benefit for family-owned businesses, it is detrimental to nonfamily businesses. The finding implies that when top managers of nonfamily businesses develop networking relationships with politicians to create social capital, the benefits they expect to receive from such relationships in the form of resources (e.g., access to financial resources), opportunities (e.g., awarding of government projects or contracts, certification and approval of products as meeting standards, etc.) and/or information (e.g., new and impending regulations) may turn into a hindrance and affect performance adversely. These findings offer some insight on how social capital help family-owned businesses navigate the complex and uncertain business environment in Ghana. Social capital matters for family-owned businesses in that it initially provides them with the resources and information that are required to minimize threats and exploit opportunities in the complex and uncertain business environment, enhance their legitimacy, and offer the ability to pursue new

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opportunities that may enhance performance. However, social capital does not completely eliminate the deficiencies and weaknesses of family-owned businesses such as managerial and technical abilities, skills and expertise, and less absorptive capacity. The findings show that the benefit to social capital to family-owned businesses increase only up to a certain level then declines indicating that an inverted U-shaped relationship exists between social capital and ROA.

Limitations

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The study reported in this chapter has some limitations which should be taken into consideration in interpreting the findings. First, we measured social capital by focusing on the extensiveness of networking relationships between managers and external constituents. Although it is the common method of operationalizing social capital in studies focusing on emerging economies (e.g., Acquaah, 2007; Li, Poppo, and Zhou, 2008; Li and Zhang, 2007; Park and Luo, 2001; Peng and Luo, 2000), it does not allow us to quantitatively determine network formation such as density, centrality, size, etc. However, measuring social capital by focusing on relational ties allowed us to capture the quality and richness embedded in the soft nature of personal and social networking relationships that have been developed between managers and other external entities that cannot be easily subjected to quantitative measurements. Second, a perceptual measure of ROA was used. The choice of a perceptual measure of ROA was predicated on the fact that it is difficult in practice to obtain objective measures of performance from organizations in Ghana which are not publicly traded. It should be noted that perceptual measures of performance are extensively and continually being used even in larger emerging economies (e.g., Li and Zhang, 2007; Park and Luo, 2001). Third, a study that explicitly uses longitudinal data over a longer time period would provide more robust conclusions about the impact of social capital on performance for both family-owned and nonfamily businesses. We have made the attempt to longitudinally link cause and effect relationships between social capital and performance, but the results may not be completely free from ascertaining associations between them. However, by soliciting information on the creation of social capital from one time period and ROA from another time period, the results may indeed be establishing causality.

Managerial Implications Our findings provide a number of managerial insights, particularly, for family-owned businesses. First, the conventional wisdom from most of the social capital research is that social capital provides benefits to organizations: that is higher levels of social capital enhances firm performance outcomes. Our results indicate that contrary to this conventional wisdom, the effects of social capital on performance are more complex that postulated. The findings show that both family-owned and nonfamily businesses benefit from the social capitals developed from networking relationships with community leaders, government bureaucrats, and their peers. However, family-owned businesses are admonished not to cultivate extensive networking relationships with these external entities in Ghana otherwise

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the benefits they derive from such relationships and connections will decline after a certain threshold. The inverted U-shaped relationship between social capitals from these external entities and performance for family-owned businesses is a caution to them about the value of extensive networking relationships. Extensive levels of networking relationships will hinder their performance prospects in the marketplace, but moderate levels of networking relationships are more likely to assist in creating value. Thus, family-owned businesses should find ways of attracting competent top management with at least significant experience in their industry and employees with skills and expertise so that they can increase the absorptive capacity to exploit the benefits from the social capitals from community leaders, bureaucratic officials and top managers at other firms. Second, while family-owned businesses do not derive any benefit from social capital from politicians, it is actually detrimental to nonfamily businesses. The findings imply that both family-owned and nonfamily businesses should minimize or desist from forging networking relationships with politicians in Ghana since the favors they may extract from these firms may overburden them and impede rather than improve their performance. In conclusion, we have shown that family-owned and nonfamily businesses utilize networking relationships to a different extent to build social capital: family-owned businesses utilize extensive networking relationships to create social capitals from external entities than nonfamily businesses. Moreover, the social capitals that are developed from the networking relationships have different impact on performance for family-owned and nonfamily businesses in Ghana. Future research should examine these relationships in other emerging economies so as to deepen our understanding of the effect of social capital on performance for family and nonfamily firms and help in providing us with rich insights into the application of social capital theory to family business research.

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REFERENCES Acquaah, M. (2007). Managerial social capital, strategic orientation, and organizational performance in an emerging economy. Strategic Management Journal, 28, 1235-55. Adler, P. S., and Kwon, S. (2002). Social capital: Prospects for a new concept. Academy of Management Review, 27, 17-40. Anderson, R. C., and Reeb, D. M. (2003). Founding-family ownership and firm performance: Evidence from SandP 500. Journal of Finance, 58, 1301-1328. Arregle, J-L., Hitt, M. A., Sirmon, D. G., and Very, P. (2007). The development of organizational social capital: Attributes of family firms. Journal of Management Studies, 44: 74-95. Baker, W. (1990). Market networks and corporate behavior. American Journal of Sociology, 96, 589-625. Bolino, M. C., Turnley, W. H., and Bloodgood, J. M. (2002). Citizenship behavior and the creation of social capital in organizations. Academy of Management Review, 2002, 27, 505-522. Bourdieu, L., and Wacquant, J. D. An invitation to reflexive sociology. Chicago, IL: University of Chicago Press, 1992. Burt, R. S. (1982). Toward a structural theory of action. New York: Academic Press.

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Burt, R. S. (1992). Structural holes: The social structure of competition. Cambridge, MA: Harvard University Press. Burt, R. S. (1997). The contingent value of social capital. Administrative Science Quarterly, 42, 339-365. Chrisman, J. J., Chua, J. H., and Sharma, P. (2005). Trends and directions in the development of a strategic management theory of the firm. Entrepreneurship Theory and Practice, 29, 555-575. Coleman, J. S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, S95-S120. Collins, C. J., and Clark, K. D. (2003). Strategic human resources practices and top management team social networks. Academy of Management Journal, 46, 740-752. Dubini, P., and Aldrich, H. E. (1991). Personal and extended networks are central to entrepreneurial process. Journal of Business Venturing, 6, 305-13. Dunn, B. (1995). Success themes in Scottish family enterprises: Philosophies and practices on perception of organizational performance. Academy of Management Journal, 39(4), 949969. Fukuyama, F. (1995). Trust: The social virtues and creation of prosperity. New York: Free Press. Gargiulo, M., and Benassi, M. (2000). Trapped in your own net? Network cohesion, structural holes, and the adaptation of social capital. Organization Science, 11, 183-196. Geletkanycz, M. A., and Hambrick, D. C. (1997). The external ties of top executives: Implications for strategic choice and performance. Administrative Science Quarterly, 42, 654-681. Granovetter, M. (1985). Economic action and social structure: The problem of embeddedness. American Journal of Sociology, 91, 481-510. Gujarati, D. N. (2003). Basic Econometrics (Fourth Edition). New York: McGraw Hill/Irwin. Gulati, R. (1995). Social structure and alliance formation pattern: A longitudinal analysis. Administrative Science Quarterly, 40, 619-52. Habbershon, G. T., and Williams, M. L. (1999). A resource-based framework for assessing strategic advantage of family firms. Family Business Review, 12, 27-39. Hakansson, H., and Snehota, I. (1995). Developing relationships in business networks. London, UK: Routledge. Khanna, T., and Palepu, K. (1997). Why focused strategies may be wrong for emerging economies. Harvard Business Review, 75(4): 41-49. Khanna, T., and Palepu, K. (2006). Emerging giants: Building world-class companies in developing countries. Harvard Business Review, 84(10), 60-69. Keister, L. A. (1998). Engineering growth: Business group structure and firm performance in China's transition economy. American Journal of Sociology, 104, 404-40. Kostova, T., and Roth, K. (2003). Social capital in multinational corporations and a micromacro model of its formation. Academy of Management Review, 28, 297-317. Kuanda, J., and Buame, S. (2000). Social ties and resource leveraging strategies of small enterprises in Ghana. In O. J. Sorensen and E. Arnold (Eds.), Proceedings of the 7th International Conference on Marketing and Development (pp. 425-439). Legon, Ghana: University of Ghana. Leanna, C. R., and Pil, F. K. (2006). Social capital and organizational performance: Evidence from urban public schools. Organization Science, 17, 353-366.

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Lee, C., Lee, K., and Pennings, J. M. (2001). Internal capabilities, external networks, and performance: A study of technology-based ventures. Strategic Management Journal, 22, 615-640. Lester, R. H., and Canella, A. A. (2006). Interorganizational familiness: How family firms use interlocking directorates to build community-level social capital. Entrepreneurship Theory and Practice, November, 755-775. Li, H., and Zhang, Y. (2007). The role of managers’ political networking and functional experience in new venture performance: Evidence from China’s transition economy. Strategic Management Journal, 28, 791-804. Li, J. J., Poppo, L., and Zhou, K. Z. (2008). Do managerial ties in China always produce value? Competition, uncertainty, and domestic vs. foreign firms. Strategic Management Journal, 29, 383-400. Lin, N. (2001). Social capital: A theory of structure and action. New York: Cambridge University Press. Lyman, A. R. (1991). Customer service: Does family ownership make a difference? Family Business Review, 4(3), 303-324. Martinez, J., Stohr, B., and Quiroga, B. (2007). Family ownership and firm performance: Evidence from public companies in Chile. Family Business Review, 20, 83-94. Merton, R. K. (1968). Social Theory and Social Structure. New York: Free Press. Mia, L., and Clarke, B. (1999). Market competition, management accounting systems and business unit performance. Management Accounting Research, 10, 137-158. Mosakowski, E. (1993). The resource-based perspective on the dynamic strategy-performance relationship: An empirical examination of the focus and differentiation strategies in entrepreneurial firms. Journal of Management, 19, 819-839. Nahapiet, J., and Ghoshal, S. (1998). Social capital, intellectual capital and the organizational advantage. Academy of Management Review, 23, 242-266. Naldi, L., Nordqvist, M., Sjoberg, K., and Wiklund, J. (2007). Entrepreneurial orientation, risk taking, and performance in family firms. Family Business Review, 22(1), 33-47. Neter, J., Kutner, M. A., Nachtsheim, C. J., and Wasserman. W. (1996). Applied linear statistical models (4th Edition). Chicago, IL: Irwin. Nordqvist, M., and Goel, S. (2008). No family is an island: A social network approach to governance in family firms. In P. H. Phan and J. E. Butler (Eds.), Theoretical developments and future research in family business (pp. 27-48). Charlotte, NC: Information Age Publishing, Inc. Park, S. H., and Luo, Y. (2001). Guanxi and organizational dynamics: Organizational networking in Chinese firms. Strategic Management Journal, 22, 455-77. Peng, M. W., and Luo, Y. (2000). Managerial ties and firm performance in a transition economy: The nature of a micro-macro link. Academy of Management Journal, 43, 486501. Putnam, R. D. (1995). Bowling alone: America’s declining social capital. Journal of Democracy 6, 65-78. Rogoff, E. G., Kay, R., and Heck, Z. (2003). Editorial: Evolving research in entrepreneurship and family business: Recognizing family as the oxygen that feeds the fire of entrepreneurship. Journal of Business Venturing, 18, 559-566.

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Schulze, W. G., Lubatkin, M. H., and Dino, R. N. (2003a). Exploring the agency consequences of ownership dispersion among the directors of private family firms. Academy of Management Journal, 46(2), 179-194. Schulze, W. G., Lubatkin, M. H., and Dino, R. N. (2003b). Toward a theory of agency and altruism in family firms. Journal of Business Venturing, 18, 473-490. Steier, L. (2001). Next-generation entrepreneurs and succession: An exploratory study of modes and means of managing social capital. Family Business Review, 14, 259-276. Tsai, W., and Ghoshal, S. (1998). Social capital and value creation: The role of intrafirm networks. Academy of Management Journal, 41, 464-76. Tokarczyk, J., Hansen, E., Green, M., and Down, J. (2007). A resource-based view and market orientation theory examination of the role of “familiness” in family business success. Family Business Review, 20(1), 17-31. Uzzi, B. (1997). Social structure and competition in interfirm networks: The paradox of embeddedness. Administrative Science Quarterly, 42, 35-68. Wall, T. D., Michie, J., Patterson, M., Wood, S. J., Sheehan M., Clegg, C. W., and West, M. (2004). On the validity of subjective measures of company performance. Personnel Psychology, 57, 95-118. Westhead, P., and Cowling, M. (1998). Family firm research: The need for a methodological rethink. Entrepreneurship Theory and Practice, 23, 31-56. Wiklund, J. and Shepherd, D. (2003). Knowledge-based resources, entrepreneurial orientation, and the performance of small and medium-sized businesses. Strategic Management Journal, 24, 1307-1314. Yli-Renko, H., Autio, E. and Sapienza, H. J. (2001). Social capital, knowledge acquisition, and knowledge exploitation in young technology-based firms. Strategic Management Journal, 22, 587-613. Young, C-S., and Tsai, L-C. (2008). The sensitivity of compensation to social capital: family CEOs vs. nonfamily CEOs in the family business group. Journal of Business Research, 61, 363-374.

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ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 5

SOCIAL CAPITAL AND ETHICS: THEIR INFLUENCE ON ECONOMIC PERFORMANCE Maria-Soledad Castaño Martínez∗ University of Castilla-La Mancha. Plaza de la Universidad, 1., 02071 Albacete, Spain

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ABSTRACT Recently, social capital has been considered as a production factor along with physical capital and human capital, that contribute to higher economic growth and also improve economic productivity. Social capital is also considered important for the efficient performance of modern economies and the sine qua non of a stable liberal democracy. It constitutes a component culture of societies that has been organized from both informal and formal institutions and legal norms and rationality. Therefore, social capital is a concept that refers to social networks and reciprocity norms associated with them and are the same as physical capital and human capital, wealth creation, as much individual as collective. This conception does not imply that the creation of norms generates in itself social capital, but rather these should lead to cooperation between groups and, therefore, they are related with virtues like honesty, commitments maintenance, duties maintenance and reciprocity. From this point their connection is clearly deduced from the socio-economic profitability of the ethics, also, as certain moral behaviour causes an increase in social capital in certain countries that influence positively on their economic growth and on their economic productivity. This conception of social capital and its economic function, surprise the traditional economic analysis, where the objective of the individuals is to get the maximum possible benefit that can be generated by individualist and egoist morals. So, this paper analyses the essential components of social capital, norms and shared values, reciprocity, trust, honesty, and social networks and their economic effects. After this theoretical analysis, empirical evidence from forty-three countries will be analysed.

∗

[email protected]

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1. INTRODUCTION An orthodox economy tries to introduce the methodology of natural sciences for the economic behaviour of economic agents, for this reason, ethical aspects have been eliminated, as well as, networks that constitute social capital. Theses aspects have recently been considered by specialized literature. The ethical virtues that constitute social capital are considered by Aristotle and classical authors’ economic analysis. Later, The Neoclassical School, Marginalist School, Utilitarilist School eliminated ethical values in their economic analysis, as well as, social capital. In spite of the analysis of social capital it did not disappear, but rather was carried out by sociologists. Recently, the effects of social capital on economic growth and on productivity have been considered unsatisfactory for traditional analyses to explain the economic growth process. For this, the second section will be centred on as certain ethical virtues that contribute to form social capital. Later on, in section three; their economic effects on economic growth will be considered. After that, in section four, an empirical analyse for forty-three countries will be carried out. Finally, it will be closed with some short conclusions.

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2. ETHICAL VIRTUES OF SOCIAL CAPITAL It is possible to find several definitions of the social capital in the literature. In this chapter, the wide definition of social capital of Putnam and Goss (2003, p. 14) was followed, it was understood for social capital that groups of social networks and reciprocity norms associated with them were the same as physical capital and human capital, wealth creation, as much individual as collective (Putnam and Goss, 2003, p. 14). This definition does not imply that the process of norm creation generates social capital in itself, but rather that these should lead to cooperation among groups and, therefore, they are related with virtues like honesty, maintenance of commitments, fulfilment of duties and reciprocity. This conception of social capital would be in agreement with that already exposed before by Aristotle (2004) in the Nichomachean Ethical. According to Aristotle the form of obtaining “happiness1” for most of the people is through “political life2”, since it has characteristics of a “happy life”3. Also, some of ethical virtues that Aristotle points out that obtain “happiness” are necessary to the social capital that arises, kindness, sincerity and reciprocity and friendship. So, Aristotle already exposes a great part of the positive effects of social capital when considering friendship. According to Aristotle (2004), friendship is a virtue and, also, it is the 1

Supreme objective to that all human action is driven. According to Aristotle (2004, p. 12) the ways of life are mainly three: the voluptuous life (bíos apolaustikos), the political life (bíos politikós) and the contemplative life (bíos theoretikos). The first one would be like wild sexual pleasures and is characteristic of animals more than people. On the other hand, the political life looks for the obtaining of honours, but its true nature consists of the exercise of virtues in society. Finally, the contemplative life is dedicated to disinterested observation of truth and cultivation of the philosophy and of the science. 3 According to Aristotle (2004) the concept of happiness has two fundamental characteristics: supreme objectivity (because it is always looked for in itself and never for the profit that could bring) and for their self-sufficient character (because he who is happy has enough with what he has and it does not miss anything that is lacking). 2

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most necessary thing in life. Indeed, without friendship nobody would want to live, even if they had other goods; even those that possess wealth, authority or power seem to need, in the main, friends (…). In poverty and in other misfortunes, friends were considered as a refuge. (…). Friendship seems also to maintain cities united, and legislators were interested more in it than justice. Indeed, concord seems to be something similar to friendship and concord in aspired to mainly and, on the other hand, they try mainly to expel discord that causes enmity. And when people are friends, there is no need for justice, but just being fair, if there is a need for friendship, and it seems that those that are fair are also those that are more capable of friendship" (Aristotle, 2004, pp. 215-216). Therefore, social links, that take place in different types of friendship and ethical virtues associated with them, are those that favour efficient societies and performance an economic activity. Also, it must be taken into account that social links are also important due to the behaviour norms that sustain them. Networks imply (almost by definition) mutual obligations; they are not interesting as mere “contacts”. Commitment networks in a community foment solid reciprocity norms. This means that when members of group or a network are convinced that the others will behave with formality and honesty, trust is born among them. Trust is like a lubricant that makes any group or organization work with more efficiency (Fukuyama, 2001, p. 43). To understand the importance of social norms the start point is Hobbes´ thought. According to Hobbes (2002) people´s supreme objective is “happiness” (the same as Aristotle). And in order to obtain it, each individual has unavoidably to be offered the means that lead to it. But contrary to Aristotle (2004), for Hobbes (2002), “the process of reaching happiness never finishes, since for this author happiness is a continuous process in desire; a continuous one that pass from one object to another. To get a thing is only a means to achieve the following one (…)” Also, “the voluntary actions and the inclinations of all people, does not only spread to offer a “happy life”, but to assure it” (Hobbes, 2002, p. 109). Hobbes (2002) indicates that it is this desire that passes from one object to another, that leads to competition among individuals for the acquisition of wealth, honours, dignities, or any sign of power, this fact leads to antagonism, to enmity and war. For these reasons individuals establish social norms. This competition among individuals and destructive possibilities is what leads individuals to establish coexistence norms and laws. For an agreement among individuals they delegate this function to the State. So, the establishment of formal norms in this case were carried out by means of the state. But this process described by Hobbes (2002), on occasions, could cause the establishment of informal norms and networks of trust that take the place of social capital, that when arise stop this way of reaching common objectives and matters by means of cooperation among individuals and not by means of competition. Therefore, in function of that shown previously, it is necessary to indicate that an essential element for the existence of social capital is moral values and social norms that are not mere arbitrary limitations of individual freedom, but the previous condition for any cooperation type. By means of social norms, the individuals enlarge their power and capacities, when following cooperative norms that limit their election freedom and they allow them to communicate with other ones and to coordinate their actions. The social virtues, like honesty, reciprocity and execution of commitments are not valuable only as ethical values but rather they also possess a tangible monetary value and they facilitate the achievement of

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objectives common to groups that practice them, so, it is necessary to introduce them into economic analysis. So that a community exists it is not only necessary that people within the group interact, but rather true communities are cohesive because of the values, norms and experiences that their members share. When these common values are deeper and stronger values, community sense are strong and solid (Fukuyama, 2001, pp. 37-42). As previously indicated, to reach happiness is the supreme objective of human activity. Formal and informal norms are necessary to correct operations in a society that guarantee a framework in which individuals can achieve as many of their individual objectives as collective. This most efficient operation in societies has evident repercussions on economic activity, since economic agents (individuals, families, companies, state) will be able to achieve its economic objectives better. Figure 1 shows, social norms and ethical virtues that take place in social capital. They have important effects, which will be seen subsequently, in the performance of the economic system, and fundamentally, it has positive effects on economic growth and productivity, when reducing transaction costs and facilitating the transmission of human capital. However, it is necessary to indicate that not always do types of relationships generate effects which benefit all society, but rather in fact shared norms can cause, on occasions, a certain degree of conflict that is negative for economic activity, like the case of the mafia in Southern Italy and of the Klu Klux Klan in the Northern USA. Therefore, with inside values and social norms, it is necessary to highlight that those that allow the generating of social capital are those that facilitate the cooperation and include virtues like truth, honesty, execution of obligations and reciprocity. Out of all of these, reciprocity has a special interest for this analysis, since it supposes mutual help among individuals that means that trust arises among them and individuals which can unite to obtain common objectives, that is to say, it will form social capital. Higher social and economic efficiency Shared norms and

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values

Reciprocity

SOCIAL CAPITAL

Decrease transaction costs Increase productivity

Trust Effects on Economic Growth Source: Castaño (2005) and own elaboration. Figure 1. Social Capital and Economic Growth.

So, the fundamental element of social capital is the principle of widespread reciprocity. Therefore, frequent interaction among different people spreads to generate a norm of

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widespread reciprocity (Portes, 1998; Putnam 1993 and 2002; Uzzi, 1997). These norms of widespread reciprocity solve problems of collective action. This way, it becomes the interest characteristic of individuals and the selfishness of agents with a small obligation sense toward others, that leads to members of a community to try to get shared objectives. Therefore, a society characterized by widespread reciprocity is more efficient than another distrustful one (Putnam, 2002), since civic commitment and social capital suppose mutual obligation and responsibility to act. As Hanifan recognized (1916) and his successors, social networks and norms of reciprocity can facilitate cooperation for mutual benefit. When economic and political agreements are carried out inside some dense networks of social interaction, opportunism and corruption can reduce their incentives. Therefore, in the measure that these values and norms appear trust arises. Trust is like a lubricant that makes any group or organization work with more efficiency (Fukuyama, 2001, p. 43 and Alesina and La Ferrara 2000).

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3. SOCIAL CAPITAL AND ECONOMIC GROWTH The economic objective that has been traditionally compared in an economic sense with happiness has been economic growth, therefore, it is necessary to incorporate into the economic analysis the effects of social capital and ethical virtues that they constitute and analyse their effects on economic growth. Analysing the social capital concept it is possible to consider at least the following sources (Castaño, 2007): (1) family; (2) associations; (3) informal links; (4) links in the work place; and (5) State. These sources provide trust networks for their members and in fact give rise to trust feelings and reciprocity among their members that give rise to the emergence of social capital. This trust situation produces a more fluent transmission of human capital and facilitates transmission and assimilation of technology, everything that supposes higher economic growth and productivity (Castaño, 2007). Another positive social capital effect to be considered, is that families and some associations facilitate financial resources to their members in order to create companies (Fukuyama, 2001; Woolcock, 2001 and Woolcock and Narayan, 2000) or to keep them running, in both cases a higher economic growth can be promoted. Besides, social capital reduces by a great amount transaction costs. Therefore, as Gambetta (1988) states, societies that are based on, to greater extents, the use of force seem to be less efficient, more expensive and more unpleasant than those that are based on trust and informal norms. A society where all kinds of agreements among individuals are necessary, a legal norm will incur that causes higher transaction costs that will reduce economic efficiency, and therefore, economic growth. Therefore, appropriate social capital, where individuals are supported by their families and their environment, together even for a appropriate formal institutional framework, is considered as an element that more than foments economic growth (Galindo, 2003, p.149) and productivity. So, Hanifan (1916) considers that “social links make our lifes more productive” and that an increment of productivity is achieved by social capital that reduces in great measure

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transaction costs. Reciprocity and honesty facilitate cooperation and participation, that rebounds in all the agents´ benefit that operate in a socio-economic space (Conill, 2004). On the other hand, State can influence in the generation of social capital, by means, establishing formal rules that constitute institutional frameworks in a country along with informal norms. So, countries that have some appropriate informal relationships and an adequate legal framework that works well, in some circumstances, can explain a significant part of the reasons why some societies progress quicker than others (Chhibber, 2000).

4. EMPIRICAL ANALYSIS In this section, an empirical analysis has been developed to observe previous theoretical relations. To realise this empirical analysis data has been used from some OECD countries and some developing countries4. To realise this, data has been used from items of the World Value Survey waves and World Bank Indicator for 2000. Then, the sources of social capital previously mentioned are considered and GDP growth, the following figures are obtained. Figure 2 shows a positive relation between those who belong to professional associations and GDP growth. Also, figure 3 shows a positive relation, but in this case, the associations of leisure activities. These results are according with Putnam´s (2002) and Fukuyama´s (2001) thesis. 30 USA 25

Professional associations

TAN BAN

20 ICE CAN NET 15

SWE

VIE DEN 10 ALG SLOV

5

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GRE

0 0

1

2

ALB

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4

5

6

COR LUX EST MEX LAT 7

8

9

10

GDP growth

Source: Own elaboration with World Values Survey data and World Bank data. Figure 2. Associations (I) and Economic Growth. 4

Albania (ALB), Algeria (ALG), Austria (AUS), Bangladesh (BAN), Belgium (BEL), Bulgaria (BUL), Belarus (BELA), Canada (CAN), Chile (CHI), Croatia (CRO), Czech Republic (CZE), Denmark (DEN), Estonia (EST), Finland (FIN), France (FRA), Greece (GRE), Hungary (HUN), Iceland (ICE), India (IND), Italy (ITA), Japan (JAP), Republic of Korea (KOR), Kyrgyzstan (KYR), Lithuania (LIT), Luxembourg (LUX), Mexico (Mex), Netherlands (NET), Philippines (PHI), Poland (POL), Portugal (POR), Romania (ROM), Slovakia (SLOV), Viet Nam (VIE), Slovenia (SLOVE), Spain (SPA), Sweden (SWE), Uganda (UGA), Republic of Macedonia (MAC), Great Britain (GB), United Republic of Tanzania (TAN), United States (USA), Venezuela (VEN) and Germany (GER).

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50 NET

Associations of arts , educations, cultural, music, ...

45 40

USA 35 30

BAN TAN SWE

25

CAN GRE

UGA 20 BEL

VEN DEN 15 AUS CZEPER JAP ITA GB FRA GER SLO CRO ALG

10 5

KYR SLOVE CHI

SPA PHI LIT

0

1

2

FIN

ALB

MAC

POR

ROM 0

COR LUX

VIE ICE

IND

3

HUN

POL

4

EST MEX BUL BELA

5

6

LAT

7

8

9

10

GDP growth

Source: Own elaboration with World Values Survey data and World Bank data. Figure 3. Associations (II) and Economic Growth.

On the other hand, figure 4 shows a negative relation between informal links and economic growth. In this case, this result is not in accordance with theoretical thesis previously mentioned. 90 UGA

80

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GB

Spend time with friends

70

CRO USA NET SWE POR SPA CAN ICE ITA DEN FRA SLOVETAN AUS MAC

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LUX

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50 ALG 40 ROM

BEL GER CZE IND VEN PHI POL LIT PER

KYR

EST LAT

HUN

COR

MEX

30

ALB

JAP CHI VIET

20

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10

0 0

1

2

3

4

5

6

7

8

9

10

GDP growth

Source: Own elaboration with World Values Survey data and World Bank data. Figure 4. Informal Links and Economic Growth.

However, links in the work place measured by means the proxy variable “spend time with work colleagues” has a positive effects on economic growth, this relation was observed by Saxenian, (1994) in Silicon Valley. These positive effects could be explained by links in the work place producing a more fluent transmission of human capital and facilitate

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transmission and assimilation of technology, everything that supposes higher economic growth and productivity (Castaño, 2007, p. 141). 60 VIE UKA

Spend time with colleages from work

50

BAN GER

40

SWE

USA IND

POR 30 ROM

PHI

ALG

TAN

MAC

CRO

ALB

BUL

SPA

PER

BELA

GRE

COR

SLOVE KYR FIN

VEN UGA ITA SLO CZE DEN NET FRA

10

MEX

GB

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ICE HUN

LAT EST

LUX

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GDP growth

Source: Own elaboration with World Values Survey data and World Bank data. Figure 5. Links in the Workplace and Economic Growth.

According to Putnam (2002) a good patrimony of social capital in a society will improve political democracy and economic outcomes by increasing the capacity of individuals to cooperate for common objectives and to reduce the transaction costs, and it defends a good operating of public institutions depending on, at least partly, social network links. Also, the capacity of social groups to be mobilized by community interests, in fact depends on the quality of formal institutions and where operated (North, 1990). The figures 6, 8 and 9 show these relations. So, figure 6 shows that higher satisfaction with democracy suppose a higher GDP per capita. 80

LUX

70

AUS NET

POR BAN

SPA

ICE GER

Satisfation with democracy

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60 UGA TAN

50

CAN

DEN

GB

IND GRE POL VEN

40

SWE USA FIN BEL FRA

SLOVE

JAP

PHI ALG VIE

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CZE MEX EST HUN LAT

ITA KOR

BELA

BUL

PER SLO TUR ROM

ALBLIT

20

MAC

CRO

10

0 0

10000

20000

30000

40000

50000

GDP pc

Source: Own elaboration with World Values Survey data and World Bank data. Figure 6. State (I) and Outcome.

60000

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Figure 7 shows those who belong to political parties and GDP growth, it is possible to observe a positive relation according with the thesis of Putnam (2002). Also, relations with local political action are considered, it can be observed that this is positive (figure 8). 30 VIET TAN 25 BAN

Political Parties

20

USA

ICE

15

ALB AUS

10

NET

MAC

IND SWE UGA

BEL GRE DEN FIN BELA PER ITA VEN CROPHI BUL JAP CZE SLOVE GER GB CAN LIT HUN SPA FRA POR KYR POL BEL

SLOV ALG

5 ROM 0 0

1

2

3

4

5

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6

7

8

9

10

GDP growth

Source: Own elaboration with World Values Survey data and World Bank data. Figure 7. State (II) and Economic Growth.

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25 TAN

Local political action

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15 USA UGA

10

DEN

ALG

5

ROM 0 0

1

2

ITA JAP

SLOVE CAN

SWE

SLO

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ALB

VEN

NET

PHI IND MAC BEL GRE

4

ICE HUN 5

FIN BUL BELA 6

EST

7

GDP growth

Source: Own elaboration with World Values Survey data and World Bank data. Figure 8. State (III) and Economic Growth.

LUX

MEX

CHI

GB CZE AUS CRO SPA POL FRA GER POR LIT 3

KOR

KYR

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Maria-Soledad Castaño Martínez

CONCLUSIONS In this chapter, ethical virtues of social capital that influence economic performance have been exposed. Therefore, although after Smith (2001 and 2004) and before the attempts of some traditional theories of suppressing the economic analysis of the ethical virtues of social capital, as this paper has been able to show, these are essential to the understanding of economical operations and therefore, they must be incorporated in economic analysis. Also, in this chapter social links, reciprocity norms, trust, and honesty that associate these links or social networks are shown to have an important economic value, not only social and, therefore, social capital can be considered as a new factor that influences economic activity. Finally, an empirical analyse was carried out that analyses the relations between the sources of social capital and economic growth. So, a positive relation between belonging to associations, links in the work place and state and economic growth can be observed, but, in this case there exists a negative relation with informal links.

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REFERENCES Alesina, A. and La Ferrara, E. (2000). “The determinants of trust”; http://www.nber.org/papers/w7621; Documento de trabajo 7621. Aristóteles (2004). Ética Nicomáquea; Madrid; Gredos y RBA Colecciones. Castaño, M.S. (2005). “Los valores éticos del capital social y su influencia en el crecimiento económico”, Información Comercial Española, june, 2005, pp. 131-140. Castaño, M.S. (2007). “The Influence of Socioeconomic Factors on Economic Growth”, International Advances in Economic Research, pp.139-145. Chhibber, A. (2000). “Social Capital, the State and Development Outcomes”; en DASGUPTA, P. AND SERAGELDIN, I. (ed): Social Capital. A Multifaceted Perspective; Washington; The World Bank, pp. 296-309. Conill, J. (2004), Horizontes de la economía ética, Tecnos, Madrid. Fukuyama, F. (2001). La gran ruptura; Madrid; Punto de Lectura. Galindo, M. A. (2003), “Algunas consideraciones sobre el crecimiento económico”, clmeconomía, nº 2, pp. 129-158, Toledo. Gambetta, D. (1988). Trust: Making and Breaking Cooperative Relations, Blackwell, Oxford. Hanifan, L.J. (1916). “The Rural School Community Center”; Annals of the American Academy of Political and Social Science; 67, pp. 130-38. Hobbes, T. (2002). Leviatán I; Barcelona; RBA Colecionables. North, D.C. (1990). Institutions, Institutional Change and Economic Performance; Cambridge (UK), Cambridge University Press. Portes, A. (1998). “Social capital: Its origins and applications in modern sociology”; Annual Review of Sociology, 24, pp. 1-24. Putnam, R.D (2002). Solo en la Bolera; Barcelona; Galaxia Gutenberg. Putnam, R.D and Goss (2003). “Introducción”; en PUTNAM, R.D (ed): El declive del capital social; Barcelona; Galaxia Gutenberg, pp. 7-34. Putnam, R.D. (1993). “The Prosperous Community”; American Prospect; 13 (Spring); pp. 35-42.

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Saxenian, A. (1994): Regional Advantage: Culture and Competition in Silicon Valley and Route 128, Harvard University Press, Cambridge. Smith, A. (2001). La riqueza de las naciones, Madrid; Alianza editorial. Smith, A. (2004). La teoría de los sentimientos morales, Madrid; Alianza editorial. Uzzi, B. (1997). “Social structure and competition in interfirm networks: The paradox of embeddedness”; Administrative Science Quarterly; 42, pp. 35-67. Woolcock, M. (2001). “The place of social capital in understanding economic and social outcomes”; Canadian Journal of Policy Research; 2 (1), 11-17. Woolcock, M. and Narayan, D. (2000): “Social capital: implications for development theory, research and policy”; World Bank Research Observer; 15 (2), 225-249.

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In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

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Chapter 6

SOCIAL CAPITAL AND THE HEALTH OF IMMIGRANT AND NATIVE-BORN RESPONDENTS IN CANADA AND THE USA Cherylynn Bassani∗ University of British Columbia, Centre for Community Child Health Research SHY L313 - 4480 Oak Street Vancouver, British Columbia V6H 3V4, Canada

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ABSTRACT This chapter examines social capital and its influence on the health of immigrant vs. native-born respondents in Canada and the United States of America. This research is unique in a number of ways: it combines the Family and Youth social capital literatures with the Health social capital literature. In doing this, we are able to enrich the conceptualization and operationalization of social capital, thereby developing social capital theory. Randomly drawn representative data from the Joint Canada/ United States Survey of Health is used to examine health disparities between the four sub-samples. Logistic regression analysis is used to test the influence of social capital on four indicators of health. A number of interesting findings are illustrated. According to the results, social capital has a significant effect on native-born respondents, particularly those in Canada. By and large, commonly used measures of social capital were not found to influence the health of immigrant respondents in either country. The findings suggest that immigrant and native-born respondents are differently influenced by social capital and therefore future health research needs to take this and other results into consideration.

∗

Mailing Address: Dr. C. Bassani, 6961 196 A Street, Langley, BC V2Y 3A and, Canada, [email protected]. phone: 604-514-8654

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INTRODUCTION This chapter examines the role that social capital plays in understanding health differences among immigrant and native-born respondents in Canada and the United States. Drawing on the family, youth, and health social capital literatures, my aim is to enrich the conceptualization and operationalization of social capital. Not only is this essential for understanding health differences, but a cross disciplinary understanding of social capital also will help in the theory’s development. The use of social capital theory in this research is particularly noteworthy because the literature tends to focus on the healthy immigrant effect1 when examining immigrant vs. native-born health disparities. In addition, few cross-national studies focus on Canadian - U.S. health disparities, despite their shared border and similar cultural heritage. For all of these reasons, the research and discussions presented in this chapter make an important contribution to both the social capital and health literatures. There have been few comparisons of the determinants of health within immigrant and native-born populations. Research has tended to examine national populations or solely immigrants, or alternately, to focus on specific immigrant groups within a country. Studies that have compared indicators of immigrant vs. native-born health typically have focused on the “healthy immigrant effect” (Chen et al., 1996; Gee et al., 2003; Newbold, 2005). While the healthy immigrant effect offers valid explanations for health differences between immigrant and native-born individuals, few other theories have been used to examine health disparities between these two groups. To expand our understanding, and thus increase the ability to alleviate health disparities, other theories need to be explored. Kawachi and his colleagues (1997) first introduced the concept of social capital into health studies. As Carlson and Chamberlain (2003) have pointed out, however, relatively few health researchers have incorporated social capital into their explanatory models of health (Harpham et al., 2002; Kawachi, 1999; Kawachi and Berkman, 1999; Kawachi and Kennedy, 1997; Kawachi et al., 1999; Lochner et al., 1999; Veenstra, 2000; Veenstra et al., 2005). In this chapter, my aim is to encourage researchers to expand their thinking about social capital (its conceptualization and operationalization) and how it can influence health. To facilitate this, I have synthesized the conceptualization and theoretical framework of social capital that is found in youth and family studies with health studies. Through this synthesis, I believe, a richer understanding of the health disparities between native-born and immigrant individuals (in Canada and the United States) may be found. The research reported in this chapter examines the influence that social capital has on health in four sub populations: native-born in Canada and the United States, and immigrants born in Canada and the United States. These results are particularly useful given the current focus on the healthy immigrant effect in the literature. In addition, given that such a large percentage of both national populations are first-generation (born outside of the country) immigrants, there is a need for research to document and react to health differences. The Canadian-U.S. comparison is used to further our understanding of social capital and its effect on health, as theory is best examined when comparing cross-nationally (Kohn, 1987; Ragin and Zaret, 1983). Such

1

Researchers that examine the health of immigrants in both Canada and the United States have found a healthy immigrant effect; that is immigrants initially tend to have better-than-average health when they first immigrate, but over time their health declines as it gravitates towards the national average.

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comparisons are particularly noteworthy because social capital theory rarely has been extended outside of the U.S. context (Bassani, 2003, 2007; Morrow, 1999).

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SOCIAL CAPITAL DEFINED Commonly defined as the product of group bonds, such as trust and obligations among group members, social capital has been recognized as a crucial element of well-being (Bourdieu, 1986; Coleman, 1987, 1990; Lin, 2001; Putnam, 1999). Due to its intangible nature, within the social capital literature there is a general consensus that “the overall body of knowledge about social capital [is] confused and ambiguous” (Edwards, 2004, p. 3), though researchers generally agree that social capital is a product of people’s social ties (Coleman, 1990; Kawachi, 1999; Morrow, 1999; Putnam, 1999). Coleman (1990) defined social capital by stating: “What I mean by social capital in the raising of children are the norms, the social networks, and the relationships between adults and children that are of value for the child’s growing up” (p. 334). In more general terms, working with Putnam’s (1996) conceptualization of social capital, Kawachi (1999) defined social capital as “levels of interpersonal trust and norms of reciprocity and mutual aide” (p. 121). General theories of social capital did not develop until the 1990s, and today, even though there is no one uniform social capital theory, it is used throughout the social sciences. The concept of social capital is not a new advent, since its essence can be seen in the writing of earlier social thinkers such as Marcus Aurelius (c. 200AD), among others, who wrote extensively about the value of family and friendship relations and the quality of one’s life (Aurelius, 2003). Within the social sciences, researchers have long recognized the importance of social capital, though it has only recently become a key indicator of well-being. Over the last century, a handful of researchers have integrated social capital into their research. In 1916, Hanifan included social capital in his discussion of the relationship between education and community in rural areas. Later, in the 1960s, Jacobs (1965) used it in her social geographic research that examined city neighborhoods, and a decade later, Loury (1977) used it to explain variations in labour markets (OECD, 2001a). In the 1980s, both Bourdieu and Coleman used the concept, and although debate exists, it is Coleman (1987, 1988, 1990) who specifically used the concept of social capital in his research and developed the concept in reference to its importance in understanding disparities in youths’ well-being. Within the general literature, there are at least three ways to view social capital, as it emerged out of Coleman’s, Bourdieu’s, and Putnam’s research (Fine, 2001; Morrow, 1999). As a family and youth health researcher, I follow Coleman’s understanding of social capital, which captures a micro-macro (micro-mezzo-macro) perspective that holds the individual as the essential unit of analysis, who is embedded in numerous mezzo and macro groups. Since the health literature tends to borrow much of its understanding of social capital from Putnam’s work, it is necessary to point out one major difference between the Coleman’s and Putnam’s perspectives. Although both perspectives argue that social capital is created within a group, they tend to disagree on who holds social capital: the group or the individual (Coleman, 1988, 1990; Fine, 2001; Lin, 2001; Putnam, 1999). As Kawachi and his colleagues (1999; Lochner et al., 1999) argued, in health studies, social capital is thought to belong to the group and not the individual. In youth and family studies, however, this capital is typically

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viewed as belonging to the individual, though it is created in the group. This is not a trivial difference between disciplines, as researchers’ understanding of what social capital is and who holds it determines how it is measured and thus affects its (theoretical and statistical) influence on health. Although scholars, such as Carlson and Chamberlain (2003), have pointed out differences in the measurement of social capital, they did not explain why these differences occur. If the concept and theory are to be developed, such differences need to be understood. In the following section, I discuss the process by which an individual develops social capital--which clearly delineates social capital as an individual’s capital. This understanding of social capital is integral to its operationalization and is the underlying reason, in my opinion, for the measurement disparity in youth and family studies vs. health and political science studies (Carson and Chamberlain, 2003; Kawachi, 1999; Lochner et al., 1999). Once this difference is clarified, much of the confusion surrounding the social capital literature dissipates.

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SOCIAL CAPITAL THEORY Within youth and family studies, social capital theory (SCT) increasingly has become recognized as a useful paradigm for explaining differences in general well-being (Bassani, 2003, 2007, 2008; Coleman, 1987, 1988; Morgan and Sorenson, 1999; Parcel et al., 1996). By integrating the conceptualization of SCT in this field with that found in the health literature, we can enrich our contextual understanding of why variations in individuals’ health occur. Within the youth studies literature, SCT has at least five fundamental dimensions (Bassani, 2007). First, there are several forms of capital (i.e., social capital--the product of social relations; financial capital--income; human capital--education and socio-economic status; cultural capital--understanding of a particular culture; material capital--possession of goods) that influence well-being. Social capital is rudimentary because it has both a direct and an indirect effect on well-being. Social capital influences health directly when social resources are mobilized into social capital. Social capital also indirectly influences well-being by mobilizing other forms of capital. Specifically, only through social capital (having a relationship with group members) can individuals access and utilize other group members’ financial, human, cultural, material, and even social capital. The second dimension of SCT is that social capital typically has a positive, linear relation with well-being. In theory, however, social capital should be seen as having a curvilinear relationship with well-being. Social capital can become excessively strong and work to isolate individuals from other groups, thereby decreasing their well-being. When individuals belong to marginalized groups, such as visible ethnic minorities, social capital has been found to have a negative effect on well-being (Bankston, 2004; Ream, 2003). Research that focuses on specific ethnic minorities (e.g., Ream’s work on Mexican immigrants in the United States and Lori’s work on refugees in the Prairie provinces), has found that social capital may have a positive, negative, or possibly a curvilinear effect on well-being. This negative--or excessively strong--social capital has been referred to as the “downside” of social capital (Portes and Lambert, 1996). When social capital in a group becomes excessively strong, the group becomes too closed, thereby barricading group members from bridging to other groups.

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In such cases, individuals have strong social capital in the one group, but have weak or absent social capital in other groups, which in turn may negatively influence their well-being. Within the literature, most researchers have recognized only the positive side of social capital. Such scholars have examined general populations and not specific marginalized groups. As a result, their findings illustrate a positive, linear relationship between social capital and well-being because the downside of social capital is masked with the “general” data. The curvilinear nature of social capital is not widely discussed in any of the family, youth, or health literatures. This important issue will be discussed in more depth towards the end of the chapter. The third and fourth dimensions of the theory are interrelated: The third asserts that the development of social capital is a complex process, while the fourth states that social capital is formed as a result of two types of efficiencies: structural social resource efficiencies (who is in the group) and functional social resource efficiencies (how the people in the group interact with each other) (Coleman, 1988). When there are efficiencies within groups (such as the family or school), resources are mobilized and social capital is created. Because social capital is a non-tangible entity, researchers tend to measure its structural and/or functional components. Within the family and youth literatures, the two components of social capital have been found to be primary indicators of well-being (Guzman et al., 2003; Jeynes, 2002; Kawachi and Kennedy, 1999; Parcel et al., 1996; Teachman et al., 1997; Veenstra et al., 2005). The theory recognizes that social capital is created within groups. All individuals belong to a primary group (typically the family) and a number of other secondary mezzo (e.g., the school, ethnic community, peer groups, etc.) and macro (e.g., education, economic, political systems) groups that are interconnected or bridged. Within each group, individuals have access to various resources that can be transformed into capital. Because individuals enter any given group with a set of micro-mezzo resources, each individual has a unique configuration of capital. Accordingly, individuals’ health will vary due to these differences in capital. This last point is a key difference in how the family and youth literatures and the health literature use the concept of social capital. The health literature tends to focus on the neighbourhood or generic community, mezzo (secondary) groups and tends not to differentiate between primary and secondary groups. This can be attributed to the health literature’s primary reliance on Putnam’s work, which recognizes the family as the main mezzo group, though it does not account for the social capital that is created in the primary group. In contrast, the family and youth literatures recognize the family as the individual’s primary group, and the school as the most important secondary group to which all individuals have belonged or currently belong. A major limitation of this literature is that it tends to not examine the effects of social capital in other secondary groups. Both literatures are limited by their conceptualization and operationalization of social capital and its effect on well-being. By drawing on the strengths of both, we can create more reflexive and richer results that have a higher validity and are thus better able to direct future research and policy.

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DATA Data from the Joint Canada/ United States Survey of Health (JCUSSH) were used to compare the influence of social capital on the health of immigrant and native-born Canadian and U.S. respondents. This data set was created through a combination of the National Health Interview Survey in the United States and the Canadian Community Health Survey and National Population Health Survey in Canada and was collected by the United States National Centre for Health Statistics (USNCHS) and Statistics Canada (SC). Survey questionnaires in each country were not identical, but rather some identical questions were asked in each of the surveys, to comprise the JCUSSH data set. Questions used (to create variables) in this study were identical with the exception of the race / ethnicity variable. As such, the measures have a high cross-national reliability and validity. A stratified random sample of persons 18 years and older was obtained in each nation. In Canada, the sample was stratified by province. In the United States, the sample was stratified by four geographic regions: Northeast, Midwest, West, and South. Random-digit dialing and computer-assisted telephone interviewing were used to select households and interview participants between November 2002 and March 2003. In both countries, interviews were conducted in two languages: English and French in Canada, and English and Spanish in the United States. An in-depth discussion of the sampling frame and specific procedures is available in the Public Use Microdata File User Guide (Statisitics Canada and United States National Center for Health Studies, 2004c). In Canada the response rate was 65.5%, with a sample size of 3,858 individuals. In the United States the response rate was 50.2%, with a sample size of 5,183 individuals. As discussed in the User Guide (2004c), due to sampling constraints, sample weights need to be incorporated into analyses. JCUSSH-devised sampling weights were used in all analyses reported.

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Research Question The JCUSSH data set is used to examine one main research question: whether or not social capital influences the health of immigrant and native-born respondents in the same way in both the United States and Canada. This is important to test for a variety of reasons. To begin with, health research that examines the influence of social capital tends not to distinguish between these two extremely different groups, and as such, immigrant status is likely to confound findings. In addition, as previously discussed, health research tends to focus on social capital at the macro level (i.e., political participation or trust), and has not focused on the influence of social capital at the micro-mezzo level (i.e., the family). Lastly, this research question looks at the differences of the effect of social capital on health amongst immigrant and native-born respondents, thereby providing results that can be used to further SCT and advance our understanding of health disparities in the population. Specifically, the second dimension (the relationship between social capital and well-being) of SCT was tested.

Comparison Groups Four subsets of the JCUSSH data were examined based on country (Canada vs. the United States) and nativity status (immigrant vs. native-born). Respondents in Canada and the

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United States were compared to gain a better understanding of how social capital influences the health of immigrant and native-born individuals. Limited research is available that looks at the influence of social capital on the individual cross-nationally (Bassani, 2008; Guzman et al, 2003). The influence of social capital on health was compared between the groups to determine if and how the levels of social capital among immigrant and native-born respondents differ, and whether social capital has a significant (positive or negative) effect on health within each of the four sub samples. This is a valuable comparison, given that most immigrant health research focuses on the healthy immigrant effect. I make no argument against the relevance of the healthy immigrant effect; however, other theories such as social capital theory might also be valuable in explaining health disparities. It also should be pointed out that the health research that has examined social capital tends to focus solely on general national populations and rarely questions whether a difference in the effect of social capital on health exists between immigrant and native-born individuals. In addition, the operationalization of social capital differs in these health studies, since the focus is on social capital that develops in secondary mezzo groups (i.e., civic participation and trust) and not within the primary mezzo group, the family.

Variables

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Four dependent variables (self-rated excellent health, being overweight, experiencing depression, and a high health utility index score), five measures of social capital, and four control variables were examined. Appendix A illustrates how each of the four dependent variables was operationalized, while Table 1 offers a concise description of each variable. Researchers have examined a variety of health measures, ranging from general health indicators to the incidence of specific health problems. Typically, studies have focused on one measure of health; however, by examining a variety of health indicators, we can make more reliable inferences regarding the influence of social capital on health. It is necessary to examine a variety of health measures because research has found that social capital’s influence often varies (in strength and significance) depending on the outcome variables (e.g., Guzman et al., 2001; Parcel et al., 1996).

Health Measures Excellent health. Self-rated health measures have become increasingly popular because they have been found to be reliable and valid predictors of overall health in countless studies in North America, Europe, and Asia (Idler et al., 1999; Madox, 1999). In the literature, selfrated health tends to be dichotomized based on theoretical perspective and the frequency of responses in each of the health categories. No consistent dichotomy is evident. Some researchers have combined excellent and very good health (Carlson, 2004; Chandola and Jenkinson, 2000), or excellent, very good, and good health (McGee et al., 1999; Pollack and Nkesebeck, 2004), while others have examined only excellent health. In the current study, respondents who reported excellent health (24%) were compared to respondents that did not

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report having excellent health (76%: 33.6% reported very good health, 27.6% good health, 10.3% fair health, and 4.5% poor health).

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Table 1. Descriptions for Dependent and Independent Variables Dependent Variables: Health Measures Excellent Health Self rate health 1= excellent health; 0= not excellent health Overweight Body Mass Index of ≥ 25.0 Experienced Dichotomy of the Kessler & Mroczek Depression Scale Depression 1= experienced depression, 0= did not experience depression Healthy Dichotomy of HUI (Centre for Health Economy & Policy Analysis, McMaster Health Utility Index) 1= ≥ 0.945 HUI score 0= < 0.945 HUI score Independent Variables Social Capital Measure Structural Social Number of persons living in the household Resources Family Structure Dummy Coded: Single, never married Married (reference category) Separated or divorced Widowed Functional Social Solitary activity scale (participates vs. does not participate): Resources walking for exercise, gardening, swimming, exercising in your home, jogging or running, weight training, fishing Group activity scale (participates vs. does not participate): Ice hockey, ice skating, inline skating or rollerblading, golfing, exercise class or aerobics, downhill skiing, bowling, baseball or softball, tennis, volleyball, basketball, soccer Racial Minority Non Caucasian = 1; Caucasian = 0 Control Variables Education University degree =1 vs. no degree =0 Income Household income in quintiles (low, mid-low, middle, mid-high, high) Age 18-85 years old Gender Female =1 vs. male =0

Overweight. Being overweight is defined as having a body mass index (BMI) of 25.0 or greater. According to the World Health Organization (WHO, 2000), individuals with a BMI of 25.0 or more are classified as overweight. USNCHS and SC researchers calculated BMI in each country by dividing respondents’ weight in kilograms by their height in meters squared, while sex, age, pregnancy, and heights below 0.91 meters and above 2.1 meters were controlled for. BMI is recognized as a useful measure of obesity, as well as a crude health measure (WHO, 2000). As the WHO (2000) has noted, “BMI can be used to estimate the prevalence of obesity within a population and the risks associated with it.” BMI scores were dummy coded into overweight or not overweight in order to compare “healthy” and “less healthy” respondents.

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Although helpful, using BMI as a health indicator has two main limitations. First, researchers have noted that the cut-off points for the classifications of: “underweight,” the “normal” BMI range, and “overweight” vary among different ethno-cultural groups (Deurenberg et al., 2002; Rosner et al., 1998; WHO, 2000). The BMI measures calculated by USNCHS and SC researchers did not consider respondents’ ethnicity, and thus the BMI scores might be slightly skewed. Also, BMI is limited because it does not consider muscle mass in its calculation. Respondents with high muscle mass also skew the data because muscle is heavier than fat. As such, some respondents with a higher BMI may be healthier than those with a lower BMI; these respondents, who represent only a small fraction of the sample, are believed to not heavily skew results. Depression. This variable measured whether respondents had experienced depression during the previous year. This dichotomized variable was based on the USNCHS depression scale (Kessler and Mroczek), using a short form of the Composite International Diagnostic Interview, an internationally recognized scale that measures “major depressive episodes” (MDE) over the previous year (WHO, 2006). As identified in Appendix A, the scale is composed of 19 variables that assess respondents’ depression levels by looking at how often they felt depressed or lost interest in something for two weeks or more during the previous year across the 19 variables. This scale does not have a linear distribution because most respondents had not experienced a MDE during the previous year. As such, this variable was dichotomized to contrast those who had experienced a MDE over the past year with those who had not. Healthy. Having a high health utility index (HUI) score was the last measure of health. This dummy-coded dependent variable was derived by SC and USNCHS researchers from the copyrighted generic health status index developed at McMaster University by researchers in the Centre for Health Economic and Policy Analyses (Furlong et al., 1998, 1999). The higher a person’s score on the HUI, the better his or her health. As a scale, it represents a combination of quantitative and qualitative indicators of health: vision, hearing, speech, mobilization, dexterity, emotional, pain, and discomfort (Furlong et al., 1998, 1999). The HUI was dichotomized because approximately 50% of respondents in each of the four subsamples reported being “healthy.” Consequently, healthy (a HUI score of ≥ 0.945) and less healthy are contrasted. Similar divisions of the HUI have been used elsewhere (e.g., Kopec et al., 2001).

Social Capital Structural Social Resources. Two measures of structural social resources were assessed. Household size is a continuous variable that ranges from 1 to 5-plus family members. The larger the household size, the more social capital that is expected to be created in the family due an increase in structural social resources. This in turn facilitates the possibility of functional social resource efficiency in the family and potentially the level of social capital. This measure of social capital is not commonly used in health research, though in the family and youth literatures, household size (typically number of siblings) is often examined (Han et al., 2001; Levine et al., 2001). Family structure, a commonly measured social resource in the youth and family literatures (Bankston and Caldas, 1998; Jeynes, 2002; Parcel and Dufur, 2001; Teachman et

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al., 1999), was examined by dummy coding four categories of marital status (married, singlenever married, separated or divorced, and widowed), using the married family status as the reference group. Family structures that have a higher structural social resource efficiency (specifically, the married family structure) are believed to create more social capital because they have more potential for functional social resource efficiency. There has been only limited theorization regarding differences in social capital among those in single nevermarried, separated or divorced, and widowed family structures. I postulate that widows are likely to have stronger social ties than adults who are separated or divorced. Although the death of a spouse creates the same structural social resource deficiency in the family as does separation or divorce, the functional social resource deficiency differs because in the latter case, functional social resource deficiencies are the cause of the structural social resource deficiency. Within the Canadian- and U.S.-born populations, the difference in social capital between never married and separated or divorced adults is unclear. Within the immigrant populations, single, never-married adults are likely to have more social capital because such adults may be more apt to live with their parents or extended family members, and thus they would have more structural social resources within their primary group. This, however, can only be inferred and not determined from the JCUSSH data because marital status and household size and not specific household composition are measured. This highlights the limitation of using marital status as a proxy for family structure. Across all four indicators of family structure, respondents could be living in an extended family household. Although having such information would provide further insight into the development of social capital in these families, examining family structure is not without merit. As discussed above, the degree of structural and functional social resource efficiencies are unique for each of the four categories. Functional Social Resources. Three functional social resources were measured. The first two are participation in solitary and group activities. Both variables represent composite scales that I created by combining activities that tended to be done either alone (gardening, swimming, exercising at home, jogging or running, weight training, and fishing) or in a group (ice hockey, ice skating, in-line skating or rollerblading, golfing, exercise class or aerobics, down-hill skiing, bowling, and playing baseball or softball, tennis, volleyball, basketball, and soccer). Respondents were asked whether they had participated in each activity during the past three months and had the option of choosing “yes” or “no.” Throughout the interdisciplinary social capital literature, higher levels of group participation are associated with more social capital (Franzini et al., 2005; Pollack and Knesebeck, 2004; Putnam, 1999). An increase in group activity is linked to an increase in social capital, while an increase in solitary activity is associated with a reduction in social capital. Because the JCUSSH is focused only on health, solitary and group activities are limited to physical activities/ sport participation. The final measure of social capital taps social isolation from the dominant society. Being a member of a visible minority (being non Caucasian) is included as a dichotomous variable in the analyses. It is not individuals’ skin colour, but rather their minority, marginalized status that is being measured (Bradby, 2003). A large literature exists that documents the effect of prejudice, discrimination and racism on an individual’s well-being (Finch et al., 2000;

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Krieger and Sidney, 1996; Noh and Kaspar, 20032; Pak et al., 1991). It is not surprising to learn that individuals who are visible ethnic minorities encounter more social isolation (because of prejudice, discrimination and racism) than their Caucasian counterparts. As a result, one’s visible ethnic minority status can be a powerful indicator of social isolation from dominant society, and thus their social capital (in dominant-lead groups) and health (Farmer and Ferraro, 2005; Kalmijn, 1996; Sue and Chu, 2003). In the social capital literature, scholars have reported that racially and ethnically marginalized individuals tend to form less social capital within non-ethnic-associated groups due to their marginalized status from the wider society and its social institutions (Ream, 2003; Stanton-Salazar, 1997). As previously discussed, these individuals are more apt to have excessively strong social capital and closure in their primary and ethno-community groups. As a result, they are apt to have fewer and weaker bridges with majority-controlled groups (Anisef and Bunch, 1994; Kalmijn, 1996; Kilbride and Anisef, 2001, Ream, 1999). Within both the immigrant and native-born groups of respondents, individuals that have a visible ethnic minority status are predicted to have lower levels of (overall) social capital and thus be less healthy than nonvisible minorities. Social isolation is complex and multilevel phenomena that cannot be fully captured with such a measure (Bradby, 2003); however, it is the best operationalization given the dataset limitations.

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Control Variables Four variables that repeatedly have been found to influence health are controlled for in the analyses: education, household income, age, and gender. Individuals with more education and income have been found to have better health than individuals with less education and income, or a lower socio-economic status (Franzini et al., 2005). Education was dichotomized into having a university degree (Bachelor’s, Master’s, Doctorate, or professional) or not having a university degree. To maintain comparability between the Canadian and U.S. samples, a categorical household income variable (created by USNCHS and SC) was used, which represents low, middle-low, middle, middle-high, and high income. Females and younger respondents tend to have better general health than males and older individuals (Franzini et al., 2005). This being said, females (Nolen-Hoeksema, 1987) and younger individuals (Klerman et al., 1985) tend to have a higher incidence of depression. The respondent’s age was a continuous variable, ranging from 18 to 85 years. Gender was compared, using males as the reference category.

LIMITATIONS This study has a few limitations that need to be addressed. To begin with, ethnicity, neighbourhood, and time of residence in Canada or the United States could not be examined due to data constraints. Ethnicity is central to any social research and needs to be considered whenever possible. However, the JCUSSH data provide racial categories only. Future 2

For a larger selection of research on health and racism see the American Journal of Public Health’s issue on the health implications of racism (93, 2).

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research needs to consider the determinants of health based on ethnicity since immigrants are not a homogenous group. This is a difficult feat if using U.S. and Canadian data, because data on ”race” (skin colour) tends to be collected in the United States, while data on ‘ethnicity’ (ethnic group) tends to be collected in Canada. Second, both Canada and the United States are geographically large countries that are regionalized and espouse cross-regional cultural and policy differences. Future research might consider--or control for-- issues of regionality (such as differences in medical coverage/services) that the present study could not examine, in order to gain a clearer understanding of health disparities. In addition, future work should incorporate the amount of time that immigrants have lived in the country because the healthy immigrant effect is known to influence the health of immigrants in high-income nations. In addition, the JCUSH was not created to measure social capital, and thus not only are the number of measures of social capital limited, but also the operationalization of social capital is limited because either structural or functional social resources were measured. Within the family, structural social resources are measured, though there is no indication of functional social resources--how the family functions. Among the group activity scales, we can only examine whether or not respondents participated in particular activities. These scales tap the functional component of social capital, though we do not know anything about the structural component of the peer/leisure group and its functioning. Lastly, being a racial minority suggests that respondents may have weaker ties to dominant society, since racial minority status is used as a proxy for discrimination and thus isolation from larger dominant society. This indicator of social capital cannot tell us to what extent the respondents are marginalized (i.e., what specific ethnic group individuals belong to. Lastly, the analyses may be limited due to the small sample size of immigrant respondents in both the Canadian and U.S. samples. This, however, is a characteristic of the sample, which cannot be corrected for.

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Analyses Descriptive and regression analyses were conducted on each of the four sub-populations. The descriptive analyses were conducted to determine the percentages (for categorical variables) and means (for continuous variables) for each variable across the four groups of respondents. Analysis of variance (ANOVA) was conducted to test for percent and mean differences among the dependent and independent variables across the four samples. Regression analysis was used to examine the effect of social capital on respondents’ health, controlling for education, income, age, and sex. Because each dependent variable is binary and not continuous, logistic regression was employed (Menard, 1995). Three factors made logistic regression the best technique for examining the effect of social capital on measures of health across the four sub samples: (a) none of the four dependent variables approximated a normal distribution in their continuous or categorical state; (b) for comparison’s sake, it is best to use the same statistical analyses to test the influence of social capital on health across all four samples; and (c) although multinomial logistic regression could have been employed, the results would have been too lengthy, given the aim to compare the effect of social capital across all four health measures.

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Logistic regression tested the influence of social capital on the likelihood of being overweight, reporting excellent health, experiencing depression, being healthy (having a high HUI score) in each of the four sub samples. Exponent B coefficients are reported for each independent variable; these coefficients indicate the likelihood of the respondent reporting either being overweight, reporting excellent health, experiencing depression or having good health when considering the specific independent variable, controlling for all other variables in the model. These analyses were conducted in SPSS and thus P values (and not confidence intervals) are reported to determine the statistical significance of the Exponent B. Statistically significant Exponent Bs that near 1.00 suggest that the specific independent variable has only a small influence on the likelihood of reporting being overweight, having excellent health, experiencing depression, or having a high BMI. Due to the binary nature of logistic regression, the traditional R squared cannot be calculated, though a pseudo R squared can be estimated. The Cox and Snell (1999) R squared is a conservative measure of association that signifies the proportion of explained variance in a given model surrounding the likelihood of the specific health measure. Across-group comparisons of the effect of social capital on the four measures of health were made by comparing the statistical significance and direction of the coefficients in each of the four models. Across-group statistical tests within the regression analyses (i.e., interaction effects) were not conducted due to the large number of dummy-coded variables in the analyses and the small cell count of some of the response categories (particularly within the immigrant samples). This understandably limits across-group inferences that can be made, though visually comparing statistical significance and the direction of the coefficients are common strategies for comparing across models in cross-national research that examine the exact same variables (e.g., Stevenson et al., 1993).

DESCRIPTIVE ANALYSES

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Results Table 2 reports the descriptive statistics for each variable and the cross-group statistical differences. Looking at the measures of health, a higher percentage of U.S. respondents were overweight (had a BMI of 25.0 or over): 54.5% of native-born and 55.8% of immigrant respondents, compared with 49.1% and 48.7% of the respective Canadian respondents. This difference was significant between all groups, except between Canadian native-born and U.S. immigrant respondents. When examining excellent health, 25.49% of native-born U.S. respondents and 23.29% of immigrant U.S. respondents reported excellent health, while a slightly lower percentage of respondents in Canada reported excellent health (22.24% and 21.85%, respectively). There were no significant differences between the native-born and immigrant respondents in either nation, though differences were found between the two nations (between 9.60% [immigrant respondents in Canada] and 12.64% [immigrant respondents in the United States]), as roughly 10% of the sample had experienced depression over the last year. No statistical differences were found between the four subsamples. In terms of being healthy (HUI ≥ 0.945), no significant difference between the percentages of nativeborn and immigrant Canadian respondents or those in Canada vs. the United States were

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found. Between the U.S. samples, however, a significant percent difference was found: 48.2% of native-born respondents had a high HUI score, compared with a slightly lower percentage (46.3%) of U.S. immigrant respondents. Table 2. Descriptive Statistics: Means, Percentages and Analysis of Variance between Each Variable and Country-Nativity Status Canada Native-Born Immigrant

United States Native-Born Immigrant

High BMI (≥ 25.0) 1245 Excellent Health 245 Experienced Depression High HUI Score (≥ 0.945) 6

Range 0 or 1 0 or 1 0 or 1 0 or 1

49.1% 22.24% 12.42% 49.80%

48.7% 21.85% 9.69% 51.90%

54.5% 25.49% 11.90% 48.20%

55.8% 23.29% 12.64 46.30%

Household Size 123476 Married 13456 Never Married 1234 Separated/Divorced 24 Widowed 12456 Solitary Activity Scale 7 Group Activity Scale 12346 Racial Minority 7

1 to 5 0 or 1 0 or 1 0 or 1 0 or 1 7 to 8 14 to 24 0 or 1

2.2 55.52% 22.21% 11.88% 8.89% 11.63 23.16 9.49%

2.6 62.52% 15.17% 10.77% 11.38% 11.92 23.48 45.93%

2.4 52.35% 17.81% 14.44% 10.82% 11.97 23.38 15.92%

2.6 62.05% 16.85% 13.56% 7.40% 12.42 23.52 62.62%

University 7 Household Income 7 Age 7 Female 7

0 or 1 1 to 5 18 to 85 0 or 1

25.38% 2.75 47.2 53.7%

35.38% 2.59 50.3 55.5%

38.60% 2.85 49.4 57.9%

31.63% 2.39 44.4 52.1%

2846

659

4453

730

Sample size

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1

Statistically significant difference between Canadian native-born and Canadian immigrant respondents. 2 Statistically significant difference between Canadian native-born and U.S. native-born respondents. 3 Statistically significant difference between Canadian native-born and U.S. immigrant respondents. 4 Statistically significant difference between Canadian immigrant respondents and U.S. native-born respondents. 5 Statistically significant difference between Canadian immigrant respondents and U.S. immigrant respondents. 6 Statistically significant difference between U.S. native-born and U.S. immigrant respondents. 7 Statistically significant difference between all groups (1-7 above).

Of the eight measures of social capital, a significant difference was found across all four samples when examining the solitary activity scale and visible minority status. Solitary activity was highest among U.S. immigrant respondents (12.42%) and lowest among native Canadian respondents (11.63%). Large percent differences among respondents who were visible minorities were found. In Canada, 9.49% of native-born respondents were visible minorities, while this percentage was 15.92% in the U.S. sample. Among immigrant respondents, 45.93% and 62.62% of respondents were visible minorities in Canada and the United States, respectively.

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Household size significantly varied among all groups except between the two immigrant groups. Immigrant respondents (in both countries) had the highest household size (2.6 people), while Canadian native-born respondents had the smallest household size (2.2 people). Looking at family structure, the percentage of respondents that were married statistically differed among all groups, with the exception of the two native-born groups. In both countries, more immigrant respondents tended to be married (62.52% in Canada and 62.05% in the United States), compared to native-born respondents (55.52% and 52.35%, respectively). A higher percentage of Canadian native-born respondents (22.21%) were never married compared to native-born and immigrant U.S. respondents (17.81% and 16.85%, respectively) and Canadian immigrant respondents (15.10%). A statistically significant difference between the percentages of separated or divorced respondents in the native-born samples and between Canadian immigrant and U.S. nativeborn samples were found. More native-born U.S. respondents were currently separated or divorced (14.44%) compared to both native-born (11.88%) and immigrant (10.77%) Canadian respondents. The highest percentage of single widows/ widowers was found among Canadian immigrant respondents (11.38%), followed by the native-born U.S. respondents (10.82%) and then Canadian native-born respondents (8.89%). These differences were significant among all groups except between Canadian native-born and U.S. immigrant samples. The mean level of group activity differed among all groups except between immigrant respondents. Scores on the group activity scale ranged from 23.52 points among U.S. immigrants to 23.16 points among Canadian native-born respondents. Among all four control variables, means significantly varied among the four subsamples. More U.S native-born respondents (38.60%) had a university degree, compared to Canadian immigrant respondents (35.38%), U.S. immigrants respondents (31.63%), and Canadian native-born respondents (25.38%). Household income was highest in the native-born groups and lowest among the immigrant groups. The average age of respondents ranged from 44.4 to 50.3 years, and females represented slightly over half of the sample in each group.

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Discussion The between-group statistical comparisons of the health indicators and social capital suggest some clear significant differences between native-born and immigrant respondents in Canada and the United States. To begin, the results suggest that respondents in Canada may have richer social capital than U.S. respondents. The majority of native-born and immigrant Canadian respondents live in a married family structure and participate in fewer solitary activities compared to the U.S. samples, while fewer Canadian respondents were reported to be visible minorities. In other words, Canadian respondents tended to have stronger structural resource efficiencies and may have stronger functional resource efficiencies. Within-country comparisons of social capital do not suggest that native-born and immigrant respondents have extremely different levels of social capital, though some withincountry differences were present. These differences were, however, contingent on the specific measures of social capital. I cannot therefore infer that immigrants have more or less social capital than their native-born counterparts in either country. For example, immigrant

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respondents in both countries tend to have more structural social resources: They have more people living in their household and are also more apt to be married than native-born respondents. In contrast, native-born respondents in both countries were found to have more functional social resources since they participate in solitary activities less frequently and are not as likely to be a visible minority, thus may experience a lower level of social exclusion in dominant society in contrast to their immigrant counterparts. These measures of social capital are expected to have a significant effect on health outcomes in each respective subgroup. Future studies will need to use other datasets that have these and/ or other measures of social capital to further examine cross-national differences in social capital (and their influence on health). Without controlling for any variation in health, health disparities were found between the four subsamples. Health differences between Canada and the U.S. respondents were noted: More native-born and immigrant U.S. respondents tended to have a high BMI score, indicating poor health. When examining self-reported health status, however, fewer nativeborn and immigrant respondents in Canada reported having excellent health compared to the U.S. samples. Based on differences in government policy (i.e. socialist-capitalism vs. laissezfaire capitalism) and health care provision (government funded vs. partial government funding), it seems reasonable that respondents in Canada should be healthier. Although the respondent’s perceived health has been found to be a reliable predictor of health (Idler and Bengamini, 1997), it has only been tested within countries and not cross-nationally. It is possible that the Canadian-U.S. differences in perceived health might be attributable to people gauging their health relative to others in their community or region. Future research will need to explore the reliability and validity of comparing perceived health cross-nationally. The results also suggest that within both Canada and the United States, there was no difference in the percentage of native-born and immigrant respondents who reported having excellent health. Similarly, there were no within or across country differences found when examining the percentage of each sample that experienced depression within the past year. The last health indicator (having a HUI score of equal or greater than 94.5) measured the percentage of respondents in each category that were in good health. There were no significant between-country differences found, however within-country differences were noted between the U.S. samples: the native-born respondents were healthier than the immigrant respondents. Being in good health did not vary depending on nativity status in Canada. The Canadian results may be supporting the healthy immigrant effect; however, length of time in the host country needs to be (measured and) assessed in order to test this hypothesis.

REGRESSION ANALYSES Results The results of the logistic regression analyses are presented in Tables 3 and 4.

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Table 3. Logistic Regression of the Effect of Social Capital on the Odds of Being Over Weight ( BMI score over 25.0 point) or in Excellent Health amongst Immigrant and Native-Born Nationals in Canada and the U.S., Joint Canada/United States Survey of Health, 2002

Constant

Over Weight (BMI over 25.0) Canada United States Native-born Immigrant Native-born Immigrant Exp(B) Exp(B) Exp(B) Exp(B) 0.57 0.081 0.06*** 0.63

Excellent Health Canada United States Native-born Immigrant Native-born Immigrant Exp(B) Exp(B) Exp(B) Exp(B) 5.86* 0.29 7.66 0.75

Household Size Never married Sep or Divorced Widowed Solitary Activity Group Activity Racial Minority

0.95 0.59*** 0.83 0.69* 1.01 1.01 1.15

0.95 0.73 1.06 0.74 1.15 0.93 0.53**

1.02 0.71** 0.92 0.82 1.11*** 1.08* 1.51***

1.13 0.85 1.32 0.62 1.11 0.97 1.02

0.99 1.07 0.82 1.01 0.89** 0.94 0.71

0.90 0.88 1.98 3.34* 0.78** 1.20 0.73

0.97 0.94 0.97 1.19 0.83*** 0.97 1.00

0.86 0.68 1.33 2.07 0.94 1.04 0.85

University Income Age Female

0.77** 1.09** 1.01*** 0.43***

0.96 1.14 1.02* 0.48***

0.86 0.98 1.01** 0.53***

0.63* 0.88 1.02 0.47***

1.41** 1.20*** 0.99*** 0.98

1.27 1.45*** 0.95*** 1.30

1.43*** 1.24*** 0.98*** 1.01

1.66* 1.39*** 0.96*** 0.77

Cox & Snell R² n

0.077 2846

0.101 659

0.05 4453

0.085 730

0.063***

0.124***

0.082***

0.100***

Note: * p, ≤ 0.05; ** p, ≤ 0.01; *** p, ≤ 0.001.

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Table 4. Logistic Regression of the Effect of Social Capital on the Odds of Experiencing Depression over the Last Year and the Odds of Being in Good Health ( Health Utility Index Score ≥ 0.945) by Immigrant and Native-born Nationals in Canada and the U.S., Joint Canada/United States Survey of Health, 2002

Constant

Experienced Depression Canada United States Native-born Immigrant Native-born Immigrant Exp(B) Exp(B) Exp(B) Exp(B) 0.01*** 0.01 0.00*** 0.01

Good Health (HUI ≥ 0.945) Canada United States Native-born Immigrant Native-born Immigrant Exp(B) Exp(B) Exp(B) Exp(B) 30.39*** 113.71 57.70*** 47.23

Household Size Never married Sep or Divorced Widowed Solitary Activity Group Activity Racial Minority

1.05 1.63** 2.72*** 2.05** 1.10* 1.14* 1.04

1.17 1.37 2.92** 4.12** 1.10 1.13 0.51*

0.97 1.02 1.80*** 0.93 1.15*** 1.20** 0.80

0.97 1.10 0.71 0.63 1.11 1.16 0.52*

1.00 0.73** 0.65** 0.81 0.87*** 0.93* 0.99

0.97 0.81 1.01 1.35 0.88 0.92 0.68

0.96 0.81 0.78* 0.91 0.82*** 0.93 1.14

0.93 0.60 1.15 0.78 0.84* 0.94 1.11

University Income Age Female

1.09 0.87** 0.97*** 1.21

0.69 1.01 0.97* 1.38

0.73** 0.86*** 0.98*** 1.29**

0.83 0.59*** 0.98 1.66

1.38** 1.19*** 0.98*** 1.10

1.50* 1.20* 0.97*** 0.91

1.53*** 1.23*** 0.98*** 1.16*

1.26 1.35*** 0.98*** 1.01

Cox & Snell R² n

0.043*** 2846

0.042*** 659

0.038*** 4453

0.071*** 730

0.075*** 2846

0.097*** 659

0.097*** 4453

0.096*** 730

Note: * p, ≤ 0.05; ** p, ≤ 0.01; *** p, ≤ 0.001.

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Social Capital Household size did not have a significant effect on any of the health measures within any of the analyses, though the effect of family structure did influence health significantly. Only native-born respondents that were never married experienced a statistically significant effect on their health. Native-born Canadian and U.S. respondents that were single and never married were less likely to be overweight compared to married respondents. In addition, these native-born Canadian respondents were 1.63 times more likely than married Canadian nativeborn respondents to have experienced depression over the last year and 0.73 times less likely to have a high HUI score (being in good health). Being single and never married did not significantly influence the health of either group of immigrant respondents. Being separated or divorced from one’s partner was associated with an increased likelihood of experiencing depression and a decreased likelihood of being in good health within both groups of native-born respondents when compared to married respondents. Native-born Canadian respondents appear to have been more negatively affected by living in this family structure than their U.S. counterparts. Canadian native-born and immigrant respondents that were separated or divorced were 2.72 times and 2.92 times more likely, respectively, to have experienced depression over the past year, compared to their married counterparts. Native-born U.S. respondents that were separated or divorced were 1.80 times more likely than married U.S. respondents to have experienced depression. In addition, the Canadian native-born respondents were 0.65 times less likely than their married counterparts to be in good health, while U.S. native-born respondents were 0.78 times less likely to be in good health compared to married individuals, after controlling for all variables in the model. Being separated or divorced did not significantly influence any respondents’ likelihood of being overweight or reporting excellent health. Being a widow influenced respondents’ health in Canada, though it did not have a significant effect across all of the analyses. Among native-born Canadian respondents, widows were .69 times as likely as married Canadian native-born respondents to report being overweight and 2.05 times more likely than the comparison group to have experienced depression over the past year. Among widowed Canadian immigrants, however, they were 3.34 times more likely to report having excellent health and 4.12 times more likely to report experiencing depression over the last year compared to married Canadian immigrants. Being a widow did not influence the likelihood of experiencing depression over the past year among either group of U.S. respondents. Across all four groups, being a widow did not influence the likelihood of being in good health when compared to married respondents. It was mostly native-born respondents that experienced a decline in their health the more they participated in solitary activities. The probability of these respondents reporting excellent health declined by .89 times and .83 times for every one-point increase in the solitary scale in Canada and the United States, respectively. Individuals in these two groups were also more likely to have experienced depression as their solitary activity increased: 1.10 times more likely in the Canadian sample and 1.15 times more likely in the U.S. sample with each onepoint increase on the solitary activity scale. In addition, as solitary activities increased, the chances of having good health (a high HUI score) declined: Native-born respondents in Canada and the United States were 0.87 and 0.82 times less likely, respectively, to have a high HUI score as their score on the solitary activity scale increased by one point. Only in the United States did solitary activities influence the chance of being overweight. These native-

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born respondents were 1.11 times more likely to be overweight with each one-point increase on the solitary activity scale. Among Canadian immigrant respondents, an increase in solitary activity was linked to a decline in the likelihood of reporting excellent health: For every one-point increase on the scale, these individuals were 0.78 times less likely to report having excellent health. A significant relationship was not found among U.S. immigrant respondents in this model, though they were more likely to have poorer health as they increased their solitary activities. For every one-point increase on the solitary activity scale, respondents were 0.84 times as likely to be in good health (according to the HUI analyses). The influence of group activities on health also appeared to be more predominant among native-born respondents. Participating in group activities had an unexpected, negative effect on respondents. Among the U.S. native-born respondents, heightened group activities was associated with a higher likelihood of being overweight: A one-point increase in the group activity scale was associated with an 8% increase in the likelihood of being overweight. In addition, U.S. and Canadian native-born respondents were more likely to have experienced depression as their group activity increased. The likelihood of experiencing depression increased by 14% among Canadian respondents and 20% among U.S. respondents for every one-point increase on the group activity scale. Lastly, among native-born respondents from Canada, increased group activity was associated with a lower likelihood of having good health (according to HUI analysis). For every one-point increase on the group activity scale, these individuals were 0.93 times less likely to report having a high HUI score, or being in good health. The frequency of group activities did not significantly influence the health of immigrant respondents living in either Canada or the United States. The last measure of social capital included in these analyses was racial minority status. Belonging to a racial minority group primarily had a significant influence on immigrant respondents. Individuals’ minority status significantly influenced their likelihood of being overweight and experiencing depression. Immigrant minority Canadian respondents were nearly half as likely to be overweight and to have experienced depression over the past year compared to non-racial minority immigrant respondents in Canada. Similarly, minority immigrant U.S. respondents were also nearly 50% less likely than the comparison group to have experienced depression. Alternatively, U.S. native-born respondents that were racial minorities were 50% more likely to be overweight compared to non-minority U.S. nativeborn respondents. The likelihood of having a high HUI score or reporting excellent health did not differ between visible and non-visible racial minorities in either country after controlling for all variables in the model.

Goodness of Fit Goodness-of-fit measures are reported at the bottom of Tables 3 and 4. As is illustrated, a larger percentage of the model variance is explained in the immigrant models. Looking at the BMI and excellent health models, the explained variance is highest among the two immigrant models. In the Canadian immigrant model, 10.1% of the variance surrounding being overweight was explained, while 8.5% of the variance was explained in the U.S. immigrant model. Among the native-born respondents, 7.7% of the variation surrounding the likelihood of being overweight was explained in the Canadian native-born model, while 5.0% of the

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variance was explained in the U.S. native-born model. In the Canadian and U.S. immigrant excellent health models, 12.4% and 10.0% of the variation was explained, compared to only 6.3% and 8.2% in the Canadian and U.S. native-born models. Among the depression models, the U.S. immigrant model had the largest explained variance, 7.1%. This was compared to 4.3%, 4.2%, and 3.8% in the Canadian (native-born and immigrant) models and the U.S. native-born model, respectively. The good health analyses indicated that the native-born U.S. sample and the two immigrant samples had a similar R squared: 9.7%, 9.7%, and 9.6%, respectively, of the variation surrounding health was explained with the variables in the model. In the Canadian native-born model, the least amount of variation (7.5%) was explained.

Discussion A number of notable findings can be surmised from the results of this study. Across each of the four subsamples, social capital had the same directional effect (with the exception of one measure of social capital that is discussed below) within each of the analyses (though the magnitude of the coefficient differed). Social capital did not, however, have a uniform, significant influence across the four health indicators. In fact, there was no uniformity in the statistical significance of any of the measures of social capital across any of the models. This suggests that specific measures of social capital tend to: (a) be more or less important in understanding the health of certain groups of respondents, and (b) influence various measures of health differently. The results also give rise to theoretical questions that call for the further development of social capital theory.

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THE NEED TO DIFFERENTIATE BETWEEN GROUPS This research supports the argument that health research needs to differentiate between minority and majority groups. Native-born respondents, particularly in Canada, were influenced by social capital, though by and large most measures of social capital were not found to influence immigrant respondents’ health in either country. Family structure in particular had a marked influence on native-born respondents in Canada and the United States. In the family and youth literatures, family structure tends to be an essential predictor of well-being (Guzman et al., 2001; Jeynes, 2001; Willms, 2002); however, as this research has indicated, this is not always the case among minority groups because other factors (e.g., socio-economics) may overshadow and subordinate the importance of family structure. The findings presented in this chapter illustrate this betweengroup difference –since family structure only meagerly influences health among immigrant respondents in Canada and did not influence the health of U.S. immigrants whatsoever. The differences that I have illustrated in the influence of social capital on well-being support the need to differentiate between native-born and immigrant populations in research. This may seem logical, though many researchers do not separate or control for minority-majority group differences.

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Not only is differentiation needed within national studies, but also this research illustrates the need for cross-national research to consider within-country differences that contribute to health disparities. Like any two countries, Canada and the United States are distinct societies that need to be differentiated when examining health and more generally well-being. Although both are high-income “Western” countries, and share similar histories, they have unique cultures, histories, and politics that shape their individual demographic trends. Crossnational research needs to identify and model within-country differences that may be influencing health outcomes. Without doing this, integral differences may be overlooked, which means that health gaps would be slower to shrink because the reasons for such gaps may go unrecognized. Cross-national studies are also needed in order to develop theory. Within the youth and family literatures, SCT tends to be best supported with U.S. data because by and large, SCT is an U.S. construction (Bassani, 2006; Guzman et al., 2003). It is noteworthy to point out that the influence of social capital was more predominant in the Canadian models than in the U.S. models. This supports the notion that SCT can be used to explain health disparities in other high-income countries, though such a postulation requires further cross-national testing. This is but one study; others are needed. Presently few studies actually test the cross-cultural appropriateness, or rather the cross-national transferability, of social capital theory (Bassani, 2003; Fukuyama, 1995). A detailed examination of the cross-cultural transferability of the theory is needed within both individual research projects and the field of social capital studies. This is particularly important given that international (among other) agencies use SCT to ground programs and policies (e.g., ACT, 2003). Research is needed to better inform agencies about best practices for minority groups--since strategies that improve well-being are apt to vary between majority and minority groups.

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NEED TO DIFFERENTIATE POWER DIFFERENCES As I have argued, the influence of social capital (and possibly other forms of capital) within heterogeneous populations should not be generalized: theoretically nor empirically. Since Coleman (1987, 1990) originally developed the theory in the 1980s, SCT has made great strides, perhaps most importantly better integrating macro social inequalities into the theory. A well-voiced critique of SCT is that it does not model social inequalities. SCT does, however, have the ability to incorporate power structures. The problem lies not with the theory, but rather with the researchers that use the theory because power structures tend not to be incorporated into the vast majority of social capital research. The root of this problem is that most scholars do not actually use SCT, but merely integrate measures of social capital into their research models. As a result, (comparatively) few scholars actually discuss (and perhaps understand) the construction of social capital and how it influences well-being. Weak theoretical modeling (which does not differentiate between ethnic and immigrant groups) leads to mispecified models, thereby confounding the findings.1 In other words, in many studies, even when ethnicity, race, or immigrant status is “controlled” for, the influence of 1

In saying this, I would like to highlight the difference between theoretical misspecification and specification challenges that are related to dataset constraints. While the latter is a feasible research limitation, the former is not, since theory is malleable.

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these quintessential socio-dynamics are hidden within the coefficients/ results. Only by separating samples into individual groups (i.e., conducting analyses on each specific group or testing group differences with interaction terms) will we be able to evaluate health disparities (or similarities) and consequentially act on these differences. Some youth researchers incorporate the power dynamic into their use of SCT, though these studies focus on academic achievement (Ream and Rumberer, 2008; Stanton-Salazar, 1997; Stanton-Salazar and Spina, 2005). Specifically, Portes and Landolt (1996), among others (i.e., Ream and Stanton-Salazar’s work) have discussed the “downside” of social capital. Recall that downside refers to the social capital that develops in groups that produce less socially desirable ends (e.g., gang involvement). This concept is typically discussed in relation to Mexican-Americans; however, by no means does the development of social capital that produces a negative effect on “traditional” measures of well-being (such as health, dropout rates, academic achievement) only afflict Mexican-American or other ethnic minorities. Downside social capital can emerge in any group that is marginalized. As previously discussed at the beginning of the chapter, groups that are marginalized can develop excessively strong ties that work to block actual or potential bridges that group members can use to access other groups. Ream and Rumberger (2008), for example, examined the influence of peer group social capital on dropping out of high school among MexicanAmerican and white (non Latino) American youth. Their current and past work has been crucial in integrating minority status and power differences into social capital theory, advancing our understanding of well-being disparities among U.S. youths. Future research needs to model power differences so to increase the validity of the research.

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THEORY TESTING: INFLUENCE OF SOCIAL CAPITAL ON HEALTH Various measures of health were examined in order to observe how social capital “works” within each of the four subgroups. By far, social capital had the largest explanatory power (in terms of the statistical significance of the various social capital measures and the size of each measure’s effect) in predicting the likelihood of a respondent experiencing depression. Social capital appeared to be of limited utility in predicting excellent health, while for examining the likelihood of having a high HUI score and being overweight social capital was somewhat useful, particularly among native-born respondents. Similar to what has been found in the youth studies literature, the influence that social capital has on well-being depends on how the researcher measures well-being. Future research needs to examine differences in the influence of social capital found within the family and other mezzo groups on various measures of health. Although the current health literature examines the influence of “social capital” on health, recall that the health literature measures social capital in political terms, such as involvement in voluntary associations (Veenstra et al., 2005), civic participation, trust in government, and trust in neighbours (Berntsson et al., 2006; Kawachi, 1999; Veenstra, 2000). In this chapter I have illustrated that social capital in the family plays an important role in predicting health. Future health studies should include social capital found in the family, along with other “traditional” health measures of social capital. Researchers must also keep in mind that the mezzo groups that need to be modeled are contingent on the life stage (and of

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course data limitations) of the participants being studied. For example, youths and mature adults are not necessarily influenced by the same secondary groups. Not only this, but the importance of social capital in the primary group--the family--will also differ. It is also essential to recognize that the significance of particular mezzo groups waxes and wanes over the life stages. Although an essential theoretical notion to be mindful of, SCT does not currently account for the changing importance of primary and secondary groups over the life cycle. With the increased availability of longitudinal data and the development of longitudinal modeling, this is a lush area that needs considerable attention from the research community.

THEORY TESTING: POSITIVE INFLUENCE OF SOCIAL CAPITAL?

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As previously stated, the results indicated that all measures of social capital had a positive relationship with social capital, with the exception of participation in group activity, which had a negative influence on health among the native-born respondents. Recall that most SCT scholars typically envision social capital as having a positive effect on well-being, except when specific groups are marginalized. Currently, the vast majority of researchers that use social capital or SCT in their work only acknowledge the positive side of social capital, while comparatively few recognize the negative or downside of social capital. What I propose here and elsewhere (Bassani, 2007, 2008, 2009) is that social capital has a curvilinear relationship with well-being. In most (random population) samples, the relationship between social capital and wellbeing illustrates the linear portion of the curvilinear relationship. Figure 1 illustrates this notion.

Figure 1. Curvilinear Relationship between Social Capital and Well-Being.

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Most research using SCT focuses solely on the first segment of the curvilinear trend, simulating a linear relationship. Since the majority of the literature uses representative samples of the U.S. (and to a smaller degree the Canadian) population and may at best only control for marginalized status (i.e., immigrant status or ethnicity), researchers that examine social capital by and large assume a positive, linear relationship between social capital and well-being because the negative or curvilinear relationship is hidden. This being said, theoretical (Bassani, 2007, 2008) and empirical evidence documents negative or downside social capital in the Mexican-American community (Portes and Landolt, 1996; Ream and Rumberger, 2008). Research needs to test for the existence of this downside social capital in other marginalized communities--ethnic and otherwise. In the research that I have presented, is the negative effect on health associated with participating in group sport activities indicative of the downside of social capital? I believe so, though in drawing this conclusion we must ask ourselves, what is it about sports group participation that makes someone more apt to be overweight, depressed, and unhealthy? One explanation could be that the group activities measured in this study may be associated with unhealthy lifestyles, such as participating in social drinking after the end of the sporting activity. Golfing and bowling were the two most frequent group activities that respondents participated in (over 10% of respondents had participated in either activity in the previous three months). Most golf courses have clubhouses (or at least beer stands) where golfers socialize (share alcoholic beverages) after their round of golf. Similarly, bowling alleys serve alcohol on the bowling premises. Participating in these types of group activities may be linked to heightened alcohol consumption and other unhealthy behaviours, though future research needs to test this premise. If this explanation has merit, then this also may mean that individuals who socialize after their group sporting events might be spending less leisure time with the members of their primary group (their family) and more leisure time with secondary group members (their peers). If this is the case, then a conflict between primary and secondary groups is apt to be present (either a cause or effect), which might be indicative of functional and/or structural social deficiencies in the primary group. This is theoretically logical, though again this premise needs to be tested to determine its merit. Similar findings have been documented in previous studies. Buchel and Duncan (1998) found that children whose parents (fathers) spent more time in sporting activities had lower school achievement. They argued that these parents experienced family vs. peer group conflict/ competition, which adversely influenced their child’s well-being. This is an interesting area for future research to focus on, particularly since the downside of social capital as it currently stands tends to be associated with members of marginalized groups. If the case scenario that I have presented has merit, then this would suggest that it is the competition between primary and secondary groups that fosters downside social capital. Currently, downside social capital is thought to develop among marginalized populations (i.e., minority ethnic groups). While I make no argument with this premise, it may be competition between primary and secondary groups that is the root in the development of downside social capital--not minority status per se. Some minority groups may be more or less susceptible to this competition depending on where they (as a group and individually) are located within the society’s power hierarchy. Macro-level socio-economic inequalities associated with minority status influence primary-secondary group competition. For example, demographic trends in both Canada and the United States illustrate that people who belong to

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a minority group (whether it be ethnic or other based) tend to have lower incomes. As such, when financial capital in the household is limited, functional resource efficiencies may decline, thereby influencing the structural resource deficiency of the household. In other words, couples that experience economic hardship are more apt to have relationship problems, which may cause the couple to spend less time together. Having a shared minority status bridges people together and consequentially secondary groups--either tightly or loosely bound--form. Although the current literature focuses on minority status as a bridging mechanism in the formation of downside capital, it is not the only shared trait that bridges people together in tightly bound groups. Given the right formula, any group could potentially become tightly bound, thereby producing downside social capital. The “formula” for downside social capital has to do with the combination of an individual’s position (determined by individual and group attributes) on the social hierarchy and the fulfillment of their emotional needs; it has to do with the development of relationships that produce acceptance, affinity, devotion, and loyalty among group members--in other words, social capital. Individuals whose needs are not being met in their primary group may seek solace in secondary groups. This is an area of the theory that is vastly underdeveloped and needs to be explored. One last question concerning the negative relationship between group participation and health is: Why was this relationship found only among native-born respondents and not among immigrant respondents? According to the theoretical argument that I have provided above, it may be that immigrant respondents do not experience the same degree of familypeer group conflict. Are immigrant families more inclined to integrate (or bridge) family and friendships groups than are native-born respondents? Do immigrant families on the whole have richer functional social resources in their families, despite having limited structural resources (since nuclear and extended family members may still reside in their home country)? These are both interesting and important questions to examine. Acculturation into dominant society is a desired outcome, especially in the United States, where the “melting pot” is fostered. (Although Canada espouses multiculturalism, acculturation arguably takes place within a few generations of residing in Canada.) Research needs to examine acculturation and how this process may or may not lead to a decline in social capital among (second, third, fourth…) generations of immigrant families. Interestingly, if a decline in social capital occurs, this is the same base argument made by the healthy immigrant effect and education researchers that see students’ academic achievement moving towards the mean-regardless of whether they came into the school with higher or lower academic achievement (Willms, 2002). These questions need to be addressed in future studies.

THEORY TESTING: RACIAL MINORITY STATUS By and large, racial minority status did not largely influence health. That is to say in only a few instances were health differences noted based on skin colour. This finding was contrary to what was expected, as social capital was predicted to influence health: either positively or negatively (downside of social capital). Racial marginalization is, however, innately intertwined with privilege and marginalization in society, which can be seen vis-à-vis socioeconomic differences. Accordingly, it was no surprise that the financial and human capital

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(control variables) accounted for much of the health variance within the U.S. immigrant sample. Previous cross-national research supports these findings, as income disparities tend to account for a large proportion of the variation in well-being (Lynch et al., 2004; OECD, 2001). In both nations, being an immigrant racial minority was linked to depression. This negative influence may have to do with the participant’s marginalized position in society. The relationship between racism and discrimination is complex (Kreiger et al., 1993; Krieger and Sidney, 1996; Paradies, 2006; Wu et al., 2003), though research continues to find a direct, negative link with poor health (Finch et al., 2000; Kessler et al., , 1999; Krieger and Sidney, 1996; Pak et al., 1991). When able, future studies should incorporate direct measures of discrimination, since discrimination has been found to be detrimental to health. In addition, future research needs to examine resiliency to racism (Dion et al., 1992) and delineate the role that social capital plays in the development of coping mechanisms. It is likely that rich (and not downside) social capital in primary and secondary groups counteracts the otherwise negative effects of racism. Although not in the context of racism, but academic achievement, the importance of this “booster effect” and the “compensating effect” on well-being has been theorized and tested (Bassani, 2007, 2008; Parcel and Dufur, 2001). The interaction or bridging of social capital across groups is an area that needs future attention, especially given that it is one of the underlying premise of SCT, yet relatively few researchers have discussed or modeled these relations in their research.

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CONCLUSION The most crucial contribution of this research that I would like to stress is that researchers and planners need to recognize that the determinants of immigrants’ and native-born individuals’ health are not necessarily the same. While researchers have acknowledged this point, the bulk of general health research in both Canada and the United States has concentrated on the general population and has not separated the samples to highlight health disparities. In 2006, 19.0% of Canadian citizens were immigrants (Census Canada, 2006), while in the United States, in 2005, 12.1% of the population were immigrants (Camarota, 2006). Immigrants represent a sizable proportion of both countries’ populations, though the story of health differences between these two sizable groups is somewhat muted. We cannot expect minority group members to react to health programs and policies in the same way that majority group members do. Only by differentiating native-born and immigrant groups-though ideally also differentiating the major intersections that divide these two groups (i.e., minority status: ethnicity, race, etc.)--can services and programs be developed or altered to best meet the needs of all members of a society.

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APPENDIX A. OPERATIONALIZATION OF DEPENDENT VARIABLES: EXCELLENT HEALTH, OVERWEIGHT, DEPRESSION, HEALTHY Variable Excellent Health Overweight

Experienced Depression

Question/ Statement In general, would you say your health is: Excellent =1, Very Good, Good, Fair, Poor = 0 Body Mass Index (combination of the following responses: Respondent’s height in meters and weight in kilograms, whether or not the respondent is pregnant, respondent’s age, and respondent’s sex) Dichotomized BMI 1 = Overweight (BMI ≥ 25.0) 0 = Not overweight (BMI ≤ 24.9) A combination of the following responses:

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Response categories: Yes=1, No=0 During the past 12 months was there ever a time when you felt sad, blue or depressed for 2 weeks or more in a row? During those 2 weeks did you: loose interest in most things? feel tired out or low on energy all of the time? have a lot more trouble concentrating than usual? feel down on yourself, no good or worthless? think a lot about death –either your own or someone else’s death in general? lost interest in most things, like hobbies, work or activities that usually give you pleasure?

Healthy

Response categories: lost/gained 9 pounds/ 4kg or more =1, lost/gained 9 pounds/ 4kg or less = 0 How much (weight) did you gain/ loose? Response categories: sleeping troubles every night = 1, nearly every night, less often = 0 How often did you have trouble falling asleep? Dichotomized Depression Scale Did not experience depression =0 Experienced depression =1-19 Health Utility Index Combination of eight health attributes: Vision Scale (HUJ1DVIS) derived from variables: HUJ1_01, HUJ1_02, HUJ1_03, HUJ1_04, HUJ1_05 Hearing Scale (HUJ1DHER) derived from variables: HUJ1_06, HUJ1_07, HUJ1_07a, HUJ1_08, HUJ1_09

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Appendix A. (Continued) Speech Scale (HUJ1DSPE) derived from: HUJ1_10, HUJ1_11, HUJ1_12, HUJ1_13 4. Mobility Scale (HUJ1DMOB) derived from variables: HUJ1_14, HUJ1_15, HUJ1_16, HUJ1_17, HUJ1_18) 5. Dexterity (HUJ1DDEX derived from: HUJ1_21, HUJ1_22, HUJ1_23, HUJ1_24) 6. Emotional (HUJ1DEMO derived from: HUJ1_25) 7. Pain (HUJ1DPAD derived from: HUJ1_26, HUJ1_27) 8. Discomfort (HUJ1DVIS derived from: HUJ1_28, HUJ1_30) Dichotomized HUI HUI ≥ 0.945 = 1 HUI < 0.945 = 0

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Parcel, T., R. Nickoll and M. Dufur. 1996. “The Effects of Parental Work and Maternal Nonemployment of Children’s Reading and Math Achievement.” Work and Occupations. 23, 4: 461-483. Pollack, C. and O. Knesebeck. 2004. “Social Capital and Health Among the Aged: Comparisons between the United States and Germany.” Health and Place. 10: 383-391. Portes, A. and P. Landolt. 1996. “The Downside of Social Capital.” American Prospect. 26: 18-21. Putnam, R. 1999. “Bowling Alone: America’s Declining Social Capital.” Journal of Democracy. 6, 1: 65-78. Putman, R. 1996. “The Strange Disappearance of Civic America.” Policy. Autumn: 3-15. Ragin, C. and D. Zaret. 1983. “Theory and Method in Comparative Research: Two Strategies.” Social Forces. 61, 3: 731-754. Ream, R. 2003. “Counterfeit Social Capital and Mexican-American Underachievement.” Educational Evaluations and Policy Analysis. 25, 3: 237-262. Ream, R. and R. Rumberger. 2008. “Student Engagement, Peer Social Capital and School Dropout Among Mexican-American and Non-Latino White Students.” Sociology of Education. 81, 2: 109-139. Rosner, B., R. Prineas, J. Loggie and S. Daniels. 1998. “Percentiles for Body Mass Index in U.S. Children 5 to 17 Years Age.” The Journal of Pediatrics. Feb: 211-222. Stanton-Salazar, R. 1997. “A Social Capital Framework for Understanding the Socialization of Racial Minority Children and Youths.” Harvard Educational Review. 67: 1-40. Stanton-Salazar, R and S. Spina. 2005. “Adolescent Peer Networks as a Context for Social and Emotional Support.” Youth and Society. 36, 4: 379-417. Statistics Canada and United States National Center for Health studies (SCUSNCHS). 2004a. Joint Canada/United States Survey of Health Derived Variables Documentation. Statistics Canada and United States National Center for Health studies. 2004b. Joint Canada/United States Survey of Health Questionnaire Final. Statistics Canada and United States National Centre for Health Statistics. 2004c. Joint Canada/ United States Survey of Health Public Use Microdata File User Guide June 2004. Stevenson, H., C. Chen and S. Lee. 1993. “Mathematics Achievement of Chinese, Japanese, and American Children: Ten Years Later.” Science. 259: 53-58. Sue, S. and J. Chu. 2003. “The Mental Health of Ethnic Minority Groups: Challenges Posed by the Supplement to the Surgeon General’s Report on Mental Health.” Culture, Medicine and Psychiatry. 27: 447-465. Teachman, J., K. Paasch and K. Carver. 1997. “Social Capital and the Generation of Human Capital.” Social Forces. 74, 4: 1343-59. USA Census Bureau. 2004. “National Population Estimates, 2004” Veenstra, G. 2000. “Social Capital, SES and Health: and Individual-level Analysis.” Social Science and Medicine. 50: 619-629. Veenstra, G., I. Luginaah, S. Wakefield, S. Birch, J. Eyles, and S. Elliott. 2005. “Who You Know, Where You Live: Social Capital, Neighbourhood and Health.” Social Science and Medicine. 60: 2799-2818. Willms, D. (ed) 2002. Vulnerable Children. Edmonton: University of Alberta Press. World Health Organization. 2006. Composite International Diagnostics Interview. http://www3.who.int/cidi/ accessed on August 9, 2006.

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World Health Organization. 2000. Obesity: Preventing and Managing the Global Epidemic. WHO Technical Report Series 894. United Nations: Geneva. Wu, Z., S. Noh, V. Kaspar and C. Schimmele. 2003. “Race, Ethnicity, and Depression in Canadian Society.” Journal of Health and Social Behaviour. 44: 426-441.

In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

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Chapter 7

SOCIAL CAPITAL AND PUBLIC HEALTH PRACTICE Alice J. Hausman∗1, Joanna Maselko1 and Rickie Brawer2 1

Department of Public Health, Temple University, 1301 Cecil B. Moore Avenue, 9th Floor Philadelphia, PA 19066 2 Department of Family and Community Medicine 1015 Chestnut Street, Suite 617, Thomas Jefferson University and Hospital Philadelphia, PA USA19107

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ABSTRACT Despite the theoretical appeal of social capital as a determinant of both individual and community health, empirically demonstrated causal processes have not been validated or confirmed, in part due to difficulties associated with defining how social capital is manifested and therefore measured. This paper discusses how a shift in perspective from one of causality to one where social capital is viewed as an intervention facilitator, would make it easier to demonstrate how social capital works and how this useful concept can be more fully integrated into public health practice. It also discusses how formal and explicit use of social capital principles and measures in program development and evaluation processes can provide strong evidence for universal domains using measures of markers that are tailored to the local context, thereby increasing evidence for policy while embracing practice principles of participation and local relevancy.

OVERVIEW Over the past two decades, social capital has gained prominence as an important concept to national prosperity and well-being. Researchers and policy makers recognize that social capital may provide important common ground for understanding and communicating ∗

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outcomes across multiple domains such as economics, health and social well-being, and the environment. Public health officials are particularly interested in the positive and negative ways that social capital may impact health, and how information about social capital could be used to inform policy and program development. Despite its intuitive appeal, the social capital concept has come under criticism relating to its underlying assumptions and theoretical constructs (Pearce and Smith, 2003; Stone and Hughes, 2002). Recently developed are a number of different models that postulate how the dimensions of social capital relate, including Bridging Social Capital: A Mediating Factor In Community Programs (Kreuter and Lezin, 2002), the Conceptual Model of How Social Networks Impact Health (Berkman and Glass, 2000), the Australian Bureau of Statistics’ A Framework for Social Capital (2004), and the Conceptual Framework: Levels and Types of Social Capital (Krishna and Shrader, 1999). Few have been confirmed or validated by empirically demonstrated causal processes, in part due to difficulties associated with defining how social capital is manifested and therefore measured. Importantly, US funding policies, at least in the health arena, rely on such evidence of effect before making recommendations of “best practice”. So, difficulties in demonstrating causal effects limit the ability to include social capital-oriented initiatives in best practice recommendations. If, however, we shift our view of social capital from one where it is in the causal pathway to specific health outcomes to one where we see social capital as an intervention facilitator, then it becomes easier to demonstrate how social capital works and how this useful concept can be more fully integrated into public health practice. Additionally, a social capital perspective on program development can provide strong evidence for universal domains using measures of markers that are tailored to the local context, thereby increasing evidence for policy while embracing practice principles of participation and local relevancy (Hausman, 2002). In many respects, social capital is already implicit in many community health approaches. Community Participatory Research models and Social Ecological Frameworks naturally lend themselves to the integration of social processes along with those more targeted to health outcomes. These theoretical frameworks and models include the Community Health Governance Model (Lasker and Weiss, 2003), the Community Coalition Action Theory (Butterfoss and Kegler, 2002), and the Community Partnerships for Healthy Children (CPHC) Theory of Change (Peterson, 2002), all designed to address research and functional/operational needs of collaboratives working on community health topics. These models provide opportunities for understanding how aspects of social capital are inherent to the collaborative process and then ultimately to improving the health of the community. We propose that a slight shift in how we view social capital and its role in health may assist in removing some of the barriers to making social capital more explicit in public health programs. To demonstrate, we discuss how social capital can be more fully integrated into different stages of public health programming. Specifically, we demonstrate how social capital enriches baseline assessments, facilitates participatory intervention development, and is amenable to evaluation. We assert that all aspects of public health programming, including sustainability, are improved by adding both a broad social capital perspective and a specific accounting of social capital dimensions throughout the life of a program.

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DEFINING SOCIAL CAPITAL While there is considerable debate on what social capital really is, and a thorough discussion of the theoretical orientations to social capital is beyond the scope of this chapter, we broadly base our approach on the work of Coleman (Coleman, 1990) and Putnam (Putnam, 1993a, 2000) and define social capital as the features of social life such as networks, norms, and trust which act as resources to facilitate the accomplishment of shared goals (Lochner, Kawachi, and Kennedy, 1999; Putnam, 1993b). Coleman views social capital as a product of rational, purposeful individuals who build social capital as means to maximize their individual opportunities. Social capital is thought of as a resource that exists in the relationships of individuals, a resource that can be tapped, depleted, as well as built as a result of social interactions. Information sharing, reciprocity, and strength of relationships are critical to internal cohesion and sustainability.

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SOCIAL CAPITAL AS A COMMUNITY ASSET A number of models are available to assist public health practitioners design feasible and effective programs. As examples, PRECEDE-PROCEED (Green and Kreuter, 2005) is a useful and well-used guide for planning health education programs; CDCynergy focuses on health communication based interventions (CDC 2003); Mobilizing for Action through Planning and Partnerships (MAPP) (NACCHO, 2001) takes a capacity and partnership orientation to designing public health programs. Common to these models are baseline assessment of community strengths and problems, engaging and enlisting community representatives as partners and co-facilitators, and tailoring best-practice interventions for local settings to maximize both intervention effect and sustainability. Asset-based planning (McKnight and Kretzman, 1997) not only assists in efficient resource allocation, it also helps program planners to build trusting relationships with the participating community because they can demonstrate their recognition of community strengths and positive characteristics (Hausman and Becker, 2000). Also common to planning models is the recognition that program activities require integration with or at least support from existing community resources. Many planning models provide assessment tools that can be used to account for specific community resources and to identify potential partners in program implementation. Implicit to capacity oriented planning is that the community’s capacity to support planned activities should be a consideration in the decision regarding resource allocation to particular communities or activities. Communities with less capacity will require additional resource and effort to create a sufficient platform for program implementation. Discussions of capacity often focus on physical and service capacity, such as recreation centers and after-school programs. An advantage of a social capital perspective on the assessment phase is that social processes, such as trust and the collective will to share, participate and act to support program activities, can be included in the accounting of assets and can be used to characterize communities at the outset. Better understanding of these domains of community assets can help tailor resources and facilitate planning decisions to best fit local circumstances. Furthermore, inclusion of these aspects can help programs address social capital through specific activities designed to address and build features, such as trust, which are critical to

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both successful implementation and sustainability. Even the act of asking these questions and providing information about these social features to participating communities enhances the program development and implementation process (Hausman and Becker, 2000; Hausman, Becker and Brawer, 2005). Participatory research methods used for assessment of community public health needs elsewhere have similar rewarding results for program planning (Schulz, Parker, Israel, Becker, Maciak, and Hollis, 1998; Lindsey and McGuinness, 1998). The challenge of this perspective of social capital as a community asset and a community condition is that it must be operationalized for measurement. Many have written extensively about the issues surrounding the measurement of social capital and the reader is encouraged to consult these for a deeper understanding (Hawe and Shiell, 2000; Lochner et al., 1999). An extensive database of social capital indicators/measures and questions has been developed by the Office for National Statistics-Social and Vital Statistics Division (2003). In addition, the Benchmark Survey developed by the Saguaro Seminar (2001) consists of questions related to eleven indices of social capital. The Social Capital Assessment Tool (SOCAT) developed by the World Bank (Grootaert, Narayah, Jones, and Woolcock, 2004), and can be downloaded from the World Bank website under social capital measurement tools, and the Australian Bureau of Statistic’s Social Capital Framework and Indicators Australian Bureau of Statistics (2004) also provide comprehensive questions and indicators related to the measurement of social capital. Independent of the theoretical orientation or specific definition of social capital used, almost all measures of social capital tap into one or more of: (1) trust and norms, (2) ease of cooperation/civic engagement/collective action, and (3) networks at three levels, bonding, bridging and linking. With an understanding that these are all proxies for social capital, below are some examples of specific domains that may be included in a social capital assessment measure.

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Norms and Trust Community norms surrounding acceptable and unacceptable behaviors as well as expectations of fellow residents can be an important component of social capital. Relevant norms cover issues such as perceived tolerance of divergent opinions, expectations of neighbors to intervene (or not) when observing something suspicious happening, as well as seemingly more mundane issues around level of acceptable trash on the street and who cleans it up. Trust can be understood as a specific type of norm and trust questions are most meaningful when in reference to specific groups or members of the community, such as coresidents, members of community organizations, religious community members, etc. Trust can also be generic or in relation to something specific such as returning lent money, watching over one’s home, etc. Particularized trust (trust of familiars or informal trust) refers to individual relationships and feelings of trust based on knowledge of the individual and a sense of whether or not the individual can be trusted. Generalized trust (social trust) describes the trust that individuals have for people who are strangers or with whom they have limited acquaintance and is based upon a sense of shared norms. For example, if you ask someone for the time, you expect that the person will respond with the correct time (Australian Bureau of Statistics, 2004). Civic or institutional trust is the basic trust in government and is based on perceived fairness of rules,

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allocation of resources, and conflict resolution (Stone, 2001). Particularized trust (trust of familiars or informal trust) is often measured by questions in which a person will be asked to what extent they trust someone to act in their best interest, such as returning a lost wallet. Generalized trust of strangers is usually measured by a question that measures the perception of whether people in a given community can be trusted. For example, the World Values Survey has questions designed to measure civic trust by giving a list of institutions and ask the respondent whether or not, or to what extent, the respondent trusts the institution (Stone, 2001). Questions on trust may also address feelings of safety in the community, such as being able to safely walk on the street after dark. The Social Capital Scale (Bullen and Onyx, 2000) consists of thirty-six items that form a reliable and valid instrument for the measurement of social capital and was developed to measure social capital in adults (aged 18 to 65) living in five communities in New South Wales. Measures of trust incorporated into the scale include Do you feel safe walking down your street after dark; Do you agree that most people can be trusted; If someone’s car breaks down outside your house, do you invite them into your home to use the phone; Does the area have a reputation for being a safe place; and Does your community feel like home? In the World Bank Social Capital Instrument (Grootaert, et al., 2004), specific survey questions that help to quantify trust include asking people to agree or disagree with the following statements like: Most people who live in this neighborhood can be trusted; In this neighborhood, one has to be alert or someone is likely to take advantage of you; Most people in this neighborhood are willing to help if you need it; In this neighborhood, people generally do not trust each other in matters of lending and borrowing money. Another item asks respondents to rate on a scale of 1 to 5, How much do you trust the people in [this] category: People from your ethnic group/race/etc; people from other ethnic group; shopkeepers; local government officials, central government officials (Grootaert, Narayah, Jones, and Woolcock, 2004).

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Civic Engagement/Collective Action/Ease of Cooperation Civic participation refers to involvement in activities that pertain to civic associations (formal ties) and government and relates to common or shared purpose. It can include voting, attending union meetings, signing a petition, participation in politics, PTA, and serving on clubs and voluntary associations (Putnam, 2000; Australian Bureau of Statistics, 2004; Stone, 2001; Baum, 2000). The Social Capital Scale (Bullen and Onyx, 2000) includes 7 measures of civic participation: Do you help out a local group as a volunteer; Have you attended a local community event in the past 6 months; Are you an active member of a local organization or club; Are you on a management committee or organizing committee for any local group or organization; In the past 3 years have you ever joined a local community action to deal with an emergency; In the past 3 years have you ever taken part in a local community project; and Have you ever been a part of a project to organize a new service in your area? The World Bank Social Capital Instrument offers these survey items: “In the past 12-months, have you worked with others in your village/neighborhood to do something for the benefit of the community?” “If there was a (example of specific problem, such as a spike in vandalism etc.) problem in this community, how likely is it that people will cooperate to try to solve the problem?” (Grootaert et al., 2004).

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Networks

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Basic components of a network assessment include information on who is in the network, network size, density, reciprocity, proximity, as well as the frequency of interactions and the duration and intensity of contacts. The Measurement of Social Capital Reference Document for Public Policy Research, Development and Evaluation (Franke, 2005) is based on the social capital perspective that social networks provide access to resources and support and provides an excellent overview of social capital as it relates to public policy research. The appendices include multiple measurement tools such as the SOCAT (World Bank), and social capital indicators suggested by the PRI Conceptual Framework, Measurement of social isolation (Russel, 1996; Onyx and Bullen, 2000). Other network analysis tools identified in the literature include the Network Ties Survey (Provan, et al., 2003), and software used for mapping networks. Network analysis mapping tools map and measure network connections and provide a current visual snapshot of a system. These maps can assist in answering key questions related to the community building process such as (Krebs and Holley, 2006): Who is in the network and are key people/connections missing; Who plays a leadership role; Who collaborates; What are the reciprocal transactions? The World Bank Instrument (Grootaert et al., 2004) asks respondents to list all of the groups that they are members of and to indicate their level of activity with that group (e.g. very active to not very active). These can include groups such as religious groups, sports clubs, hobby groups, etc. Other questions ask the respondent to indicate how many of the people in their neighborhood they know by name, and how often they socialize with them. A feature that overlays all three of the above described dimensions is the bonding, bridging, and linking nature of social capital (Szreter and Woolcock, 2004; Almedon, 2005) Bonding social capital refers to the tight bonds within a single, homogenous group of people. The cohesiveness and unity of a single neighborhood would be an example of bonding social capital. Bridging social capital refers to the norms, cooperation and networks that cross group boundaries and connect more diverse people and groups. Finally, linking social capital refers directly to connections with groups or individuals who have access to power and resources. Taking trust as an example, bonding would refer to the level of trust between members of the same community group or neighborhood; bridging would refer to the level of trust of other community groups or people who live in the next neighborhood; while linking would refer to the levels of trust of elected officials, government representatives, or business leaders. These three distinctions are valuable because they directly incorporate issues of power dynamics and group divisions into the social capital assessment. An example of how explicit measures of social capital can enhance the assessment and program planning phase comes from a participatory effort to build a firearm violence prevention program in an inner city neighborhood. The Firearms Connection – The North Philadelphia Firearms Reduction Initiative (Hausman, Siddons and Becker, 2000) was a youth firearm violence prevention program that used a partnership model to link healthcare, criminal justice, business and social service providers with neighborhood residents and community organizations to identify priorities and develop solutions. The needs assessment was used to 1) specify the problem of firearm violence in the community, 2) frame possible solutions from the community perspective, 3) identify community assets and resources, 4) engage key members of the community in the assessment and program planning process, and

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5) identify appropriate markers for evaluation. While social capital was not the target of the assessment and not explicitly measured, social capital themes permeated the assessment results. For example, strong social networks were clearly specified as a community asset. The people who lived in the neighborhood described themselves and others a long term residents, homeowners, family members, and people close to other another. Conversely, weak connections were seen among existing services, leading to poor use of valuable resources. Increasing neighborhood cohesiveness and cooperation was specified as a target for intervention and a sign of positive change for the community was when parents, community members, police and local service organizations would work together to reduce gun violence. In this case study, the assessment of social capital emerged as fundamental to the eventual program development. A more structured and quantitative measurement of the relevant social capital themes would have laid the groundwork for tracking success on the stated desired outcomes of the program. For example, the Network Ties survey developed by Provan et al. (2003) is a survey that has been used to track aspects of networks over time. The survey asks respondents to identify each agency with whom they worked in the past six months, the types of involvement, and to rate the quality of its relationship with every other agency, based on trust. In addition, the survey explores the extent of collaborative relationships (network transactions) by measuring aspects of specific benefits or drawbacks related to collaboration. Provan et al. were then able to track changes in these parameters over time and to identify specific contributors, such as information sharing, to strengthened collaborative ties. If the Firearms Connection had employed this scale, for example, more formal evidence for future practice would have been realized. To summarize, including social capital in the assessment phase provides the opportunity to “discover” important community assets and sentiments that can be critical knowledge important for program development. For the Firearms Connection, building new resources, a common approach to violence prevention, would not have been an effective approach, despite theoretical specifications. Rather, linking existing resources proved to be the better approach, in the end. Conceptually, the general domains of norms/trust, civic participation, and networks can be operationalized using standardized instruments, yet yield information that is locally relevant. Methodologically, questions can be added to sample surveys but the domains are open to qualitative assessment as well. Network analysis, simple or complex, can provide important information on how a community defines itself in relation to other groups and important political boundaries that can influence the ability to collaborate. Finally, more structured social capital assessment lays the groundwork for more evidence on causal relationships to accrue.

SOCIAL CAPITAL AND INTERVENTION DEVELOPMENT Current public health practice also places emphasis on community collaboration in the program planning process. Partnership development, shared decision-making and coownership are increasingly embraced as best-practice to ensure appropriate and sustainable programming (Minkler and Wallerstein, 1997). A social capital perspective assists with leveraging community partners and managing sustained participation. For example, the expectation of reciprocity encourages program developers to identify and deliver on elements

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that are valued by community representatives (Hausman et al., 2005). As noted above, the North Philadelphia Firearms Reduction Initiative showed that increased communication among community based agencies and greater linkages with city resources emerged as a stated desired program outcome – clearly reflecting a key domain of social capital (Hausman, Siddons and Becker, 2000). Action steps were taken to link service providers within the neighborhood and to create linkages with city-level services. Interestingly, merely sharing the assessment report that documented the commonly perceived lack of linkages spurred several organizations and individuals to initiated reaching out to each other, independently of any project-specific actions. This internally generated effort was essentially independent of project resources and thus more likely to be sustainable. More recent studies show that social capital can be specifically targeted for building through specific intervention. The Stronger Communities Action Fund in New Zealand was a community intervention whose goals included testing models of devolved decision making in communities while encouraging and supporting them in identifying, developing and funding innovative responses to their social service needs (Taylor, 2004). Three groups were thus involved: the community which was responsible for identifying needs and developing ideas for projects; the funding agency which also provided oversight and ensured accountability; and the government appointed agency that was to provide guidance and support as well as evaluate the intervention. Working in small, disadvantaged, but fairly functional communities it was hoped that the intervention would also increase stocks of social capital. To measure social capital, the team drew on theoretical (Bullen and Onyx, 2000) as well as pilot data to guide in-depth interviews from representative stakeholders. Changes in social capital were then assessed using qualitative research methodology relying on these interviews. The intervention succeeded in increasing stock of some, but not all, aspects of social capital. For example, interviews revealed that the intervention increased people’s tolerance to different viewpoints, which lead to an increased willingness to participate. Community networks also increased while levels of trust among community members did not appear to change. Several insights can be gained from these examples. Improvements in social capital, namely those social processes of trust and networking that build collaboration, are important perceived and real desired outcomes that inspire communities’ willingness to participate in programs. And, true participatory program development processes mandate that some element of program activity must address these processes at least in some fashion. Finally, it is increasingly evident that these processes do respond to intervention and that social capital can be built. Other disciplines beyond public health have successfully targeted building social capital in community interventions such as environmental planning (Mandarano, 2008) or those from developing countries (Snoxell, Harpham, Grant, and Rodriguez, 2006) and perhaps it is time that public health programs include such efforts, regardless of the specific health topic under consideration.

SOCIAL CAPITAL AND EVALUATION Social capital can assist public health programming in evaluation, particularly when participatory and collaborative approaches are used. The first area where social capital is relevant to evaluation is process or implementation evaluation, The Community Health

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Governance Model proposed by Lasker and Weiss provides an opportunity to develop and measure intermediate level indicators that are indicative of how well the collaborative process is functioning. Measures of social capital, such as trust, reciprocity and network development, particularly bridging social capital, may provide insights about social network functioning and how network linkages can contribute to desired individual, coalition and community outcomes, as well as public policy development and evaluation (Australian Bureau of Statistics, 2002; Franke, 2005). With this perspective, social capital is not posited in the causal pathway of the intervention but rather is assistive in viewing the functioning of the group undertaking the intervention. In a sort of continuous quality improvement mode, social capital dimensions provide on going evaluation and feedback on program process. A second assistive aspect of a social capital perspective is that it is amenable to evaluation. As noted above, measurement issues contribute to the difficulty in tracking and measuring any change in social capital dimensions. Yet, as also discussed, proxy measures are possible and including assessment of social capital at the evaluation stage provides invaluable information about the impact of the intervention on social capital as well as illuminating why specific components of an intervention worked better than others. Bullen and Onyx (2002) suggest that their Social Capital Scale, can be used to measure social capital over time; that is, the tool could be used to measure the level of social capital of the local community (or a particular group in the community) before and after a community development project, and could be used to compare social capital levels of different communities. As described above, the New Zealand team drew on both theoretical and local knowledge to inform them which aspects of social capital might be salient in the target communities. Importantly, it was acknowledged from the beginning that there existed multiple domains of social capital which might or might not be relevant for the intervention and the future health of the community. Based on prior work in New Zealand (Bullen and Onyx, 2000), initial themes identified included participation with community, proactivity in a social context, trust and safety, work/neighborhood/family/friend connections, tolerance of diversity, and value of life. They used these themes to inform in-depth interviews and then reported on the themes that were salient in their communities and the ones that it was felt changed as a result of the intervention (Taylor, 2004). A third point is that social capital principles can facilitate both the evaluation process and build sustainability. Peterson (2002) notes that using measures of social capital as short-term evaluation of progress towards desired long-term health outcomes may help to alleviate some of the problems of frustration and that can come when “results” may be a long time coming. Identifying short-term and intermediate outcomes, including specific measures of social capital, may assist in sustaining collaborative members’ interest in participating in initiatives that require long periods of time to achieve changes in health outcomes. The Annie E. Casey policy report, “The role of Social Capital in Building Healthy Communities” (Schneider, 2004), proposes that approaches designed to build social capital should foster connections across groups as well as enhance benefits to all participants. The report further suggests that failure to develop social capital in social service institutions is likely to limit opportunities for the people they serve. Communication among coalition organizations for example, can raise awareness about a marginalized community’s culture and needs, resulting in expanding resources for community members (Schneider, 2004).

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A recent effort to create a participatory evaluation process provides an example of how evaluation can both measure and build social capital while addressing other performance and practice goals as well as health outcomes (Hausman et al., 2005). The Value Template Process applies concepts and principles of social capital to community health partnerships, viewing the network of different agencies as the social unit where social capital is built and bartered. The underlying premise based on social capital is that the more participating individuals and organizations realize their own self-interests through participation, the more likely they are to continue to participate. Many of these network indicators are measurable and increasingly we see efforts to address relevant methodology, as noted above. Demonstrating return on the investment of participation may also increase sustainability. Subsequent research by Brawer, Hausman and Becker (Brawer, unpublished dissertation 2007) explored the Value Template Process as a strategy/intervention that could build social capital while discovering and communicating shared values of coalition success. Incorporating research tools and methods used previously by other researchers to measure concepts associated with social capital (Israel, 1994; Provan et al., 2003; Bullen and Onyx, 2000), the resulting social capital survey tool was designed to measure changes in the level of social capital indicators prior to and after implementation of the Value Template Process in a coalition in Philadelphia. Significant changes were found related to the impact of the Process on networks. Implementation of the Value Template Process enhanced levels of social capital related to density/multiplexity of network transactions (reciprocity related to information sharing, sharing resources and referrals to and from the parent organization) among those who participated in the Process. This study of the Value Template Process demonstrated that processes designed around assessment and evaluation, such as the Value Template, can be employed to build social capital, and that social capital indicators can be developed and serve as more proximal indicators of organizational effectiveness in reaching desired long term health and social goals. A fourth and final point is that social capital can be the common theme that unites seemingly different community health improvement projects, both within and across disciplines. The need to tailor interventions to the local context is widely recognized. Yet, at the same time, when local implementations are “controlled” to provide unimpeachable evidence of effect, the ability to generalize is lost. A social capital perspective can aid evaluation and eventually policy formulation through the reconciliation of tailored interventions and locally relevant evaluations with the need for broader generalizable statements about program effects. Simply put, locally identified themes can be mapped on to the three main social capital components of Norms and Trust, Collective Action, and Networks described above, creating a common thread for comparison and communication across studies. For example, in the Taylor study, specifically, ‘trust and safety’, ‘tolerance of diversity’, and ‘value of life’ are examples of community norms and trust. ‘Participation with community’ and ‘proactivity in a social context’ can be understood from the perspective of civic engagement/collective action. Various group connections can be clearly situated within the networks domain. The specific context of the disadvantaged New Zealand community informs which aspects of the ‘skeletal’ measure of social capital should be measured and how they should be tailored, yet ultimately, the “trust” domain measured in New Zealand can be compared with that measured in North Philadelphia, thereby enabling comparison and eventual synthesis of findings.

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CONCLUSIONS Social capital is a concept that is widely used across a range of disciples to explain and describe the social environment of communities, which plays a significant role in individual health. Researchers should continue to elucidate the underlying mechanisms that link the social experience to health markers. However, a social capital perspective on the program development process can be built into public health practice in such a manner that core principles of community participation and sustainability can be enhanced and fully realized, based upon the evidence currently available. We make the following recommendations. Include social capital in community assessment to fully characterize community assets, capacity, and contexts for program development. Inclusion of social capital measures at the assessment phase also assists with tracking and noting changes in these domains later and may also provide early feedback on program progress. Early measurement of social capital features also fosters participation and can be a trust and relationship building process in and of itself. Measurement problems exist but there are many available tools and the goal of all measurement of social capital should be to derive measures that reflect the locally relevant manifestations of social capital principles and processes but that can also be mapped back to larger domains of Trust, Collective Action, and Networks. Pre- and post-measurement, use of comparison groups, and a mixture of quantitative and qualitative measures will yield strong designs that will facilitate evaluation. Including program actions that specifically target building trust, leveraging reciprocity, and strengthening networks is strongly recommended for any intervention program that utilizes a partnership approach. Assessment of baseline issues to create the local tailoring for relevance underscores the need for early measurement. Participatory evaluation methods that include social capital can assist to integrate assessment and evaluation processes and build community capacity. As noted in the Annie E. Casey Foundation’s report, building trust among individuals/institutions in different closed networks, such as a community health coalition, is a necessary first step to foster healthy communities (Schraeder, 2004). Network analysis methods, such as those previously described, can be valuable tools for assessing progress in developing coalition capacity and building social capital, particularly in regard to the strength and number of relationships. This information can be collected and reported back to community to demonstrate how far they have come and provide insight for future directions. Ultimately this may enhance the sustainability of partnerships so that desired longer-term goals, such as improved health, can be achieved. There is sufficient evidence of clear benefits to including social capital in public health programs. At the same time, the more social capital measurement and action is included in programs, the more opportunity there will be to explore the causal pathway between social capital and health.

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REFERENCES Almedon, A. (2005). Social capital and mental health: An interdisciplinary review of primary evidence. Social Science and Medicine, 61, 943-964. Australian Bureau of Statistics. (2002). Approach to a statistical framework for social capital. Retrieved February 22, 2004, from http://www.abs.gov.au/websitedbs/c311215.nsf Australian Bureau of Statistics. (2004). Measuring social capital – An Australian framework and indicators. Retrieved February 22, 2004, from http://www.communitybuilders. nsw.gov.au/getting_started/needs/sfi.html Baum, F. (2000). Social capital, economic capital and power: Further issues for a public health agenda. Journal of Epidemiological Community Health, 54, 409-410. Berkman, L.F. and Glass, T. (2000). Social integration, social networks, social support, and health. In L.F. Berkman and I. Kawachi (Eds.). Social epidemiology, (pp.137-173). New York: Oxford University Press. Bullen, P. and Onyx, J. (2000). Measuring social capital in five communities. Journal of Applied Behavioral Science, 36(1), 23-42. Butterfoss, K. and Kegler, M. (2002). Toward a comprehensive understanding of community coalitions – Moving from practice to theory. In R.J. DiClemente, R.A. Crosby, and M.C. Kegler (Eds.). Emerging theories in health promotion practice and research (pp. 157193). New York: Jossey Bass. Centers for Disease Control and Prevention. U.S. Department of Health and Human Services (2003). CDCynergy 3.0: Your Guide to Effective Health Communication (CD-ROMM Version 3.0). Atlanta, GA: Author. Coleman, J. S. (1990). Foundations of social theory. Cambridge, MA: Harvard University Press. Franke, S. (2005). Measurement of Social Capital Reference Document for Public Policy Research, Development, and Evaluation, Policy Research Initiative Project – Social Capital as a Public Policy Tool; downloaded from www.policy research.gc.ca/doclib /RD_SC_Measurement_200509_e.pdf on March 12, 2007. Green, L. and Kreuter, M. (2005). Health promotion planning: An educational and ecological approach (4th ed.). Boston, MA: McGraw Hill. Grootaert, C., Narayah, D., Jones, V. N., and Woolcock, M. (2004). Measuring Social Capital, An Integrated Questionnaire. World Bank Working Paper No. 18. Hausman, A.J. (2002). Implications of Evidence Based Practice in Community Health. American Journal of Community Psychology 30(3):453-467. Hausman, A.J. and Becker, J. (2000).Using Participatory Research to Plan Evaluation in Violence Prevention. Journal of Public Health Management and Practice, 1(4), 331-340. Hausman, A.J., Siddons, K., and Becker, J. (2000). Using community perspectives on youth firearm violence For prevention program planning. Journal of Community Psychology, 28(6), 643-654. Hausman, A.J., Brawer, R., Becker, J., Terry, B., Wilcox, R., Foster-Drain, R., and Sudler, C: (2005). The Value Template Process: a participatory evaluation method for community health partnerships. Journal of Public Health Management and Practice, 11(1), 6571.Hausman, A.J., Becker, J.A., and Brawer, R. (2005). Identifying value indicators and

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social capital in community health partnerships. Journal of Community Psychology, 33(6), 691-704. Hawe, P. and Shiell, A. (2000). Social capital and health promotion: a review. Social Science and Medicine, 51(6), 871-885. Building Smart Communities through Network Weaving, Valdes Krebs and June Holley, downloaded from www.orgnet.com/BuildingNetworks.pdf on August 20, 2008. Kreuter, M. and Lezin, N. (2002). Social capital theory: Implications of community-based health promotion. In: DiClemente, R.J., Crosby, R.A., and Kegler, M.C. (Eds.). Emerging theories in health promotion practice and research (pp. 228-254). New York: Jossey Bass. Krishna, A. and Shrader, E. (1999). Social Capital Assessment Tool, prepared for the conference on Social Capital and Poverty Reduction, World Bank, Washington, D.C., June. Retrieved December 13, 2003, from http://wbln0018.worldbank.org. Lasker, R.D. and Weiss, E.S. (2003). Broadening participation in community problem solving: A multidisciplinary model to support collaborative practice and research. Journal of Urban Health, 80(1), 14-59. Lindsey, E. and McGuinness, L. (1998). Significant elements of community involvement in participatory action research: evidence from a community project. Journal of Advanced Nursing, 28(5), 1106-1114. Lochner, K., Kawachi, I., and Kennedy, B. P. (1999). Social capital: a guide to its measurement. Health and Place, 5(4), 259-270. Mandarano, L. A. (2008). Evaluating collaborative environmental planning outputs and outcomes - Restoring and protecting Habitat and the New York-New Jersey Harbor Estuary Program. Journal of Planning Education and Research, 27(4), 456-468. McKnight JL and Kretzman, JP. (1997). Mapping community capacity. In: Minkler, M. (ed). Community organizing and community building for health. New Brunswick NJ: Rutgers University Press; pp.157-174. Minkler, M. and Wallerstein, N. (1997). Improving health through community organization and community building. In: Minkler, M. (ed). Community organizing and community building for health. New Brunswick NJ: Rutgers University Press; pp 30-52. National Association of County and City Health Officials (NAACHO). (2001). Mobilizing for action through planning and partnerships (MAPP). Washington, DC: Author. Office for National Statistics. (2003). The Development of harmonized questions on social capital. Social and Vital Statistics Division. Retrieved February 22, 2004, from http://www.statistics.gov.uk/about_ns/social_capital/default.asp. Pearce, N. and Smith, G.D. (2003). Social capital the key to inequalities in health? American Journal of Public Health, 93, 122-129. Peterson, D. (2002). The potential of social capital measures in evaluation of comprehensive community-based health initiatives. American Journal of Evaluation, 23, 55-64. Provan, K.G., Nakama, L., Veazie, M.A., Teufel-Shone, N.I., and Huddlesston, C. (2003). Building community capacity around chronic disease services through a collaborative interorganizational network. Health Education and Behavior, 30, 646-662. Putnam, R. D. (1993a). Making Democracy Work: Civic Traditions in Modern Italy. Princeton, NJ: Princeton University Press. Putnam, R. D. (1993b). The prosperous community. Social capital and public life. The American Prospect, 13, 35-42.

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Putnam, R. D. (2000). Bowling Alone: The collapse and revival of American community. New York: Simon and Schuster. Russell, D. w. 1996. UCLA Loneliness Scale (version 3): "Reliability, Validity, and Factor Structure". Journal of Personality Assessment, 66 (1), 20-40. Saguaro Seminar. (2001). Executive summary. The Social Capital Community Benchmark Survey. Retrieved February 22, 2004, from http://www.ksg.harvard.edu/saguaro /communitysurvey/docs/exec_summ.pdf Schraeder, J. (2004). The role of Social Capital in Building Healthy Communities. The Annie E. Casey Foundation wwwgwu.edu/~jschneid/research%20reports/Social.Capital04.pdf on March 15, 2007. Schulz, A.J., Parker, E.A., Israel, B.A., Becker, A.B., Maciak, B.A., and Hollis, R. (1998). Conducting a participatory community-based survey. Journal of Public Health Management and Practice 4, 10-24. Snoxell, S., Harpham, T., Grant, E., and Rodriguez, C. (2006). Social capital interventions: A case study from Cali, Colombia. Canadian Journal of Development Studies-Revue Canadienne D Etudes Du Developpement, 27(1), 65-81. Stone, W. (2001, February). Measuring social capital: Towards a theoretically informed measurement framework for researching social capital in family and community life. Australian Institute of Family Studies, research paper No. 24. Retrieved February 22, 2004, from www.aifs.org.au/institute/pubs/RP24.html. Stone, W. and Hughes, J. (2002). Social capital – Empirical meaning and measurement validity. Research Paper No. 27. Australian Institute of Family Studies – The Commonwealth of Australia. Szreter, S., and Woolcock, M. (2004). Health by association? Social capital, social theory, and the political economy of public health. International Journal of Epidemiology, 33(4), 650-667. Taylor, L. (2004). Building social capital through devolved decision making: The Stronger Communities Action Fund. Social Policy Journal of New Zealand (21), 67-82.

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Chapter 8

SOCIAL CAPITAL, MIGRATION AND THE WELFARE STATE Gert Tinggaard Svendsen1 and Gunnar Lind Haase Svendsen Department of Political Science, University of Aarhus, Denmark

ABSTRACT The full potential of migrants from non-western countries has not yet been realized in the modern welfare state. Rather, parallel societies have risen, as often counteracting integration. It is however crucial to integrate migrants from non-western countries more successfully – also simply to rescue the ageing populations in Western Europe. Though the modern welfare state seems in strong need of reform within a globalized world, it nevertheless enjoys strong support among voters in its present form. Thus, an empirical puzzle exists. Given the existing institutional set-up of the modern welfare state and based on data from our ongoing SoCap project, we suggest how more bridging social capital can be established between parallel societies and the rest of society. Our ‘institutions matter’ model is tentative and needs to be tested rigorously in future empirical research.

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JEL Codes: D60, H11, I38, J11; J15, P52, Z13. Keywords: Social capital, bridging and bonding social capital, migration, welfare state.

1. INTRODUCTION 1.1. Migration and the Modern Welfare State The designs of the modern welfare state and migration policies have spurred much controversy and political debates all over Europe. Academics, however, need to address these 1

Corresponding author: [email protected].

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troubled waters too. Baldwin-Edwards (2002: 1) reviews the migrant literature and concludes that the political science/public policy and political sociology literature on this topic is almost nonexistent. Drawing up the state of the art, he says that: “A conventional approach is adopted by Freeman (1986) who argues that welfare states are inevitably exclusive, in order to protect the privileged citizens. The other extreme is represented by Soysal (1994) and Jacobson (1996), both arguing from a legal sociology perspective, who claim that European states are obliged to grant extensive social rights to resident immigrants through the impact of human rights law and that these rights are tantamount to citizenship”. The modern welfare state itself is basically a formal institution that redistributes a substantial fraction of income among total strangers. This collective insurance system against ‘bad luck’ and inequality enjoys strong popular support (Fong et al. 2004). For example, the Scandinavian welfare states (Denmark, Norway, Sweden and Finland) are supported by very large majorities of the populations.2 All Scandinavian political parties with more than a marginal share of the vote are strongly in favor of conserving the existing welfare state.3 One consequence of the generous redistributive and equality enhancing policies of the modern European welfare states has been mass migration. The very institutions of rich modern welfare states have, over the last couple of decades, attracted large numbers of migrants from poor non-western countries. Even when facing persistent unemployment in the host country, full access to welfare services and social transfers depends in general on legal residence only (Nannestad 2004). This flow has clearly been reinforced by implementation of more liberal laws for migrant workers manifested in the resolution of “Free movement of workers in the context of enlargement” of 2001 (European Commission 2001). On the one hand, the increasing number of migrants in these countries has generally caused integration problems that have so far remained largely unsolved (Nannestad et. al. 2007). On the other hand, there have been substantial economic benefits obtained by both host countries and migrant workers in what can be seen as a prevailingly win-win game – as e.g. illustrated in the cases of Norway (Rye and Frisvoll) and Denmark (Dall-Schmidt 2008). Especially in the rural areas of such host countries, scarcity of work supply has created an increasing demand for workers from countries like Poland, Ukraine and Rumania. Such large-scale migration has however also caused the rise of so-called ‘parallel societies’ with migrants – especially from Muslim and third world countries – living in their own neighborhoods and speaking their own languages quite isolated from the rest of society. Labor market integration has generally failed due to insufficient qualifications, incentive problems, or discrimination in the labor market. When the level of social assistance is relatively high and universal, it follows that the financial burden of immigration can be substantial (Andersen, 2004; Baldwin-Edwards 2002). Ethnic segregation in the form of urban ghettos seems, then, to be a risky road to go for rich European countries. To illustrate this in more dramatic terms, an Indian case study 2

The hallmark of the Nordic welfare model is its universal character in the sense that basic welfare arrangements (such as education, hospital care, social benefits, care of the elderly, and pensions) are a citizen’s right defined for the individual and the financing is collective via taxation. Therefore, the Nordic countries have the highest average tax burdens and relative shares of the public sector among OECD countries (some 50% of GDP) (Andersen, 2004), see also Esping-Andersen (1990). 3 Paldam (2004). The contemporary Center-Right government in Denmark, for example, is based on a firm promise to the voters that the scope of the welfare state will not be reduced (ibid.).

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(Varshney 2002) reports that several thousands have been killed in ethnic riots between Hindus and Muslims in India during the period 1950-90. Remarkably, killings have almost only taken place in big cities like Bombay and Ahmedabad, that is, in urban areas characterized by religious segregation, i.e. places where Hindu and Muslim communities seldom meet and where communication between the two groups is rare or never-existing. In contrast, only very few killings have taken place in rural villages, where Muslims and Hindus regularly meet in the local associational life and where, generally, most people know and trust each other. Also statistically, distrust and religious-political riots seem to be related to ethnic segregation leading to stereotypic representations of ‘them’ and ‘us’ (Uslaner 2006). Nevertheless, at EU level there is no clear housing policy strategy although it is widely acknowledged that ethnic segregation often leads to societal evils.4 In sum, isolated badly integrated, ethnic minorities from third world countries cannot be expected to create less problems in the EU in the near future than previously – hence, an important human potential may be turned into collective evils and groups fighting each other, with counter-productive results for all citizens. The increasing and one-directional flow in itself seems to make integration and abolition of ghettos problematic. For example, in Denmark the number of immigrants and descendents from non-western countries increased from 152.958 to 415.331 persons, or from 3,0 to 7,7 percent of the total population over two decades (from 1980 to 2001). Family reunification was initially the most important access route to Denmark for would-be immigrants until the early 1980s when asylum became an important vehicle of immigration as well. The five largest ethnic groups in Denmark today are from Turkey, ex-Yugoslavia, Iraq, Lebanon (Palestinians), Pakistan and Somalia. The unemployment rate among immigrants from non-western countries is three times the unemployment rate among native Danes - even after prolonged periods of stay (Nannestad 2004). Thus, an empirical puzzle exists. On the one hand, voters clearly want to keep the existing welfare state system. Basic reforms, such as lowering the universal social benefits or pensions, are out of question in a foreseeable future. Therefore, migration issues have to be discussed within the existing institutional framework of the modern welfare state in Western Europe. On the other hand, the modern welfare state is incompatible with the fiscal pressure linked to (1) mass in-migration and (2) parallel societies. How can these two problems be solved in the modern welfare state given the existing institutional set-up? The political response to the first problem of mass migration has been rather drastic in the sense that the Scandinavian welfare states now: ”…are developing into particularly heavy bastions in Fortress Europe, protecting the wealth and the institutions against the invasion of poor people” (Paldam 2004: 741). Numerous complicated and bureaucratic migration rules have been established to secure the survival of the Scandinavian welfare state system in its present form.

4

For example, in a recent report from the European Foundation (2007: 6), one reads: ”Generally, the research recommends promoting neighbourhoods that are ethnically and socio-economically mixed. However, [the researchers are] also aware that some concentration of ethnic groups cannot and need not be avoided. Ethnic networks can serve an important function, in particular for new arrivals who are unfamiliar withy local conditions”.

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1.2. A BR/BO Approach in Migration Studies? The second problem of parallel societies is the focus of this paper. How can parallel societies be integrated into overall society? To cope with this overall question, we suggest an interdisciplinary social capital approach by applying the conceptual pair of bridging/bonding social capital (BR/BO).5 We do this in order to grasp both the sunny and more shadowy side of network co-operation. As such, we try to incorporate sociological critique of the “onesided picture of social capital” (Portes and Landolt 1996: 20). By doing this, we also attempt to further develop the social embeddedness perspective, which has been popular since Portes’ and Sensenbrenner’s (1993) seminal paper.6 In our view, this perspective has led to strong syntheses of empirical and theoretical findings (e.g. Zhou and Bankston 1994; Waldinger 1995; Nee and Sanders 2001). We argue, however, that the theoretical framework could be even further strengthened by using a simple and operational distinction between positive, inter-group types of social capital (BR+) and positive and negative types of excluding, intragroup social capital (BO+ –). Until now, the social capital approach has been seldom within migrant studies. Portes (1998, 2000) has applied immigrant literature to show that, first, social capital has a negative side, second, that Putnamian social capital explanations often are teleological, why one should always look for other, alternative explanations (the ‘spurious effect’ argument, cf. Portes 2000). At macro level, Hammar et al. (1997), Massey (1998) and Schiff (1998) see social capital as a good, which influences migration patterns, without however operating between qualities of social capital (bridging/bonding) in the analysis. In most studies, however, social capital is seen as belonging exclusively to a certain immigrant group and used ‘against’ the surrounding society (that is, prevailingly bonding social capital in our terminology) (e.g. Portes and Stepick 1985; Portes and Zhou 1993; Zhou and Bankston 1994; Oooka and Wellman 2000; Favell 2003; Hagan et al. 2005). As states Granovetter (1995), it is the level of group solidarity that gives immigrants and other minorities advantages in the construction of enterprise, that is, prevailingly strong ties, and not weak ties (i.e. inter-group connections, colleagues, or bridging social capital in our terminology). Such classical micro-sociological perspective have been greatly enhanced by one of the most influential authors in the early formation of a social capital research agenda during the 1980s and 1990s, James Coleman (1988, 1990), who stressed the importance of common, intra-group norms and closure. Portes (1998) is the first to make the distinction between positive and negative types of social capital. Positive social capital derived from social control is typically found in the form of what Portes (op.cit.: 10) calls ‘rule enforcement’, ‘bounded solidarity’ and ‘enforceable trust’ (see also Portes and Sensenbrenner 1993). However, Portes argues that social capital cuts both ways, meaning that negative types of network cooperation also exist. That is, networks where costs tend to exceed profits for individual members, e.g. loss of personal freedom or possibility of upward social mobility. Moreover, that the boundary between positive and negative types can be very subtle indeed.

5

Putnam 2000; Svendsen and Svendsen 2004, 2009. For an overview of the literature, see Patulny and Svendsen 2007. 6 For an overview of NES, see Richter 2001; of social embeddedness and similar topics within immigrant literature, see Zhou 1997.

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In Bowling Alone, Putnam (2000: 22) uses the BR/BO typology, however not in any strictly systematic way and – in contrast to Portes – at the macro level. In the book, he defines BR as open networks that are “outward looking and encompass people across diverse social cleavages” (op.cit.: 22), while BO consists of “inward looking [networks that] tend to reinforce exclusive identities and homogeneous groups” (ibid.). While being fully aware of the negative dimensions of immigrant networks, we will in this paper draw attention to their positive dimensions, or potentialities. This in line with the social embeddedness literature, which often directs focus on types of prevailingly BO+.

1.3. Research Question and Outline Our contribution is to apply the approach of bridging and bonding social capital at both the micro and macro level which, to our knowledge, has not been done before. Thus, in the following, our research question is simply to ask how bridging and bonding social capital affect the integration of immigrants. Is bonding social capital predominant in parallel societies? If so, how can it be turned into bridging social capital in the modern welfare state? In other words, how can bridges be established between parallel societies consisting of migrants from non-western countries and the modern welfare state, given the existing institutions of the latter? To deal with this question, we proceed as follows. First, Section 2 elaborates upon the BR/BO distinction, mainly BO+. We present examples of formation of BO+ from the migration literature and then suggest how BO+ arguably may affect BR positively through the channel of voluntary organizations. Next, Section 3 explains our central argument of institutional set-up in relation to power centralization. Section 4 develops two social capital hypotheses and a model related to migration and parallel societies. Section 5 deals with measurement of BR and BO by applying the proxies of generalized and particularized trust among ethnic groups. Data are drawn from the World Values Survey (Inglehart et al. 2004) as well as a questionnaire survey among a broad range of ethnic minorities in Denmark, which forms a part of our ongoing SoCap project (SoCap 2005). Finally, in Section 6, we discuss policy recommendations.

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2. THE BR/BO FRAMEWORK 2.1. Social Capital as ‘Cutting Both Ways’ As we mentioned, it is important to take into consideration both positive and negative externalities when talking about social capital. The recent BR/BO distinction certainly takes into account the important critique of a dominant ”celebratory view of social capital” since the 1990s (Portes and Landolt 1996: 21) and a general ignorance of the ‘downside’ or ‘dark side’ of social capital, which has been raised by sociologists. In respect to empirical evidence, BO– has been detected at a large scale in Eastern Europe. For example, Stephenson (2001) notes that social capital works in negative and positive ways in post-communist Russia, both supporting groups of children on the streets of

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Moscow, but also enabling and supporting the Russian Mafia. The negative social capital heritage can be traced to the Communist era, as in Poland (Chloupkova et al. 2003) and Romania (Almond 1991; Coplin and O’Leary 2001; Ivanes 2001; Ledeneva 1998), but harmful bonding can also be traced historically in countries with democratic traditions, such as Denmark in the decades following World War II (Svendsen and Svendsen 2004). Theoretically, BR/BO can be traced back to Portes’ notion of social capital as cutting ‘both ways’: At the individual level, the processes alluded to by the concept [of social capital] cut both ways. Social ties can bring about greater control over wayward behavior and provide privileged access to resources; they can also restrict individual freedoms, and bar outsiders from gaining access to the same resources through particularistic preferences [Portes 1998: 21].

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This because a group of people – say, a group of Puertoricans in New York, or a Turkish community in Brussels – can get to know and trust each other ‘too much’, not admitting other people access to their network (by Putnam termed ‘superglue’). Thus, the radius of exchange of information, knowledge and reciprocal services is restricted, leading to negative externalities and zero-sum games (BO–). In worst cases, such group isolationist strategies result in symbolic violence between groups of insiders and outsiders (‘us’ and ‘them’). Not seldom, this involves marginalization of social groups, reinforced by prejudices and group isolation, such as unemployed urban migrants in peripheral rural Denmark (Svendsen and Svendsen, 2004). Or even more dramatically, in riots and killings as in the case of enduring conflicts between Hindus and Muslims in India (Varshney 2002). In particular, the migration literature is rich on cases of good provision within ethnic networks ‘cutting both ways’. The recognition of social capital ‘cutting both ways’ is crucial and in close correspondence to Simmel’s distinction between formal and substantial rationality, Tönnies’ Gemeinschaft and Gesellschaft, Durkheim’s mechanic and organic solidarity as well as Granovetter’s strong and weak ties (Svendsen and Svendsen, 2004). Add to this the simultaneous existence of negative and positive types of social capital in a society and even as two qualities within the same network (Portes 1998: 20). In sum, we are talking about various mixes of BR/BO+ –.

2.2. From BO+ to BR Both the ‘family’ and the BO+ ‘group solidarity’ theories have been promoted by American sociologist James Coleman (1990), who – as we already mentioned – stressed the importance of common, intra-group norms and closure, as well as family resources.7 Likewise, Granovetter (1995) claims that it is the level of group solidarity (strong ties) that gives immigrants and other minorities advantages, for example in the construction of enterprise. And Portes and Zhou (1993: 96) point at the advantages obtained by children of nonwhite immigrants, who remain “securely ensconced in their coethnic community 7

Abundant discussions on this issue prevail in the literature, for example Offe (1999), Bowles and Gintis (2004), Ostrom (1990) and Coleman (1987). An assessment of Coleman’s relevance for migration studies can be found in Waldinger (1995: 559-60).

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[enabling them to capitalize] on otherwise unavailable material and moral resources”. A cultural argument is also advanced by Waldinger (1995), who finds that success in adaptive strategies among Carribean and Korean Americans, and failure among African Americans, can be explained as differences in ethnic organization. Similarly, using a Vietnamese case Zhou and Bankston (1994: 841) explain successful integration as a result from “a coherent complex of immigrant cultural orientations and the significant positive influence of this cultural complex on the adaption of Vietnamese youth”. That is to say, in our terminology, a BO+ building process, which functions as a safeguard against formation of harmful BO–: [Ethnic] social integration creates a form of social capital that enables an immigrant family to receive ongoing support and direction from other families and from the religious and social associations of the ethnic group. Consequently, community standards are established and reinforced among group members who may otherwise assimilate into an underclass subculture (op.cit.: 842).

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Nee and Sanders (2001) have proposed an interesting ‘forms-of-capital’ approach, which aims to shed light on the importance of various mixes of financial, human-cultural and social capital among immigrant groups, as important determinants for careers. However, in contrast to cases of BO+ based on ethnic solidarity cited above they emphasize the family as the core of BO+ formation. Thus, immigrants “with the lowest stock of family capital rely more on social ties embedded in the ethnic community as a substitute for the social support provided by a family. These social connections more often lead to jobs [in the ethnic economy] characterized by low wages and poor working conditions” (op.cit.: 407). In contrast, more independent families rich on human and financial capital are better equipped to participate in the open economy and establish inter-ethnic networks, i.e. BR in our terminology. Besides getting access to resources and jobs, the positive side of BO may too, as argued by Putnam (1993), lead to BR due to participation in voluntary organisations. One example could be the social interaction in a sports club where you get to know people. This regular face-to-face interaction in the sports club arguably facilitates BO+, which again is carried out into society and by that transformed to BR. In other words, the positive specific experience with other people in a voluntary organisation will ‘spill over’ into overall society and eventually enhance economic growth due to reduced transaction and monitoring costs in the economy.8

3. POWER CENTRALIZATION BR is arguably closely related to the design of the political system, which may determine the degree of power centralization and affect the levels of both bridging and bonding social capital. We derive this ‘institutions matter’ model from the work of North and Weingast (1989), who focus on the transition from dictatorship (power centralization) to democracy (power decentralisation) in England during the ‘Glorious Revolution’ in 1688–89.

8

The voluntary organisations that Putnam (1993) refers to are, for example, neighbourhood associations, choral societies, co-operatives, sports clubs, mass-based parties, tower societies, mutual aid societies, literary societies, guilds, unions.

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They argue that the successful British development of a well-functioning capital market was due to the parliamentary system, which deprived the king of most of his rights to influence economic policies. By introducing ‘fragmented’ political institutions where the power was spread out among several institutions (parliament, king, independent courts), the state turned into a far more trustworthy actor than earlier on because more veto-actors now would prevent the king from arbitrarily violating contracts, as had occurred earlier on. Private citizens now started to lend money to the state when it was clear that it would respect its financial obligations. For a couple of decades, England succeeded in allocating capital to establish naval supremacy and to facilitate its industrial revolution and the rise of England can mainly be attributed to the constitutional change following the Glorious Revolution and the way political power was divided (ibid). The revolutionary settlement stated that the parliament gained the upper hand in financial matters. Hence, parliament acquired the power to raise new taxes and the rights to monitor and veto spending by the king. On the other hand, only the king could propose an expenditure, which the parliament again had to authorise. The outcome was a complex institutional arrangement of checks and balances in which the parliament became the new focus of power (Schjødt and Svendsen 2003; see also Ekelund and Davidson 2001). This new institutional set-up had a beneficial impact on policy outcome and economic growth. Firstly, private property rights became more secure than under the Stuart kings because it was now more difficult to undermine them as more actors had to accept such action. Secondly, power sharing and parliamentary supremacy mitigated rent-seeking activities by raising the price of favourable regulation. Interest groups seeking private benefits now had to deal with both the king and the parliament, which in itself consisted of several actors. Hence, North and Weingast (1989: 818) conclude that the institutional arrangement ‘significantly limited publicly supplied private benefits.’ Thus, due to this spreading out of power, rent-seeking and corruption became more difficult because interest groups had to pay a higher price for favourable regulation than they previously paid under the centralised political system of the Stuarts (Schjødt and Svendsen 2003). Power centralization favours the bargaining position of bureaucrats. Often, as was the case in former communist Eastern Europe, bureaucrats had discretionary power so that they, on their own, could decide the outcome of a given case. This monopoly power is the source of corruption and bribery.9 The level of corruption is most likely to affect the level of BR. If somebody commits an illegal act against you, e.g. ignoring the formal rules of a contract, then the offender will be punished in a police and court system without corruption. It is not possible for the offender to use the gains from the crime and split it with the police and the judge. So, if both parties know that it does not pay to break the rules, they will adapt their behaviour and, by repeated encounters, build up trust and social capital. Eventually, the high level of trust and the low level of transaction costs in the market will lead to the experience of significant aggregated 9

After 1987, one of the authors has traveled several times in Romania, speaking the language and having friends there. He himself experienced widespread corruption, such as the case of an accountant from the local bank, who took the author on a trip in his little van to a nearby state collective orchard. Here, the accountant simply ordered the workers to put onto the back of his van this box with apples, that box with plums, etc. This was done without a word. Finally, having supplied himself in this way, he drove away without paying. On the author’s wondering how this could be possible, the accountant smiled slyly and answered, in a quiet and matter-of-fact way: “This is Communism. The clever one cheats the less clever”.

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benefits and agents no longer need formal contracts (Putnam, 1993 and Dasgupta, 2000). The risk of being cheated is simply reduced in the presence of well-defined formal rules of the game. In contrast, a high level of corruption may lead to less BR and BO+ and more BO–, harmful to economic growth. This is so because corruption, in the sense of low-quality institutions, hampers non-personal enforcement of rules. If it pays to break the rules, it is hard to build up beneficial types of social capital, and the high level of transaction costs in the market will not lead to the experience of significant aggregated benefits, as agents would need more formal contracts. When citizens cannot trust institutions in society and when everyone is not equal to the law, this unpredictability blocks the building of beneficial social capital. This idea leads to the proposition that an agent’s trust in the quality of formal institutions (i.e. degree of corruption) will affect the level of BR beneficial to economic growth, because a high level of corruption means non-enforcement of contracts, and as such prevents building of trust among trading parties. The idea that power centralisation leads to more corruption and BO– and less BR is relevant in relation to many non-western migrants as they come from countries with heavy power centralization.

4. TWO HYPOTHESES

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We now integrate the arguments from Sections 2 and 3 into a general framework for analysing rational public policy decisions in the case of migration and parallel societies. The model in Figure 1 provides a parsimonious and overall framework for the main causal links. The model indicates that both BO and BR will be determined by the formal institutional set-up of the political system, i.e. the degree of power centralisation in both the host country and the country of origin. As already mentioned, BO cuts ‘both ways’, which is to say that BO can be empirically detected as either prevailingly harmful (BO–) or beneficial (BO+) in relation to integration. As shown in the model, stocks of BO+ – and BR depend critically on the level of corruption and the arbitrary removal of entrepreneurs in a country. This view that institutions matter to policy outcome, here in relation to minimize the occurrence of parallel societies, is the starting point.

Figure 1. Political system, social capital and parallel societies.

If we ask again what can be done within the existing institutional framework of the modern welfare state to cope with social capital and integration problems, we may develop two hypotheses based on the model in Figure 1:

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H1: First, migrants that come from non-western countries with heavy power centralization are likely to carry mostly negative BO and only little BR. They are therefore inclined to form parallel societies based on BO–. H2: Second, a positive BR effect on migrants from staying in a modern welfare state (where power is decentralized and institutions are non-corrupt) must be expected. In the next section, we will apply this ‘institutions matter’ model and test these two hypotheses.

5. MEASUREMENT

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5.1. Hypothesis 1 In this subsection, we test the first hypothesis, namely whether migrants from nonwestern countries with heavy power centralization are likely to carry mostly negative BO. We measure the bridging social capital (BR) by the standard measure of generalized trust. Generalized trust at the macro level is operationalized as the percentage of a population answering yes to the question “Do you think that most people can be trusted, or can’t you be too careful?” In other words, generalized trust expresses the expectation that a stranger will follow the norm in question and not defect whenever there is a private gain from doing so (e.g. between two ethnic groups). This approach was pioneered by the team behind the World Values Survey (Inglehart et al., 2004) and originally developed by Morris Rosenberg (1956). The data have been collected in 86 countries and are drawn from the four waves of the World Values Survey (Inglehart et al., 2004) and our ongoing Social Capital Project (SoCap, 2005).10 The 22 selected countries are ranked in Table 1 below according to the average score (last column). The main result is that the welfare states stand out as countries with most Generalized Trust. The four Scandinavian welfare states are outstanding. Denmark, Norway and Sweden top the list with more than 60% of respondents trusting most people. Finland is number four with a 56% average score. Below this group, we generally find other Western European/anglosaxon countries such as the Nederlands, New Zealand, Australia and Iceland. United States is number 13 (42% score) and Germany number 22 (36% average score where the first three waves cover West Germany and latest 2000 survey covers both West and East Germany). Note, that West Germany scores about 40% in the 90’s whereas Eastern Germany scores about 25%. This difference could, perhaps, partly be seen as the institutional effect of capitalist democracy versus communist dictatorship. Russia is ranked 29 with a 31% score. Pakistan ranks 38

10

The Danish Social Capital Project (SoCap) project started September 1, 2002. Members of the steering committee are Professor Martin Paldam, Professor Peter Nannestad and Professor Gert Tinggaard Svendsen (project leader). Furthermore, two PhD students Christian Bjørnskov (see Bjørnskov 2005) and Niels Bruhn Christensen are members of the project group. The data collected for SoCap was split into two main parts. First, our social capital survey was conducted in 21 countries (25 000 respondents and 30 questions including background variables). Second, a special survey focuses on the level of social capital between different ethnic groups in Denmark. This social capital database has just been completed and is, to our knowledge, the biggest in the world (SoCap 2005).

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(26%) and Bosnia 57 (22%). France ranks 50 (23%) scoring strikingly low compared to its neighboring countries. Table 1. Generalized trust in 22 selected countries (out of 86 countries)

1. Denmark 2. Norway 3. Sweden 4. Finland 5. Nederlands 6. New Zealand 9. Australia 10. Iceland 13. USA 14. Japan 22. Germany 29. Russia 38. Pakistan 41. East Germany 46. Serbia 50. France 57. Bosnia 70. Romania 78. Turkey 84. Costa Rica 85. Philippines 86. Brazil Average (all 86)

Early 80s 56 61,2 57,1 57,2 46,2

Early 90s 57,7 65,1 66,1 62,8 55,8

Mid 90s 65,3 59,7 47,6

2000 66,5 66,3 58,0 59,8

49,1 39,8 46,8 40,8 29,8 35,2

41,6 50 41,7 37,9 37,5 25,6

24,8

40,1

43,6 35,6 46 41,8 23,9 20,6 24,9 29,8

22,8

51,6 41,1 35,8 43,1 34,8 23,7 30,8 18,8 22,2 15,8 10,1 15,7

16,1 10

28,3 18,7 5,5 5,5 2,8

8,4

6,7 35,1

26,8

27,2

SoCap 2000-05 Average 77,6 64,5 63,9 62,3 56,4 53,9 56,1 52,6 41,7 46,7 60,6 45,3 42,1 38,3 42,0 36,1 35,5 31,2 25,7 25,3 24,3 23,3 22,0 15,0 10,4 7,4 7,4 5,8 6,6 4,8 27,4

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Source: Inglehart et al. (2004); SoCap (2005).

Romania is ranking low as number 70 with a 15% score. Finally, Turkey ranks 78 with a 10% score. Brazil, Philippines and Costa Rica hit the bottom with scores below 10%. Average for all eighty-six countries in the database is 27%. These macro data seem to confirm our first hypothesis, namely that migrants coming from countries with high power centralization, such as former communist countries and/or non-western countries, will carry less BR (measured as generalized trust). An immigrant from Turkey, Bosnia or Pakistan, for example, is likely to carry much less BR than the average citizen in the host country thus increasing the risk of non-cooperation and parallel societies.

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5.2. Hypothesis 2 In this subsection, we measure bonding social capital (BO+ –) by particularized trust measures at the meso level (section 5.2.3). Before doing that, we address the respondents (section 5.2.1) and the selection bias problem (section 5.2.2).

5.2.1. Respondents In the following, we present survey-data from the SoCap (2005) project as collected April – May 2004. This survey may highlight BR/BO between different ethnic groups and native Danes thereby identifying the magnitude of parallel societies in Denmark.11 Here, bilingual interviewers used a mixture of phone and personal (face to face) interviews. Respondents consisted of a representative sample from the five largest groups of non-western immigrants and refugees in Denmark, see Table 2, defined according to the criteria developed by Statistics Denmark (SoCap 2005; Nannestad et al. 2008). Table 2. The immigrant respondents in the sample Group size in population

Group size in sample

Composition

Group

Original type of migration

Migration onset

Religious composition

Turks

53.465

302

Turks and Kurds

Guestworker

1960’s

Muslim

Pakistani

19.049

300

Pakistani

Guestworker

1960’s

Muslim

Somalis

17.849

276

Somalis

Refugees

1990’s

Muslim

Palestinians

21.202

322

Mainly from Lebanon

Refugees

1980’s

Muslim

ExYugoslavs

38.314

303

Serbs and Bosnians

Serbs: guestworker Bosnians: refugees

1960’s 1990’s

Christian and Muslim

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Source: Nannestad et al. (2008: 615).

5.2.2. Selection Bias Selection bias seems a real risk in this setting. As argued by Nannestad and Svendsen (2005), people who do not trust others will probably feel most safe in their known surroundings and hence prefer to stay there. Thus, one may expect that differences between trust levels among non-western immigrants in Denmark and among their countrymen who have stayed in their countries of origin will be biased upwards. This intuition, however, does not hold in the case of non-western immigration to Denmark because there have only been two avenues for would-be immigrants from non-western countries to Denmark: asylum or family reunification. 11

For a more detailed presentation of this survey, see Nannestad et al. 2008.

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Considering asylum, oppression and persecution in the country of origin seems hardly the way to install much trust in fellow men or in institutions of the state in individuals. Note also that the main part of the refugees in our sample are Bosnians who did not flee from individual persecution but from ethnic cleansing. Considering family reunification, they need to have a spouse (most often) or a parent in Denmark. In the case of family reunification with a spouse, immigration from a non-western country to Denmark hence primarily depends on the decision to marry someone living in Denmark - quite often a distant relative. Unless generalized trust has something to do with the marriage decision itself, immigrants who have come to Denmark using the family reunification avenue should also not be positively self-selected with respect to generalized trust (ibid.). Nannestad and Svendsen (2005) also control for other background variables that in turn may correlate with generalized trust, like education, age, religion, etc. Still, a uniform selfselection bias cannot be identified. The authors conclude that due to Danish immigration policies, immigrants from non-western countries in Denmark are unlikely to be positively self-selected with respect to levels of generalized or institutional trust in a direct way. Thus, self-selection of immigrants to Denmark has been curtailed to a degree where selection bias is not a problem.

5.2.3. Meso Level Professor Peter Nannestad has been in charge of the survey and has, among 45 questions, posed a trust-question at the meso level that is relevant in our setting. The question is: “Do you think one can normally trust people or do you think one cannot be too careful when dealing with (1)… people from your own ethnic group now living in Denmark, (2)… immigrants and refugees from other countries than your own now living in Denmark, (3)… Native Danes, (4)…Jews living in Denmark, (5)… Catholics living in Denmark. Table 3 shows the results. Table 3. Trust in own group, other migrants, Danes, Jews and Catholics (% of valid answers)

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own group Turks

34.5

other immigrants 30.6

Danes 36.1

Jews in Denmark 31.8

Catholics in Denmark 32.6

Pakistani

39.2

33.2

38.3

26.7

28.8

Somalis

80.2

70.5

71.9

48.1

58.1

Palestinians

52.6

48.1

69

30

53.1

Yugoslavs

41.4

34.7

53.1

45.2

51.1

Source: SoCap (2005).

These figures do not suggest the existence of parallel societies. Turks, for example, trust Danes more than themselves (36.1% vs. 34.1%). So do Palestinians and Yugoslavs. Pakistanis and Somalis are almost indifferent between their own group and native Danes in terms of specific group trust.

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If parallel societies did exist, we would have expected that ‘ingroup’ trust would be significantly higher than the ‘outgroup’ trust in Danes. Also, we would expect less trust between different immigrant groups, which is almost at the ingroup level. Why is it so? Could the relatively high trust levels be due to the institutional effect of the modern welfare state? Clearly, the trust levels observed here are by far higher than the generalized trust levels in the countries of origin. At the country level, Turkey scored only 10 % whereas Pakistan scored 26% and Bosnia 22%. Though the trust level has been raised in Denmark, it is still far below the 64.5% average generalized trust score for Denmark as a whole. So there is still a possible catch-up effect for immigrants. Table 4 demonstrates the pattern above in another way by ranking outgroups according to which are most trusted (left panel) and which non-western immigrant groups trust outgroups most (right panel). Danes form the most trusted outgroup (53.5%) followed by own group (49.2%) whereas jews are trusted the least (36.1%). Somalis are the most trusting outgroup (66.2%) followed by Palestinians (52.2%) and with the Turks at the bottom (33.1%). Table 4. Outgroups most trusted (weighted averages)

Danes

Average pct. trusting 53.5

Somalis

Average pct. trusting outgroups 66.2

Own group

49.2

Palestinians

52.2

Catholics

43.8

Yugoslavs

45

Immigrants

43.2

Pakistani

33.5

Jews

36.1

Turks

33.1

Source: SoCap (2005).

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Overall, these data seem to confirm our second hypothesis, namely that a positive BR effect on migrants from staying in a modern welfare state (where power is decentralized and institutions are non-corrupt) will occur.

6. INTEGRATION 6.1. Labour Market Integration Labour market integration of immigrants has generally failed in the modern welfare state. As already mentioned, in Denmark the number of immigrants and descendents from nonwestern countries increased from 3,0 to 7,7 percent of the total population 1980-2001. Family reunification was initially the most important access route to Denmark for would-be immigrants until the early 1980s when asylum became an important vehicle of immigration as well. The five largest ethnic groups in Denmark today are from Turkey, ex-Yugoslavia, Iraq, Lebanon (Palestinians), Pakistan and Somalia. The unemployment rate among immigrants

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from non-western countries is three times the unemployment rate among native Danes - even after prolonged periods of stay (Nannestad 2004). The highest unemployment rates are found among non-Western immigrants. Thus, only 35-37% of immigrants from Somalia, Libanon (stateless Palestinians) and Iraque were in employment in 2008 – compared to 79% of native Danes. Hereof, only 21-24% of women from Somalia, Libanon and Iraque had jobs, while 3339% of female immigrants from Afghanistan, Pakistan and Marocco were in work (Statistics Denmark 2008). Besides the criminality rate among citizens descending from Lebanon is more than twice as high as among native Danes, while rates among people descending from Jugoslavia, Pakistan, Morocco, Turkey and Somalia are significantly higher than the one we find among native Danes.12 A lower educational level arguably causes the high unemployment rate in Denmark among migrants from non-western countries. Nannestad (2004: 759) writes: “In a survey in 1999, 11% of immigrants and descendants in the age group 16–70 years from Turkey reported having completed or being enrolled in vocational education or a theoretical education program beyond the secondary level. The corresponding figures were 10% for immigrants and descendants from Pakistan, 21% for immigrants and descendants from Lebanon and 18% for immigrants and descendants from Somalia. In comparison, 54% of the native Danish population aged 16–70 years had completed or were enrolled in a vocational education or a theoretical education program beyond the secondary level. In an increasingly knowledge-based economy, the market value of immigrants with weak educational backgrounds will tend to be low.” Unfortunately, this has not changed. Thus, in 2008 only 11% of native female Danes were neither employed or were under education, compared to 57-60% of female immigrants from Somalia, Iraque, Libanon and Pakistan (Statistics Denmark 2008). The reason for these weak educational backgrounds in Denmark among immigrants from non-western countries is, according to Paldam (2004: 741) that “…the institutions of the welfare states and the traditions of protection of the weak cause adverse selection of immigrants, so that most are unskilled—some even illiterate—and speak no language that is understood by the natives of the Scandinavian countries. Those with strong marketable skills and knowledge of English and French prefer to go elsewhere.” Thus, in the short run, it is not possible to secure full labor market integration of immigrants due to lower educational levels. Therefore, a supportive policy initiative could be that of creating more BR among immigrants. In the long run, labor market integration seems a more feasible solution based on the US experience. Lieberson (1980) discusses why southern and central Europeans coming to the US between 1880 and 1930 succeeded when blacks did not. He argues that the European immigrants could take full advantage of their specific skills because new immigration was cut off due to severe restrictions between 1920 and 1930. This barrier to entry allowed the already present newcomers to get a foothold in the American economy that would have been impossible if new immigrants had continued to arrive as such competition would have driven 12

A recent questionnaire survey on libearl freedom rights (Cepos 2009) included 1610 respondents of first and second generation Muslim immigrants in Denmark. Half of these answered yes to the question: “Should books and films that attack religion be forbidden by law?” This has spurred a major debate on the ‘failure of integration’ in Denmark (see e.g. Jyllands-Posten February 13, 2009).

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down wages available to them. A similar argument could be made for the modern welfare states. Slowing down further competition from non-western immigrants would then make it easier for already present immigrants to get a job as time goes by.

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6.2. Voluntary Organizations It is important that isolated networks should be reached through building bridging social capital in plus-sum games. If not, we risk the formation of excessive bonding in the form of one-sided, intra-communal engagement (Varshney 2002: 12), within immigrant parallel societies. This leads to a fragile social order in the single communities, which can easily be brought out of balance, e.g. by rumors and tensions from the outside world, and perhaps reinforced by public medias. This might lead to symbolic violence and, in extreme cases, physical violence – as in the already mentioned case of Hindus and Muslims killing each other in India. Or mirrored in the murder of the Dutch film director Theo van Gogh in 2004. This event not only came as a great chock for the Dutch population, but also for the Scandinavian populations living in formerly peaceful, homogenous, tolerant and high-trusting welfare states, so much alike the Dutch (cf. Mouritsen 2005). Also the riots in Paris (OctoberNovember 2005) highlights the problem, as well as the controversy caused by the publication of 12 cartoons of the prophet Mohammed in a Danish newspaper (30 September 2005), leading to major demonstrations and the burning of Danish embassies in the Middle East in January and February 2006, followed by a boycot of Danish products. Hence, building bridges between increasingly superglued groups becomes essential. Parallel societies should not only be seen as private, ‘monopolized’ network resources that are not being exploited by the rest of society as well. They might lead to downright societal evils such as corruption, black markets, criminality, decrease in generalized trust, deteriorating human capital and, ultimately, economic backlash. One way of building bridges could be to facilitate voluntary organizations as they may secure regular interaction between different ethnic or social groups (e.g. Putnam 2000; Warren 2001; Giri 2002; Varshney 2002; Svendsen and Svendsen 2004). Numerous historical examples, such as voluntary cooperative movements or sports movements in Denmark (Svendsen and Svendsen 2004), suggest that organisations, which appeal to members across group cleavages and are situated in decentralized, physical meetingplaces owned by the members themselves, may function as platforms for integration. When prejudices and myths about other groups are contested and where information and services are exchanged for mutual benefit, the likelihood that BO is transformed into BR is increased significantly.

CONCLUSION The modern welfare state seems in strong need of reform within a globalized world. It still, however, enjoys strong support among voters in its present form. Thus, an empirical puzzle exists in relation to migration where the modern welfare state is incompatible with the extra costs linked to both mass migration and the rise of parallel societies. As the modern

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welfare states have started closing their borders to cope with mass migration, we focused on the role of social capital in integrating parallel societies given the existing institutional set-up. Theoretically, our contribution was to apply the approach of bridging and bonding social capital to migration studies at the meso and macro level which, to our knowledge, has not been done before. We simply asked how bridging (BR) and bonding (BO) social capital affect the integration of immigrants. In other words, how can bridges be established between ethnic parallel societies (containing both BO+ and BO– at varying degrees) and native groups in the modern welfare state, given the existing institutions of the latter? Such insight is important, as the full economic potential of immigrants has not yet been realized. Our ‘institutions matter’ model suggested that the political system would determine the degree of power centralization and affect the levels of both bridging (BR) and bonding (BO) social capital. The idea was simply that the more BR that was accumulated among ethnic minority groups, the more integration of parallel societies would take place. Concerning BR, we would in line with our hypothesis expect high levels in the welfare states. This because power in general is decentralized, whereas levels would be lower for most non-western migrants. When measuring BR as the level of generalized trust, this expectation is confirmed by the data from the World Values Survey and our SoCap project where the four Scandinavian welfare states and other welfare states top the list. As expected, non-western countries like Pakistan and Turkey hold low scores confirming that migrants from non-western countries such as Turkey, Bosnia and Pakistan typically carry less generalized trust than the average citizen in the host country thus increasing the risk of parallel societies. Concerning BO, we had access to data at the meso level from the SoCap project. Here, the figures did not suggest the existence of parallel societies at first hand. Turks, Palestinians and Yugoslavs, for example, trust native Danes more than their own groups. Also ethnic groups tended to trust other ethnic groups, especially the Danes, at the same levels as members from their own groups. These observations supported hypothesis two suggesting an institutional impact of the modern welfare state on how much BR an immigrant would carry, as the measurable trust levels at the ethnic group level are by far higher than the level in the non-western countries of origin. Furthermore, we argued that even though the trust level has been raised in Denmark, it is still below the 64.5% average generalized trust score for Denmark as a whole. So, there is still a possible catch-up effect for immigrants. The big question is how policy makers can turn the risk of predominant bonding social capital among migrants into bridging social capital. In line with the social embeddedness perspective within immigrant literature, our results called attention to what appears to be a surprisingly great potential for BO+ and BR among Danish immigrant groups. That is, when using the proxy of generalized trust to measure levels of +types of social capital. We however suggested that social capital among immigrants only ‘cuts’ this fortunate way, if the annual number of new low-skilled immigrants remains low; in order to allow for integration of the already present low-skilled immigrants given the existing institutional setup of the modern welfare state. Due to the existing barriers of educational levels and high minimum wages in the modern welfare states, labour market integration would probably be a long run option. Rather, in the short run, we stressed the policy recommendation of open voluntary organisations in inter-group bridging. Moreover, these associations should be situated in decentralized, shared meetingplaces securing regular face to face interaction across group cleavages and the potential transformation of BO to BR.

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More theoretical and empirical work is strongly needed, if we are to make the bridging/bonding approach helpful in studies of immigrant parallel societies. How do we establish the optimal mix between BO+ and BR, for example, and how do we measure BO+ and BO– separately? Such challenges do indeed call for sophisticated quantitative and qualitative analysis in future research.

ACKNOWLEDGMENT We acknowledge financial support for our ongoing Social Capital Project (SoCap) from the Danish Social Science Research Foundation, the Rockwool Foundation and the World Bank. Special thanks to Peter Nannestad (for permitting us to reproduce some of his work in Section 5.2) and Martin Paldam.

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REFERENCES Almond, M. (1991) “Decline without fall. Romania under Ceaucescu”. In: G. Frost (ed.) Europe in Turmoil: The Struggle for Pluralism. London: Adamantine Press. Andersen, T. (2004) “Challenges to the Scandinavian Welfare Model”. European Journal of Political Economy, 20, 743-54. Baldwin-Edwards, M. (2002) “Immigration and the welfare state: A European challenge to American mythology”. MMO Working Paper No. 4, Nov. 2002 Bauer, T., Epstein, G. and I.N. Gang (2002): “Herd Effects or Migration Networks? The Location Choice of Mexican Immigrants in the U.S.” IZA Discussion Paper No. 551. Bjørnskov, C. (2005) Investigations in the Economics of Social Capital. PhD thesis, Aarhus School of Business, Denmark. Borjas, G. (1990) Friends or Strangers: The Impact of Immigrants on the U.S. Economy. New York: Basic Books. CEPOS (2009) Muslimske nydanskeres holdninger til de liberale frihedsrettigheder [Attitudes towards the liberal freedom rights among Muslim immigrants in Denmark]: http://www.cepos.dk/fileadmin/user_upload/dokumenter/Muslimske_nydanskeres_holdni nger_til_de_liberale_frihedsrettigheder.pdf (Date of access: 13-02-2009) Chloupkova, J., G.L.H. Svendsen and G.T. Svendsen (2003) “Building and destroying social capital: The case of cooperative movements in Denmark and Poland”. Agriculture and Human Values, 20 (3), 241-252. Coleman, J.S. (1988) “Social capital in the creation of human capital”. American Journal of Sociology 94:95-121. Coleman, J.S. (1990) Foundations of Social Theory. Cambridge, MA: Harvard University Press. Coleman, J.S. ([1987] 2003) “Norms as Social Capital”. In: Gerard Radnitzky and Peter Bernholz (eds.) Economic Imperialism: The Economic Approach Applied Outside the Field of Economics. New York: Paragon House Publishers, 133-55. Reprinted in Ostrom, E. and Ahn, T.K. (eds.) Foundations of Social Capital. Edward Elgar Publishing, UK.

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Uslaner, E.M. (2006) “Does diversity drive down trust?” Working paper 2006.69. Fondazione Eni Enrico Mattei: http://ideas.repec.org/p/fem/femwpa/2006.69.html (Date of access: 25-4-07). Varshney, A. (2002) Ethnic Conflict and Civic Life. Hindus and Muslims in India. New Haven and London, Yale University Press. Waldinger, R. (1995) ”The 'other side' of embeddedness: a case-study of the interplay of economy and ethnicity”. Ethnic and Racial Studies, 18, 555-580. Warren, M. R. (2001) Dry Bones Rattling. Community Building to Revitalize American Democracy. Princeton and Oxford: Princeton University Press. Zhou, M. and C.L. Bankston (1994) “Social capital and the adaptation of the second generation: The case of Vietnamese youth in New Orleans”. International Migration Review, 18, 821-845. Zhou, M. (1997) ”Segmented assimilation: Issues, controversies, and recent research on the New Second Generation”. International Migration Review, 31, 975-1008.

In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

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Chapter 9

THE INFLUENCE OF MULTIDIMENSIONAL SOCIAL CAPITAL AND NEIGHBORHOOD CONTEXT ON CO-OCCURRING MATERNAL DEPRESSIVE SYMPTOMS AND BEHAVIOR PROBLEMS IN SIX YEAR OLD CHILDREN Maritt J. Kirst1∗, Patricia J. O’Campo1,2 and Margaret O’Brien Caughy 3 1

The Centre for Research on Inner City Health, The Keenan Research Centre in the Li Ka Shing Knowledge Institute of St. Michael's Hospital, Toronto, Canada 2 Dalla Lana School of Public Health, University of Toronto, Canada 3 University of Texas School of Public Health, Dallas, Texas, USA

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ABSTRACT A growing body of research has noted the importance of neighborhood and other social contextual effects on physical and mental health outcomes. Social capital is a complex concept which captures different types and components of social network and community-based resources, and thus allows for the examination of micro/relational and macro/structural effects on health outcomes. Research has found that social capital derived from social networks and from communities can have different effects on mental health. Furthermore, neighborhood characteristics have been found to moderate the relationship between network- and/or neighborhood-level social capital and mental health in interesting ways. Such differing effects highlight the complex, contextual/interactive effects that dimensions of social capital and other contextual factors can have on mental health, and ∗

Corresponding author: Centre for Research on Inner City Health, St. Michael’s Hospital, 30 Bond St., Toronto, ON, M5B 1W8, Canada, Phone: 416-864-6060 ext. 3349, Fax: 416-864-5485, E-mail: [email protected]

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Maritt J. Kirst, Patricia J. O’Campo and Margaret O’Brien Caughy emphasize the need for further study. Thus, consideration of both levels of social capital should be incorporated into mental health research in order to comprehensively and accurately capture social contextual influences on mental health, and consider their implications for policy. Yet, there have been few studies that have considered the influence of multidimensional, network- and neighborhood-level social capital on mental health outcomes in such a comprehensive manner. This chapter discusses the value of a social consequences model approach to the study of mental health problems in which social capital at various levels and neighborhood context are examined on multiple, cooccurring mental health problems. In this discussion, the study of the effects of social network- and neighborhood-level social capital and neighborhood characteristics on cooccurring maternal depressive symptoms and child behavior problems is used as an illustrative example of such an approach.

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INTRODUCTION In recent years, empirical evidence has been mounting to support the contention that characteristics of the neighborhood in which one lives confer both risk and resilience for poor health outcomes over and above individual factors. A broad range of health outcomes has been considered in neighborhood research including indices of adult physical health (DiezRoux, 2003; Franzini et al., 2005; Papas et al., 2007) and mental health (Leventhal and Brooks-Gunn, 2003; Ross, 2000; Xue et al., 2005) as well as child well-being (Beyers et al., 2003; Browning et al., 2005; Caughy et al., 2007; O'Campo et al., 2000; Roche et al., 2005; Wickrama et al., 2005). Social capital is a concept which captures social network and community-based resources, and thus allows for the examination of micro/relational and macro/structural effects on health outcomes. Resources derived from social networks and from communities can have different effects on health behaviors and outcomes (De Silva, McKenzie, Harpham et al. 2005), as the composition of individuals’ social networks often extend beyond their neighborhood boundaries. Consideration of multiple levels of social capital should be incorporated into health research in order to comprehensively and accurately capture social contextual influences on health (Kawachi, Kim, Coutts et al. 2004), and consider their implications for policy. Yet, there have been few studies that have considered the influence of both network- and neighborhood-level social capital on mental health outcomes (Kawachi et al. 2004). In this chapter, we will discuss the implications of considering social capital effects at multiple levels for understanding social contextual effects on health, using an empirical example for the mental health field to illustrate our points.

TYPES OF SOCIAL CAPITAL Social capital is a complex concept that has been defined as encompassing different types and components that operate at individual- and ecological-levels (McKenzie and Harpham 2006). Two types of social capital that have been identified include bonding and bridging social capital. Bonding social capital refers to resources derived from relationships with individuals who are similar with respect to socio-demographic characteristics. Bridging social capital refers to resources derived from relationships with individuals who are different in

The Influence of Multidimensional Social Capital and Neighborhood Context…

socio-demographic characteristics, thus potentially providing access to a broader range and diversity of social resources (De Silva, McKenzie, Harpham et al. 2005). Bonding and bridging social capital each have two components, cognitive and structural. Cognitive social capital refers to cognitive/perceptual aspects of social relationships, such as trust and belongingness, while structural social capital relates to behavioral aspects of relationships, such as group participation (De Silva, McKenzie, Harpham et al. 2005). Individuals can gain access to these types and components of social capital from different societal levels - individual and ecological. For example, individual-level social capital refers to an individual’s access to social resources through his/her family or social networks, which provide benefits to the individual (Lin 2001). Ecological-level social capital involves social resources accessed through larger social structures such as the neighborhood, community, or state, and is hypothesized to provide benefits to the larger collective (McKenzie and Harpham 2005). There are a number of limitations in the current measurement of social capital in mental health research. Definitions of social capital have commonly been tailored to either the individual/network-level or the ecological/community-level. As a result, most research has failed to simultaneously measure individual/network-level and ecological/community-level social capital. Studies that have measured the effects of social capital on mental health often include a limited number of indicators of bonding or bridging, cognitive or structural dimensions. This varied use of different social capital measures has perhaps led to inconsistent findings regarding the effects of social capital, particularly at the ecological level. Furthermore, there is controversy concerning the use of contextual proxy measures, in which individual responses are aggregated to the ecological level, in social capital research at the ecological level (De Silva 2006). It has been argued that this interpretation creates an “ecological fallacy”, in which community-level effects are inferred from individual-level data, and that more objective measures of social capital at the ecological-level are necessary. However, truly objective data of social dynamics are challenging to capture, and it is possible that “the sum of individual perceptions in an area or group is more important for community building and the psychological health of the community than actual structures of society” (McKenzie and Harpham 2006; 17). A small body of research has begun to explore the effects of bonding and bridging, cognitive and structural dimensions of social capital on health outcomes in a multi-level manner (see Nyqvist, Finnäs, Jakobsson et al. 2008; Carpiano 2007; De Silva et al. 2007; Harpham, De Silva and Tuan 2006; Caughy and O’Campo 2006; Ziersch 2005; Harpham, Grant and Rodriguez 2004). Still, there is inconsistent evidence surrounding the multidimensional effects of social capital on mental health outcomes. In light of findings which speak to the contextual effects of social capital, in which different dimensions of social capital derived from highly salient social network and community-levels affect mental health in differing ways, multidimensional means of examining the effects of social capital on a variety of mental health problems is needed. .

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Social Consequences versus Social Etiology Models of Inquiry for Research on Mental Health According to Aneshensel (2005), an etiological approach to exploring social contextual effects on mental health continues to dominate sociological research. In this approach “people with different disorders are implicitly classified as “well” because they do not have the one particular disorder singled out for investigation” (Aneshensel 2005; 222). While this “disorder-specific approach” is useful for revealing the etiology of the particular disorder of study, its contributions to our understanding of how social structure affects mental health is limited in the context of increasing rates of comorbid or co-occurring health conditions (Fortin, Soubhi, Hudon et al. 2007; Aneshensel 2005). As the social environment has been identified in the last decade as a powerful predictor of overall health and well-being (Galea and Vlahov 2005), a social consequences model, in which the consequences of social structure and social context are examined on a range of, frequently comorbid, health conditions, should be more readily adopted in sociological and social epidemiological inquiry (Aneshensel 2005). Such examinations would inform the development of much needed treatment strategies with which to address a range of comorbid or co-occurring physical and mental health problems as opposed to continuing to support disorder-specific treatment approaches. Despite the fact that the social capital concept is increasingly being researched in the public health field, and links have been shown between different dimensions of social capital and mental health, there are few social capital interventions or studies assessing their impact on mental health (Harpham 2008). Research examining the effects of multidimensional social capital on mental health from a social consequences approach, in which social consequences on comorbid/co-occurring health problems are considered, can subsequently be used to inform health programming for multiple mental health conditions that addresses such social determinants of health.

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The Importance of Examining Multidimensional Social Capital: Maternal Depressive Symptoms and Child Mental Health Research on social capital and mental health has shown that individual-level and ecological-level social capital can affect mental health in different ways. A systematic review of social capital and mental health research found that greater amounts of individual-level cognitive and structural social capital were found to be inversely related to mental health problems (De Silva et al. 2005). However, evidence concerning the association between ecological cognitive/structural social capital and mental health has been more mixed. For example, one study isolated an inverse relationship between ecological, state-level social capital and mental health problems (Kim and Kawachi 2007), another found that ecological, structural social capital increased the odds of common mental health disorders among community samples of women in four developing countries (De Silva, Huttly, Harpham et al. 2007), and other studies have found no association (De Silva et al. 2005). Neighborhood characteristics have been found to moderate the relationship between network- and/or neighborhood-level social capital and mental health. For instance, Caughy,

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O’Campo and Muntaner (2003) found that in poor communities in Baltimore, low parental social integration within the community was associated with less internalizing problems among children, while the reverse was true for wealthy neighborhoods. Among the same sample, Rajaratnam, O’Campo, Caughy et al. (2007) found that social isolation from social networks was associated with increased depressive symptoms among women living in lowcrime neighborhoods, whereas no such effect was found among women residing in highcrime neighborhoods. These various findings that continue to emerge from the social capital and health literature further highlight the complex, contextual effects that dimensions of social capital can have on mental health (Caughy et al. 2003), and emphasize the need for further study using comprehensive data to facilitate examination of these multiple pathways. Moreover, few studies have examined the influence of neighborhood context and social capital on co-occurring conditions such as maternal depressive symptoms and child mental health problems. In the interest of moving away from a social etiological model in which only one mental health outcome is examined, towards a social consequences model in which the effects of social contexts on comorbid mental health conditions are explored (Aneshensel 2005), we examined the effects of multidimensional social capital and neighborhood characteristics on co-occurring maternal depressive symptoms and child behavioral problems among a sample of maternal caregivers of six year old children in Baltimore, USA. Given existing evidence that maternal depressive symptoms are related to and co-occur with child behavioral problems (Burke 2003; Carter, Garrity-Rokous, Chazan-Cohen et al. 2001; Beck 1999; Cicchetti, Rogosch and Toth 1998), this type of social consequences approach is valuable as it provides important knowledge that can inform treatment strategies for both disorders as opposed to just one (Aneshensel 2005).

METHODS

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Study Sample A total of 405 families with a child entering first grade in the Fall of 2002 living in Baltimore City were recruited from neighborhoods through door-to-door canvassing, targeted mailings, and referral from other participants. Neighborhoods were defined as census block groups, and these block groups were stratified by average household wealth and racial composition to ensure representativeness of the sample. In order to be eligible for the study, participants had to have lived in their current neighborhood for more than six months, and their child had to be capable of entering first grade in September, 2002. Participants were recruited from 163 different block groups, with the number of families per block group ranging from 1 to 14 (average 2.47). Interviews consisted of a home visit in Fall/Winter 2002, and involved an interview with the primary caregiver and a developmental assessment of the child. In order to explore predictors of co-occurring maternal depressive symptoms and child behavior problems, the analyses presented are focused on the maternal caregiver sample of 345 women.

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Measures Maternal depressive symptoms were assessed using the Centre for Epidemiologic Studies Depression Scale (CES-D) (Radloff 1977). This 20-item scale is frequently used in research to assess cognitive and affective symptoms of depression and has demonstrated good internal reliability in general population samples. We used the standard, dichotomous, cut off score of >16 to identify mothers with high levels of depressive symptoms. Child behavior problems were measured with the Child Behavior Checklist (CBCL) (Achenbach and Rescorla 2001). The 118-item measure is a parent report measure to assess competencies and behavioral/emotional problems among children aged 6-18. To create the child behavior problem variable, the CBCL score was converted into a t-score, and the variable was dichotomized using the standard cutoff score of >60 to indicate those children at risk for clinical level behavior problems. To create the outcome variable of co-occurring maternal depressive symptoms and child behavior problems, the dichotomous CES-D and CBCL cutoff scores were summed and re-coded to create a variable with four categories: “no maternal depressive symptoms and/or child behavior problems”, “child behavior problems”, “maternal depressive symptoms”, and “co-occurring maternal depressive symptoms and child behavior problems”. A multinomial outcome was used in these analyses in order to best capture the outcomes in an appropriate way for examining co-occurring mental health conditions from a social consequences approach. Multidimensional social capital was assessed using three different measures that reflected a mix of cognitive and structural components of bonding social capital at the network (individual) and neighborhood (ecological)-levels. Structural, bonding social capital at the social network level was assessed using the social isolation variable. This was a dichotomous variable that indicates social isolation through association with 0 to 1 social network members vs. involvement of participants in a social network of two or more other people. Cognitive, bonding social capital at the neighborhood-level was captured with the use of a parental psychological sense of community (PSOC) measure. The psychological sense of community measure, consisting of 12 Likert-scale items, was originally developed by Chavis and Wandersman (1996) to assess perceived community connectedness/cohesion and membership. The 10-item version of this measure capturing neighborhood social cohesion was used in the study (Caughy and O’Campo 2006). Higher scores on the PSOC scale indicate higher levels of neighborhood social cohesion. To create a binary PSOC variable, the PSOC scale was divided into quartiles, and then dichotomized at the bottom quartile to indicate high vs. very low levels of psychological sense of community. The PSOC variable was dichotomized in this manner because it was found in previous research that very low psychological sense of community was associated with child behavior problems (Caughy, O’Campo and Muntaner 2003, 2004). Cognitive, bonding social capital in the form of neighborhood social cohesion was also assessed with the neighborhood potential for community involvement with children (CIC) measure. This measure is comprised of four subscales from the Neighborhood Environment for Children Rating Scales (NECRS) (Coulton, Korbin and Su 1996) that assess willingness of adults in the neighborhood to intervene in acts of delinquency, willingness to intervene in acts of child misbehavior, willingness to assist children in need, and the extent of social interaction in the neighborhood. A higher score on the CIC measure indicates higher levels of neighborhood social cohesion. The CIC scale was divided into quartiles, and then

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dichotomized at the top quartile to indicate very high vs. lower levels of community involvement with children. The CIC scale was dichotomized at the top quartile because exploratory analyses showed differences in outcomes at the high end of the CIC scale. The neighborhood characteristics measured in the analyses included neighborhood negative social climate, and neighborhood concentrated economic disadvantage. The negative social climate measure was comprised of three subscales of the NECRS measuring perceived physical/social disorder, fear of retaliation, and fear of victimization. Neighborhood concentrated economic disadvantage was comprised of percent of individuals below poverty, percent receiving public assistance, percent unemployed, and percent of households that were female-headed with children (Sampson et al. 1997). All variables were drawn from the 2000 Census and standardized and averaged to create the concentrated economic disadvantage composite. This composite scale was dichotomized at the median point in order to create a binary neighbourhood concentrated economic disadvantage variable. A number of individuallevel characteristics were entered into the analyses as potential confounder variables, including maternal age, marital status, educational attainment, poverty status, and child gender.

Data Analyses

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After descriptive statistics on the sample were calculated, all independent variables were assessed for multicollinearity, and no significant problems were detected. Multinomial logistic regression analyses techniques were used in the multivariate analyses because of the categorical nature of the dependent variable. Due to the small sample size and the employment of a multinomial outcome, the focus of these analyses was on main effects of network- and neighborhood-level social capital, and neighborhood context on co-occurring maternal depressive symptoms and child behavior problems. Thus, interaction effects between the independent variables were not explored in these analyses. Multinomial logistic regression models were built examining the independent effects of network social capital, neighborhood social capital and neighborhood characteristics on the dependent variable. A final model was then created which measured the effects of social capital and neighborhood characteristics on co-occurring maternal depression and child behavior problems, adjusted for maternal caregiver characteristics. All data analyses were performed using SPSS Version 16.0.

RESULTS Characteristics of the Study Sample As shown in Table 1, the majority of the total sample of maternal caregivers was between the ages of 20 and 32, unmarried, and employed. Sixty-eight percent had a high school education or less, and 32% had some post-secondary education. Almost 40% of the sample was living under the federal poverty level, and 51% had a male child. Five percent of the maternal caregivers reported that their child had behavior problems (both externalizing and internalizing), 23% reported having depressive symptoms, and 9% reported co-occurring

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maternal depressive symptoms and child behavior problems. The comparison of maternal caregivers by social isolation status shown in Table 1 revealed a number of significant differences between the socially isolated and non-isolated caregivers. Compared to nonsocially isolated maternal caregivers, the socially isolated maternal caregivers were younger, less educated, and were more likely to be unmarried. More socially isolated maternal caregivers lived in neighborhoods with mid to high levels of concentrated economic disadvantage, and had male children.

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Table 1. Characteristics of Maternal Caregivers by Social Isolation Status

Maternal Caregiver Age 20-32 33+ Maternal Caregiver Marital Status Unmarried Married Maternal Caregiver Educational Attainment High school/GED or less More than high school Maternal Caregiver Employment Status Never employed Employed in last 5 years Currently employed Maternal Caregiver Poverty Status Below 100% of federal Poverty level 100-179% of federal poverty level 180% of federal poverty level or higher Neighborhood Concentrated Economic Disadvantage Low Mid/high Child Gender Female Male Co-occurring Maternal Depressive Symptoms and Child Behavior Problems No maternal depressive symptoms or child behavior problems Child behavior problems

Total Sample (N=345)

Maternal Social Isolation Status Yes (N=101) No (N=244)

P-value

179 (52%) 166 (48%)

61 (60%) 40 (40%)

118 (48%) 126 (52%)

.042

200 (58%) 145 (42%)

69 (68%) 32 (32%)

131 (54%) 113 (46%)

.012

195 (57%) 172 (43%)

67 (68%) 32 (32%)

128 (52%) 116 (48%)

.010

49 (14%) 94 (27%) 201 (58%)

12 (12%) 31 (31%) 57 (57%)

37 (15%) 63 (26%) 144 (59%)

.053

128 (38%)

43 (45%)

85 (36%)

74 (22%)

25 (26%)

49 (21%)

131 (39%)

28 (29%)

103 (43%)

.054

173 (50%) 172 (50%)

36 (36%) 65 (64%)

137 (56%) 107 (44%)

.001

168 (49%) 177 (51%)

39 (39%) 62 (61%)

129 (53%) 115 (47%)

.016

216 (63%)

58 (57%)

158 (65%)

18 (5%)

6 (6%)

12 (5%)

The Influence of Multidimensional Social Capital and Neighborhood Context…

Maternal depressive symptoms Co-occurring maternal depressive symptoms and hild behavior problems

Total Sample (N=345) 81 (23%) 30 (9%)

Maternal Social Isolation Status Yes (N=101) No (N=244) 31 (31%) 50 (21%) 6 (6%) 24 (10%)

181

P-value .160

Prevalence of Social Capital Table 2 reports the prevalence of network- and neighborhood-level social capital among the sample of maternal caregivers. Almost thirty percent of the sample was socially isolated, having reported association with 0 to 1 social network members. High levels of psychological sense of community were reported among the sample, with 60% reporting mid/high psychological sense community, while 25% reported very high community involvement with children. Table 2. Prevalence of Network- and Neighborhood-Level Social Capital among Maternal Caregivers (N=345) # (%) Social Isolation No Yes Psychological Sense of Community (PSOC) High PSOC Very low PSOC Community Involvement with Children (CIC) Very high CIC Low CIC

244 (71%) 101 (29%) 247 (73%) 92 (27%) 87 (25%) 259 (75%)

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Multivariate Analyses of Multidimensional Social Capital, Neighborhood Characteristics and Co-occurring Maternal Depressive Symptoms and Child Behavior Problems Results of the multinomial logistic regression are displayed in Table 3. Model 1 examined the effects of network-level, structural social capital in the form of social isolation from social networks. Model 1 shows that socially isolated maternal caregivers were more likely to report maternal depressive symptoms than those who were not socially isolated. In model 2, we explored the effects of neighborhood-level, cognitive social capital on the outcome variable, and found that maternal caregivers reporting high community involvement with children were less likely to report maternal depressive symptoms, and co-occurring maternal depressive symptoms and child behavior problems. Model 2 also shows that low psychological sense of community and low community involvement with children were associated with increased odds of maternal depressive symptoms and the co-occurring maternal and child mental health conditions.

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Maritt J. Kirst, Patricia J. O’Campo and Margaret O’Brien Caughy

In model 3, we examined the independent effects of neighborhood characteristics on the outcome variable. The results indicate that increased negative neighborhood climate was associated with both greater odds of maternal depressive symptoms and co-occurring maternal depressive symptoms and child behavior problems. Furthermore, living in a neighborhood with mid to high concentrated economic disadvantage was associated with greater odds of maternal depressive symptoms among the sample. Finally, model 4 examined the effects of network- and neighborhood-level social capital, and neighborhood characteristics on the outcome variable, while adjusting for maternal caregiver characteristics. Table 3. Multinomial Logistic Regression Models for the Association between Co-occurring Maternal Depressive Symptoms and Child Behavior Problems, Social Capital, and Neighborhood Characteristics, Adjusted for Maternal Caregiver Characteristics (N=345)

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Child Behavior Problems†

Dependent Variable Maternal Co-occurring Depressive Maternal Depressive Symptoms† Symptoms and Child Behavior Problems†

Independent Variables OR (95% CI) OR (95% CI) OR (95% CI) Model 1 - Network Social Capital Variable Social Isolation No 1.0 1.0 1.0 0.68 (0.26, 1.75) Yes 1.36 (0.49, 1.69 (0.98, 3.78) 2.90)+ Model 2 - Neighborhood Social Capital Variables Psychological Sense of Community (PSOC) High PSOC 1.0 1.0 1.0 Low PSOC 0.96 (0.29, 1.85 (1.03, 2.59 (1.15, 5.83) * 3.18) 3.30)* Community Involvement with Children (CIC) Low CIC 1.0 1.0 1.0 High CIC 0.46 (0.13, 0.51 (0.25, 0.32 (0.09, 1.13) + 1.71) 1.00)* Model 3 - Neighborhood Characteristics Negative neighborhood social 1.02 (0.53, 1.85 (1.33, 2.74 (1.71, 4.41)** climate 1.98) 2.58)** Neighborhood concentrated economic disadvantage Low 1.0 1.0 1.0 Mid/high 2.23 (0.73, 2.51 (1.38, 1.48 (0.62, 3.5) 6.79) 4.54)* Model 4 – Network and Neighbourhoood Social Capital, and Neighborhood Characteristicsa Social Isolation No 1.0 1.0 1.0 Yes 0.92 (0.26, 1.21 (0.63, 0.32 (0.10, 0.99)* 3.23) 2.30)

Nagel kerke R2

.017

0.68

.165

The Influence of Multidimensional Social Capital and Neighborhood Context…

Child Behavior Problems†

Independent Variables Psychological Sense of Community (PSOC) High PSOC Low PSOC Community Involvement with Children (CIC) Low CIC High CIC Negative neighborhood climate Neighborhood concentrated economic disadvantage Low Mid/high

Dependent Variable Maternal Co-occurring Depressive Maternal Depressive Symptoms† Symptoms and Child Behavior Problems†

OR (95% CI)

OR (95% CI)

OR (95% CI)

1.0 0.93 (0.19, 3.51)

1.0 0.70 (0.32, 1.46)

1.0 0.69 (0.24, 2.05)

1.0 0.46 (0.89, 2.42) 0.98 (0.43, 2.19)

1.0 0.82 (0.38, 1.75) 1.66 (1.11, 2.49)*

1.0 0.32 (0.07, 1.52)

1.0 2.08 (0.43, 7.38)

1.0 1.74 (0.89, 3.41)

1.0 1.51 (0.58, 3.97)

183

Nagel kerke R2

2.45 (1.35, 4.45)**

.282

†Reference category of the outcome variable is ‘No maternal depression or high child behavior problems’. a Adjusted for mother’s age, mother’s education, mother’s poverty status, and child gender. + p < .10; *p < .05; **p < .01; ***p < .001

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In the adjusted model, socially isolated maternal caregivers were less likely to report cooccurring maternal depressive symptoms and child behavior problems than non-socially isolated maternal caregivers, thus suggesting that being socially isolated has a protective effect against these co-occurring mental health conditions among the sample. Furthermore, increased negative neighborhood climate was associated with greater odds of maternal depressive symptoms and co-occurring maternal depressive symptoms and child behavior problems.

CONCLUSION This study has explored the influence of multidimensional social capital and neighborhood characteristics on co-occurring maternal and child mental health conditions. We found that maternal caregivers with low network-level social capital, in the sense that they were socially isolated, were less likely to report co-occurring maternal depressive symptoms and child behavior problems. We also noted that more socially isolated mothers lived in economically disadvantaged neighborhoods. These results echo findings from an earlier study that was conducted on a different sample of low-income women in Baltimore in which it was found that the low social capital, in the form of psychological sense of

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Maritt J. Kirst, Patricia J. O’Campo and Margaret O’Brien Caughy

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community, was protective against child behavior problems among families living in economically disadvantaged neighborhoods (Caughy, O’Campo and Muntaner 2003). Low social capital in economically disadvantaged neighborhoods was interpreted as suggestive of better parental coping skills in the context of impoverished environments and that better coping skills may be more supportive of healthy child development. While the results of the current analyses imply a similar interactive effect between social capital and neighborhood economic disadvantage, it was not possible to explore this interaction given the small sample size. The study findings regarding negative neighborhood climate provide support for results from other studies showing that a negative neighborhood social climate, involving perceptions of physical and social disorder and fear of victimization, is a stressor that can contribute to the poor mental health of residents (Caughy et al. 2008; Matheson, Moinnedin et al. 2006; Ross 2000). This study has begun to explore in-depth the multidimensional effects of social capital on co-occurring mental health conditions and has generated several hypotheses for future research. Future research in this area should continue to examine the complex effects of social capital through multidimensional operationalization of the concept which includes measures of cognitive and structural, bonding and bridging social capital, at individual/network- and ecological/community-levels. In order to examine these complex influences in sufficient depth, future studies must involve a large sample size with which to explore main, interactive, and cross-level interactive effects on mental health outcomes. Moreover, given increasing rates of comorbidity within both general and marginalized populations, it is imperative that further research use a social consequences model with which to explore social determinants of comorbid physical and mental health problems. For example, a link between maternal depressive symptoms and child behavior problems has been established in the research literature (Burke 2003; Carter et al. 2001; Beck 1999; Cicchetti et al. 1998). A relationship between the social environment and these mental health problems has also been welldocumented (Leventhal and Brooks-Gunn, 2003; Ross, 2000; Xue et al., 2005; Aisenberg, Trickett, Mennen et al. 2007; Caughy et al. 2003; Cicchetti et al. 1998). Yet, there is a lack of research on social interventions with which to prevent and reduce the prevalence of these cooccurring mental health problems. Future research from a social consequences approach can make important contributions to the knowledge base regarding social contextual effects on mental health which can then inform targeted strategies for the much needed prevention and treatment of comorbid mental health conditions.

ACKNOWLEDGMENTS The authors would like to acknowledge support for the collection of data from NICHD grant R01HD404901A1, the Canadian Institutes of Health Research for postdoctoral support for MK, and the Ontario Ministry of Health and Long-Term Care for support of PO during the writing of this paper.

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REFERENCES Achenbach, T.M. and Rescorla, L.A. (2001). Manual for the ASEBA School-Age Forms and Profiles. Burlington, VT: University of Vermont, Research Centre for Children, Youth and Families. Aisenberg, E., Trickett, P.E., Mennen, F.E., Saltzman, W., and Zayas, L.H. (2007). Maternal depression and adolescent behavior problems: An examination of mediation among immigrant Latino mothers and their adolescent children exposed to community violence. Journal of Interpersonal Violence, 22(10), 1227-1249. Aneshensel, C.S. (2001). Research in mental health: Social etiology versus social consequences. Journal of Health and Social Behavior, 46, 221-228. Beck, C.T. (1999). Maternal depression and child behaviour problems: A meta-analysis. Journal of Advanced Nursing, 29(3), 623-629. Beyers, J.M., Bates, J.E., Pettit, G.S., and Dodge, K.A. (2003). Neighborhood structure, parenting processes, and the development of youths’ externalizing behaviors: A multilevel analysis. American Journal of Community Psychology, 31(1/2), 35-53. Brooks-Gunn, J., Duncan, G.J, Klebanov, P.K., and Sealand, N. (1993). Do neighborhoods influence child and adolescent development? American Journal of Sociology, 99(2), 353395. Browning, C. R., Leventhal, T., and Brooks-Gunn, J. (2005). Sexual initiation in early adolescence: The nexus of parental and community control. American Sociological Review, 70, 758-778. Burke, L. (2003). The impact of maternal depression on familial relationships. International Review of Psychiatry, 15, 243-255. Carpiano (2007). Neighborhood social capital and adult health: An empirical test of a Bourdieu-based model. Health and Place, 13, 639-655. Carter, A.S., Garrity-Rokous, F.E., Chazan-Cohen, R., Little, C., and Briggs-Gowan, M.J. (2001). Maternal depression and comorbidity: Predicting early parenting, attachment security, and Toddler social emotional problems and competencies. Journal of the American Academy of Child and Adolescent Psychiatry, 40(1), 18-26. Caughy, M. O., O'Campo, P. J., and Nettles, S. M. (2008). The effect of residential neighborhood on child behavior problems in first grade. American Journal of Community Psychology, 42 (1-2), 39-50. Caughy, M. O. and O’Campo, P.J. (2006). Neighborhood poverty, social capital and the cognitive development of African American preschoolers. American Journal of Community Psychology, 37(1/2), 141-154. Caughy, M.O., O’Campo, P.J. and Muntaner, C. (2004). Experiences of racism among African American parents and the mental health of their pre-school aged children. American Journal of Public Health, 94(12), 2118-2124. Caughy, M.O., O’Campo, P.J. and Muntaner, C. (2003). When being alone might be better: Neighborhood poverty, social capital and child mental health. Social Science and Medicine, 57, 227-237. Chavis, D.M. and Wandersman, A. (1990). Sense of community in the urban environment: a catalyst for participation and community development. American Journal of Community Psychology, 14, 55-81.

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Cicchetti, D., Rogosch, F.E. and Toth, S.L. (1998). Maternal depressive disorder and contextual risk: Contributions to the development of attachment insecurity and behavior problems in toddlerhood. Development and Psychopathology, 10, 283-300. Coulton, C.J. , Korbin, J.E., and Su, M. (1996). Measuring neighborhood context for young children in an urban area. American Journal of Community Psychology, 24(1), 5-33. Cutrona, C.E., Russell, D.W., Brown, P.A., Clark, L.A., Hessling, R.M., and Gardner, K.A. (2000). Neighorhood context, personality, and stressful life events as predictors of depression among African American Women. Journal of Abnormal Psychology, 114(1), 3-15. De Silva, M.J., Huttly, S.R., Harpham, T. and Kenward, M.G. (2007). Social capital and mental health: A comparative analysis of four low income countries. Social Science and Medicine, 64, 5-20. De Silva, M.J., McKenzie, K., Harpham, T., and Huttly, S. R.A. (2005). Social capital and mental illness: A systematic review. Journal of Epidemiology and Community Health, 59, 619-627. Diez-Roux, A. V. (2003). Residential environments and cardiovascular risk. Journal of Urban Health, 80, 569-589. Drukker, M., Kaplan, C., Schneiders, J., Feron, F.J.M., and van Os, J. (2006). The wider social environment and changes in self-reported quality of life in the transition from late childhood to early adolescence: a cohort study. BMC Public Health, 6(133). Drukker, M., Kaplan, C., Feron, G., and van Os, J. (2003). Children’s health-related quality of life, neighborhood socio-economic deprivation and social capital: A contextual analysis. Social Science and Medicine, 57, 825-841. Fortin, M., Soubhi, H., Hudon, C., Bayliss, E.A. and van den Akker, M. (2007). Multimorbidity’s many challenges. British Medical Journal, 334, 1016-1017. Franzini, L., Caughy, M. O. B., Spears, W., and Fernandez Esquer, M. E. (2005). Neighborhood economic conditions, social processes, and self-rated health: A multilevel latent variables model. Social Science and Medicine, 61, 1135-1150. Galea, S. and Vlahov, D. (2005). Handbook of Urban Health: Populations, Methods, and Practice. New York: Springer. Harpham, T. (2008). Urban health in developing countries: What do we know and where do we go? Health and Place, doi: 10.1016/j.healthplace.2008.03.004. Harpham, T., De Silva, M.J., and Truan, T. (2006). Maternal social capital and child health in Vietnam. Journal of Epidemiology and Community Health, 60, 865-871. Harpham, T., Grant, E. and Rodriguez, C. (2004). Mental health and social capital in Cali, Colombia. Social Science and Medicine, 58, 2267-2277. Kawachi, I., Kim, D., Coutts, A., and Subramanian, S.V. (2004). Commentary: Reconciling the three accounts of social capital. International Journal of Epidemiology, 33, 682-690. Kim, D. and Kawachi, I. (2007). US state-level social capital and health-related quality of life: Multilevel evidence, of main, mediating, and modifying effects. Annals of Epidemiology, 17, 258-269. Leventhal, T., and Brooks-Gunn, J. (2003). Moving to Opportunity: An experimental study of neighborhood effects on mental health. American Journal of Public Health, 93, 15761582.

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Lin, N. (2001). Building a network theory of social capital. In Lin, N., Cook, K. and Burt, R.S. (Eds.), Social Capital: Theory and Research, (pp.3-29). New York: Aldine de Gruyter. Matheson, F.I., Moineddin, R., Dunn, J.R., Creatore, M.I., Gozdyra, P. and Glazier, R.H. (2006). Urban neighborhoods, chronic stress, gender and depression. Social Science and Medicine, 63, 2604-2616. McKenzie, K. and Harpham, T. (2006). Meanings and uses of social capital in the mental health field. In McKenzie, K. and Harpham (eds.), Social Capital and Mental Health,( pp11-23). London: Jessica Kingsley Publishers. Nyqvist, F., Finnäs, F., Jakobsson, G., and Koskinnen, S. (2008). The effect of social capital on health: The case of two language groups in Finland. Health and Place, 14, 347-360. O’Campo, P., et al. (in press). The effect of residential neighborhood on child behavior problems in first grade. O'Campo, P., Rao, R. P., Gielen, A. C., Royalty, W., and Wilson, M. (2000). Injuryproducing events among children in low-income communities: the role of community characteristics. Journal of Urban Health, 77, 34-49. Papas, M. A., Alberg, A. J., Ewing, R., Helzlsouer, K. J., Gary, T. L., and Klassen, A. C. (2007). The built environment and obesity. Epidemiologic Reviews, 29, 129-143. Radloff, L.S. (1977). The CES-D scale: A self-report depression scale for research in the general population. Applied Psychological Measurement, 1, 385-401. Rajaratnam, J., O’Campo, P., Caughy, M.O., and Muntaner, C. (2007). The effect of social isolation on depressive symptoms varies by neighborhood characteristics: A study of an urban sample of women with pre-school aged children. International Journal of Mental Health and Addictions. Roche, K. M., Ellen, J., and Astone, N. M. (2005). Effects of out-of-school care on sex initiation among young adolescents in low-income central city neighborhoods. Achieves of Pediatric and Adolescent Medicine, 159, 68-73. Ross, C. E. (2000). Neighborhood disadvantage and adult depression. Journal of Health and Social Behavior, 41, 177-187. Sampson, R.J. et al. (1997). Neighborhoods and violent crime: A multilevel study of collective efficacy. Science, 277(5328), 918. Wickrama, K. A. S., Merton, M., and Elder, J. G. H. (2005). Community influence on adolescence precocious transitions to adulthood: Racial differences and mental health consequences. Journal of Community Psychology, 33. Xue, Y., Leventhal, T., Brooks-Gunn, J., and Earls, F. (2005). Neighborhood of residence and mental health problems of 5- to 11-year-olds. Archives of General Psychiatry, 62, 554563. Ziersch, A.M. (2005). Health implications of access to social capital: Findings from an Australian study. Social Science and Medicine, 61, 2119-2131.

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In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 10

SOCIAL CAPITAL ACCUMULATION THROUGH BUILDING UP IRRIGATION WATER GOVERNANCE IN MONSOON ASIA-COMPARATIVE ANALYSIS ON POLICY MEASURES Kazumi Yamaoka∗1, David Groenfeldt2, Kota Asano and Mikiko Sugiura4 1

Associate Professor, Graduate School of Agricultural and Life Sciences, The University of Tokyo, 1-1-1, Yayoi, Bunkyo-ku, Tokyo, 1138657 Japan 2 Executive Director, Santa Fe Watershed Association, 1413 Second St., Suite 3, Santa Fe, New Mexico 87505 USA 3 Professor, Graduate School of Human and Environmental Studies, Kyoto University, Yoshida- Nihonmatsu-cho, Sakyo-ku, Kyoto, 6068501 Japan 4 Assistant Professor, Graduate School of Agricultural and Life Sciences, The University of Tokyo, 1-1-1, Yayoi, Bunkyo-ku, Tokyo, 1138657 Japan

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1. PREFACE Water governance and irrigation dispute resolution involve a variety of interests at multiple levels. This paper focuses on irrigation systems in paddy fields in the Asian monsoon region. Farmer A and B, who cultivate adjacent paddy plots may have mutual conflicts; but at the same time, they are comrades forming a united front against other groups. A structure of chain links as shown in Figure 1 is commonly observed. The typical structure of a water supply system for paddy is an open channel gravity system which provides the most efficient and least-cost distribution of water to the tail-end of the irrigation system under normal flow conditions. Moreover, beyond the network of canal irrigation systems, ample water supplies enable water to be conveyed from higher-elevation paddy plots to lower-elevation ones, thereby ∗

E-mail: [email protected] / [email protected]

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extending the effective reach of the irrigation system. With this technique of "plot-to-plot irrigation", the paddy fields themselves serve as irrigation canals. This is widely developed in rain-fed paddy areas, and around the edges of traditional irrigation networks and also, even in the periphery of modern irrigation systems.

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Figure 1. Chain links of united front and confliction in multistage levels on dividing agricultural water.

This basic structure and climatic characteristics of frequent dry spells exert a strong influence on the accumulation of social capital in this region. Repeated water disputes sometimes escalate into violence, however, repeated experiences of reconciliation among farming families and between villages have led to the establishment of local discipline and norms for collective water management. Moreover, long experience in collective water governance among farmers during abnormally dry spells serve as an investment in the accumulation of social capital, the network of trust, norms, mutual confidence and spirit of reciprocity among farmers. And the accumulated social capital also works as a catalyst to overcome other unexpected events after that, enabling successful experience of water governance next time. This synergistic effect assures a sustainable development of social capital and related activities over centuries.

2. PADDY RICE CULTIVATION IN THE ASIAN MONSOON REGION Paddy rice cultivation is the most suitable farming method under humid and warm condition with ample rainfall. The world's rice production is about 600 million tons (unhulled), of which some 90% was produced in the world's top 10 producing countries, all of

Social Capital Accumulation through Building up Irrigation Water Governance… 191 which have annual precipitation in excess of 1,500 mm, and of which nine are located in the Asian monsoon region (Figure 2).

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Figure 2. Ratio of rice production area to grain production area and relationship to annual precipitation. Source: Yamaoka, Kazumi and Yasuhiro Ochii (2003)

Figure 3. Monthly Precipitation in Major Cities. Source: Yamaoka, Kazumi, Masayoshi Satoh et al. (2007)

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The amount of rainfall in this region concentrates in the rainy season due to typical monsoon climates. It exceeds 125mm per month and may come up to 500mm per month in the rainy season which lasts for several months in major cities in this region. Incontrast, no major cities in a Western country has monthly rainfall of more than 125mm throughout the year (Figure 3). Such a great amount of rainfall and inundated plants can result in oxygen starved soils and waterlogged roots. Rice is well adapted to extreme wet conditions because it can provide oxygen into its roots through the plant due to its distinctive body structure with paths for good air passage. Moreover, inundated paddy rice cultivation has many advantageous effects in reducing usage of land, labor and other resources by substituting ample water resources (Table 1).

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Table 1. Advantages of paddy rice agriculture with ample water use Items of advantages

Explanation on advantages of paddy rice agriculture with ample water use

Reducing management in distributing water (off-farm)

Because ample water is available, it is possible to convey water to all parts of the field with even poorly built canals, and it is easy to manage water distribution at divergence points, and this means that the amount of investment in facilities and labor required for off-farm water management can be reduced.

Reducing management in distributing water (on-farm)

With the system, called “plot-to-plot irrigation”, the paddy fields themselves serve as irrigation canals. This method can be used to supply water to all of tens or hundreds of paddy plots easily. By repeatedly using water (i.e., by introducing it into paddy fields that are located in higher-elevation and letting excess water flow to downstream paddy fields), labor required for on-farm management of water as well as investment in facilities can be reduced.

Reducing weed control

Flooding can prevent growth of weeds, except vascular plants like reeds that normally grow quickly and thickly when the soil is not submerged in the wet and warm climate.

Preventing soil erosion

Use of levees around rice fields and a standing pool of water reduce soil erosion losses even during periods of heavy rain. In fact, rice paddies act as a settling basin for suspended sediments in water.

Reducing fertilization

Organic matter in the soil decomposing slowly through anaerobic decomposition when the soil is flooded maintains soil fertility. Organic nitrogen is transformed into ammonia nitrogen while the soil is under reduced conditions and nitrogen is easily taken up by plants and attaches to soil particles. Less phosphate fertilizer is required for flooded soils because soluble, plant-available phosphates are formed while the soil is in a reduced state.

Reducing plowing

Paddy rice cultivation in clay-rich soil involves a year-long process whereby flooding expands and softens the soil (swelling) and drying shrinks the soil, forming cracks. This process increases the pore space between grains of soil, which facilitates movement of water, improves soil leaching that occurs with rainfall and prevents the build-up of salts in the soil.

Preventing a fall in yield by repeated cropping

The soil is under reduced conditions when it is flooded and becomes oxidized when water is drained. This process promotes alternation between anaerobic and aerobic microbes, which maintains bacterial balance and soil fertility and prevents a fall in yield from repeated cultivation of the same crop on the same ground.

Social Capital Accumulation through Building up Irrigation Water Governance… 193 For instance, the existence of ample water enables water to be conveyed to the tail end of the irrigable area in spite of poorly built canals with many leaks. The more water that is available in the irrigation canals, the easier it is to manage the water distribution throughout the irrigated area. This means that investment in facilities and labor required for off-farm water management can be reduced. Consequently, the available amount of water use, labor investment for operation and maintenance, and investment for infrastructure can be mutually substituted. An item that is costly can be replaced by one that is less costly. If this practice is employed, it is possible to raise the economic efficiency of water use by using cheap and ample water resources. In the rainy season, although ample rainfall enables farmers to enjoy rain-fed rice cultivation and floodwaters can be used for floating-rice cultivation in some places, drainage in low-lying flat lands, including arable land, may become a problem. On the other hand, during the dry season, since temperatures are high and potential evapo-transpiration is large in the Asian monsoon region, the land dries out and irrigation is usually required.

3. IMPORTANCE OF PADDY RICE CULTIVATION Paddy rice cultivation has evolved over thousands of years at many sites in the Asian monsoon region, as witnessed by archaeological traces of 7,000-year-old paddy in China. Still today, paddy rice cultivation forms a unique natural and cultural feature of people living in symbiosis with water. At present, rice is one of the world’s three major crops whose production amounts to around 600 million tons. Rice calories support people in the Asian monsoon region, 54% of world’s population (Table 2). Table 2. Proportion of calories supplied by rice

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Country / region Proportion of calories supplied by rice (%) Population (mil.)

Bang ladesh

Ko Cambo Indone Ja Vietna rea dia sia pan m Rep

72

75

50

138

13

212

2 3

3 1

1 27

4 7

Asia

66 78 80

No Wo n-Asia rld

31

3

20

3,6

2, 391

6, 071

Source: IRRI’s homepage, [Atlas of Rice and World Rice Statistics], http://www.irri,org/science/ricestat/index.asp FAO’s homepage, [FAOSTAT], http://faostat.fao. org/faostat/collections?version=extandhasbulk=0.

Among the three most prevalent crops globally, maize is more important as animal feed, and wheat has a higher ratio of international trade (Table 3). We need some 11kg of maize for beef cattle, 7kg for pig and 4kg for poultry for producing 1kg of meat respectively, so maize is rather inefficient as a source of calories for the world’s population. Wheat is mostly used for food, but it needs to be processed and usually requires some butter or oil for taste. Rice contains many types of nutrients including vitamin B1 and B2 and has a good balance of amino acids in its protein. If the protein score of an egg is set at 100, polished rice has a score

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of 81, which is followed by beef (79) and soybeans (70). Its rate of digestion by the body is high at 98%. One hundred grams of polished rice yields 356 Kcal of energy. It does not need to be ground like wheat does, and it requires less time and fuel to cook compared with beans. It is also flavorful. It has advantages in food mileage and Life Cycle Assessment on energy consumption so that it can claim to be the most environmentally friendly crop in terms of global warming. All of these factors have led rice to receive considerable accolades from the United Nations as "a major contributor to solving poverty issues and food security". Table 3. Comparison of World’s three major grains

Na me

Ric e Paddy Wh eat Ma ize

Consumptio n of A as food B/ B( A mil. (% tons) )

Amount of exported C/ C( A mil. (% tons) )

Area under Cultivatio n (2000) (mil. ha)

Annual productio n (2000) A (mil. tons)

154

600

682

High

521

87

36

6

214

585

557

Low

419

73

138

24

138

593

349

Low

115

19

85

14

Water required to produce 1g of dried foodstuffs (g)

Ability to withstand immersion

Notes: Rice production is based on unhulled rice/ The amount of water required to produce 1g of dried foodstuffs has a degree of latitude depending on the reference. Source: Statistical Databases (UN Food and Agriculture Organization) / Black, C. C., T. M. Chen and R. H. Brown, Biochemical basis for plant competition. Weed Soc.17,10-20, 1969

4. FEATURES OF RICE PADDY IRRIGATION AND ITS MANAGEMENT

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In contrast to irrigation systems for upland crops (which are typical in Western countries), rice paddy irrigation systems in the Asian monsoon region are characterized by the following elements, which are reflected in agricultural water governance: 1) 2) 3) 4)

Wide-ranging substitutability between water and labor as a factor of production, Short-term variability in the shadow price of water, Frequency of the risk of abnormally dry spells, Ability to reallocate surface water from one rice field to another in the event of abnormally dry spells, 5) Multi-functionality generated by ample water usage for rice fields. We will omit the last issue since it is discussedin a mass at another opportunity. The first two issues are illustrated below, and the third and fourth issues are discussed at some length in the sections following. Substitutability between water and labor. Inundated paddy rice cultivation can reduce the use of land, labor and other resources by substituting ample and relatively low-cost water

Social Capital Accumulation through Building up Irrigation Water Governance… 195 resources. In contrast to this, irrigation systems for upland crops (e.g., wheat), provide just enough water to supplement the moisture in the soil; there is little opportunity to reduce usage of other resources by substituting more water. Inundated paddy rice cultivation allows for a broader range of substitutability between water and labor as factors of production. Short term variability in the shadow price of water. The basic demand of irrigation water resources in paddy rice cultivation is much higher than that in other crops because the former utilizes water not only for the physiological requirements of the rice crop, but also as a strategy for reducing imputs of other resources. Moreover, rice is a tropical or subtropical plant so that air temperatures are high and potential evapo-transpiration is also high. On the other hand, direct rainfall to paddy plots is a water resource whose shadow price is extremely low, almost zero. Therefore, farmers want to take maximum advantage of the humid environment in the rainy season, and to store rain water in the form of inundated rice paddies. However, fluctuations in rainfall sometimes cause a dry periods of several days even in the rainy season, and the stored water disappears in some plots due to high evapo-transpiration and infiltration. Irrigation water is introduced to supplement and maintain the stored water in the paddy plots. Because farmers in paddy rice areas generally rely on rainfall during the rainy season, the demand for irrigation is affected by the amount of rainfall and fluctuates sharply. Some periods of dry weather (e.g., up to ten days) during the rainy season drastically increase the demand for irrigation water in comparison with normal conditions. Tightness of supply and inelasticity of demand for water resources can reach a critical stage in a very short period of time, particularly if the source of water from a river decreases at the same time. Reservoirs upstream from river basins usually serve as insurance in these cases. However, in the case of small river basins without large reservoirs in some insular and peninsular countries, the critical stage can be reached in a very short time. These phenomenon,are called as “abnormally dry spells”, and the frequency of risks is higher than that in dry regions.

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5. FREQUENT OUTBREAK OF ABNORMALLY DRY SPELLS MAKING SHADOW PRICE SOAR The following case study of Aichi-Yousui water supply project shows a typical phenomenon in insular and peninsular regions. Makio reservoir, the main reservoir of the project, has recorded during 30 years (1973–2002); a) 20 years when a water-saving ratio was regulated to reduce the amount of water to be discharged from the reservoir, b) 16 years when the water-saving ratio for agriculture exceeded 20% (Yamaoka et al., 2006). Figure 4 shows the price effects of scarcity of agricultural water in Aichi-Yousui waterworks project area in Japan. Makio reservoir was designed as the main reservoir of the modernized irrigation system of this project area. It has 68 million m3 of storage capacity and discharges a maximum of 29 m3 /s water for agricultural and non-agricultural use. In Ffigure 4, the X-axis represents the amount of water stored in Makio reservoir. The Yaxis depicts the water-saving ratio, defined as (Im-Ic)/Im where Ic is actual discharged volume of water at a specific period in a year and Im is the mean actual discharged volume of water at the same period for the previous three years.

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The water-saving ratio is inversely proportional to the amount of stored water, and shows that the higher the water-saving ratio, the higher the scarcity (i.e. value or shadow price) of agricultural water. On the demand side, the amount of water that farmers are legally allowed to use is fixed at 21.5 m3 /s during the period of May 1 to October 3. The reduction in the amount of water stored in Makio reservoir means that farmers actually use the full amount of irrigation water discharged from the reservoir. So it is probable that, during this period, the farmers’ potential demand for water is nearly the same as the fixed water use right.

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Figure 4. Relation between amount of water reserved and ratio on reduced amount of agricultural water discharged from Makio reservoir in 1982/1994/2001.

Figure 5 shows the change of the water-saving ratio in the same area for the years 1982, 1994 and 2001. The scarcity of agricultural water fluctuates widely during a given crop season. An abnormally dry spell where the water-saving ratio exceeds 30% may extend over three months as in 1994 while less than two weeks as in 1982. This example shows that abnormally dry spells are not predictable. The unknown variables include; a) the date of onset, b) the date and reach of peak water-saving ratio, and c) the total duration. Under these conditions of high risk for abnormally dry spells with the shadow price (scarcity) of water fluctuating unpredictably, volumetric water pricing systems are inadequate. In regions with generally ample water resources the price level of water should be low to encourage farmers to use the water resources for full production of crops. In contrast, during an abnormally dry spell, the price should be high to avoid a scramble for securing water under the tight conditions of supply and demand for water resources. The price level must fluctuate to adjust to the changing supply and demand balance. If the price depends only on a market mechanism, it could fluctuate sharply, and the water could become a targete for speculative dealing. It is a serious matter to distribute river water regarded as a public good or commons, although it may be allowed in the case of ground water which is considered as a private good. This is why irrigation water for paddy fields under humid climate is usually pricing according to farmland area.

Social Capital Accumulation through Building up Irrigation Water Governance… 197 This system allows farmers to use water flexibly. Farmers observe each other, and this serves as a mechanism for adjusting water supply and demand during abnormal dry spells, through local customs and norms about water management. In dry regions, however, the demand for irrigation is more stable, since it rarely rains. Under these conditions, where the supply and demand for water do not fluctuate and water is generally scarce, volumetric water pricing can work well.

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Figure 5. Change of ratio on reduced amount of agricultural water discharged from Makio reservoir in 1982/1994/2001.

For instance, expected monthly rainfall is only 10mm to 50mm during Summer in paddy fields in California. Nearly all the water needed for rice cultivation derives from the irrigation supply and there is no fluctuation in water demand. The available irrigated water supply also does not change in the course of the crop year because reservoirs have already reserved a huge amount of snowmelt by Spring and no rainfall is expected during Summer. It can be precisely calculated by Spring how much acreage is available to cultivate compared to the amount of actually reserved water, so that water banking systems have evolved. However, the volumetric water pricing systems, commonly observed in the irrigation systems in dry regions and in the water supply systems in urban areas, encourages the use of water as a private good rather than public good or commons. Users are encouraged to act independently based on self-interest rather than collectively based on the local norms about water management. In this sense, volumetric water pricing systems have a disadvantage from the perspective of social capital accumulation.

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6. REPEATED WATER TRANSFER WITHOUT PAYMENT DURING ABNORMALLY DRY SPELLS During the stress of abnormal dry spells, paddy farmers sometimes adapt the counterintuitive economic practices of water transfer without payment. An enabling condition for this behavior is the fact that dryness affects some fields much more than others, due to soil conditions, micro-topographical features and the theory of water flow under gravity. Thus, there are usually some advantageous plots and disadvantageous ones in terms of water availability. Crop stress from the abnormally dry spell breaks out in the disadvantageous plots first and spreads to the other plots. In this case, farmers can transfer part of the surface water stock that is temporarily enclosed on a paddy plot to other paddy plots by means of plot-toplot irrigation. Even in rain-fed paddy rice farming areas, negotiations among farmers for water transfer, normally made through bilateral agreement between farmers, are attempted during abnormally dry spells, and methods of redistributing water stock and local practices of water use are widely developed as traditional customs. If these plots were upland farm fields or pastures, water transfer between adjacent fields never happened because water was integrated with soil as moisture. “Plot-to-plot irrigation” is the most common technique for distributing water among rice paddy fields. The existence of ample water enables water to be sent from higher-elevation paddy plots to lower-elevation ones, cutting a part of the levees surrounding paddy plots, and letting the excess flow to downstream paddy fields. With this system the fields themselves serve as irrigation canals as well as farm fields. It does not matter if hundreds of plots are involved; if there is sufficient difference in ground elevation, this method can be used to supply water to all of them, enabling the labor required for on-farm water management as well as investment in facilities to be reduced. Therefore, this approach is widely developed in rain-fed paddy areas, and around the edges of traditional irrigation networks. However, this also allows upstream farmers in the plot-toplot irrigation area to have a strong advantage in using water. Downstream farmers in the area have little choice but to take the surplus or drainage water released from upstream paddy plots. Even in modern irrigation systems, in which water is normally taken into each paddy plot directly from a canal, the custom of plotto-plot irrigation is sometimes practiced as a response to critical water shortages due to abnormally dry spells. The crisis atmosphere within the smallest unit of the irrigation systems quickly spreads to whole systems through the chain-link structure, and it becomes a touchstone to accumulate social capital within the irrigation society. Paddies joining in plotto-plot irrigation during abnormally dry spells could be regarded as most carefully operated water diverting devices. Figure 6 shows a sample of water courses of plot-to-plot irrigation in a typical paddy fields along a so-called Pol Pot channel in Kandal Stung province in central Cambodia. This figure shows how farmers are involved in complicated relationship on water to employ the method of plot-to-plot irrigation. Farmers in this area have established a traditional and local practice of plot-to-plot water use as described above. To avoid confusion, each farmer in this area negotiates only with farmers in adjoining plots about distributing water impounded in their paddy plots. Assume that paddy plot (A) and (B) is located side by side and cropped by farmer (A) and (B), and that the plot (A) is located upstream of the plot (B). Upstream farmer (A)

Social Capital Accumulation through Building up Irrigation Water Governance… 199 naturally has an advantageous position between two farmers in using water in normal period. A local custom here is that the farmer (B) who wants to take water from the next plot (A) during dry spells must obtain permission from the farmer (A) and the farmer (A) must give permission to the farmer (B) if the plot (A) is filled with water more than plot (B). Negotiation between farmers who do not share borders is rare (Tomosho et al., 2006). This custom during abnormal dry spells appears to be an economically irrational because there is no benefit gained and the farmer (A) incurs additional farm labor costs in the process of helping his neighbor. Why are such actions taken repeatedly to establish this custom? Are there so many philanthropists in Cambodia?

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Figure 6. Water courses of plot-to-plot irrigation in paddy fields during the wet season in Kandal Stung, Cambodia (2003). Source: Tomosho, Tatsumi and Kazumi Yamaoka (2004)

Such an economically irrational phenomenon is also observed in the case of the AichiYousui water supply project area in Japan. In this case, farmer (A) is replaced by an agricultural water users association and farmers, while (B) is replaced by a municipal domestic water supplier and tap water users, both of whom depend on the same water supply from one reservoir. In the case of the Aichi-Yousui water supply project cited in the previous section shows that Makio reservoir has recorded 15 of the last 30 years (1973–2002), when the agriculture sector granted additional free water to municipal domestic water users during abnormally dry spells by means of undertaking a relatively higher water-saving ratio. Why do they transfer such high valued and scarce water without payment when shadow prices for water soar during

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abnormally dry spells? The simple explanation is that the process of negotiating the water transfers between the two sectors accumulates a new social capital that can have important future value. An analysis through game theory explains more clearly the economical rationality underlying these behaviors.1

7. ANALYSIS BY USING INFINITELY REPEATED NON-COOPERATIVE GAME THEORY Non-cooperative game theory is a theory that deals with the strategic maneuvering engaged in by a number of players, without postulating the existence of a binding contract; such games are mostly analyzed under the concept of the Nash equilibrium. The Nash equilibrium is a situation in which each player's strategy constitutes the optimal response to the existing strategies of the other players. The idea can be expressed more precisely as follows. Let i=1,2,...N represent the players; let Si represent the set of potential strategies that each player may adopt; let πi(s) represent the profit for each player resulting from the strategy combination s=(s1,...sn). The Nash equilibrium can then be defined as the strategy combination s* that fulfils the following conditions:

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πi(s*)≧πi(s*-i,si) ∀i ∀si∈Si

(1)

The Nash equilibrium refers to a situation in which all players select the optimal strategy with understanding the optimal strategies of the other players. Now, consider two types of natural conditions. P represents the probability that the total volume of available water resources for both parties will be normal; 1-P represents the probability that an abnormally dry spell will occur. Let us postulate two possible courses of action for each player; we will consider only pure strategies. The strategies available to player B are either to assent to or not to assent to player A’s advantageous position on using water when the volume of available water resources is normal. The strategies available to player A are either to transfer or not to transfer water to player B when a dry spell occurs. Let db represent the loss to player B and ga the profit for player A if the former assents the latter’s advantageous position when the volume of available water resources is normal. Let gb represent the profit for player B and da the loss to player A if the latter transfers water to the former during a dry spell. Given this scenario, the profits for each party will be as shown in Table 4. The rows give the two strategies available to player B; the columns give the two strategies available to player A. Within each cell, the profit for player A is given first (before the semicolon), followed by the profit for player B.

1

There are some cases of water transfer with payment during abnormal dry spells reported as "water right trade" in early-modern Japan (Sugiura and Yamaoka, 2008). The conditions of water transfer with payment are also referred in Sugiura (2005). Though the transfer was implemented with payment, since it was implemented mainly inside a village, consensus for water management must be shared with villagers which meant "social capital" in this paper.

Social Capital Accumulation through Building up Irrigation Water Governance… 201 Table 4. Profit table for player A and B Player A Player B Assent player A’s advantageous position

Don't assent player A’s advantageous position

Transfer water to player B

Don't transfer water to player B

P･ga+(1-P)(-da);

P・ga ;

P(-db)+(1-P)gb (1) (1-P)(-da); (1-P)gb (2)

P(-db) (3) 0; 0 (4)

In Cell (1), the profit for both parties is positive. This is because such action would not make strategic sense unless the expected profit from the strategy is positive, even if both players are risk-neutral. Note the values in the profit table: for player A, profit (3) is greater than profit (1), and profit (4) is greater than profit (2); for player B, profit (2) is greater than profit (1), and profit (4) is greater than profit (3). This profit matrix is characteristic of the prisoner's dilemma game, in which both players have a dominant strategy. In the prisoner's dilemma game, it should never happen that cooperative action is attained spontaneously -- unless the game is infinitely repeated, in which case cooperative action can be attained under certain conditions. If the prisoner's dilemma game takes place only once, then a dominant strategy is available to both parties, so that player B will refuse to assent and player A will refuse to transfer water: neither will be willing to cooperate. But if the prisoner's dilemma game is infinitely repeated, the following is known to occur. If, in a prisoner's dilemma game that is (infinitely) repeated, the discount factor δ governing the future profit to be enjoyed by the players conforms to the following condition,

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δ≧max{(-P(-db))/((1-P)gb), (-(1-P)(-da))/(P・ga)}, then the trigger strategy results in a Nash equilibrium. This result means that, in a situation where cumulative long-term losses exceed short-term gains, an equilibrium may occur in which player A gains assent for his advantageous position on using water when the volume of water resources is normal, and agrees to transfer water during abnormally dry spells; that happens because player A and B employ a trigger strategy. This is resulted from the fact that both players adopt a long-term viewpoint, each realizing that betraying the other party's expectations will cost them dearly. By the way, even if people recognize a certain profit in their sector, they may face difficulties in taking collective action when a number of free riders seek benefit. This is the case in Aichi-Yousui project area, as well as farmer A and B in the case of Cambodia. However, the chain-link structure mentioned at the beginning of this paper can decrease the risk of free riding and increase people’s motivation for taking collective action. An additional significant element is that a social capital relating to water management accumulates under the acceptable tense atmosphere generated by the chain-link structure. Social capital consists of ties of trust, norms, networks, and other arrangements that facilitate cooperative behavior (Putnam, 1993); it is thought to affect such things as (1) players' expectations that a cooperative equilibrium will be achieved, and (2) the extent to which they feel guilty about betraying another party's trust (Platteau, 1994b). It may be speculated that

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the probability of transfers of water taking place during more severe dry spells increases according to the accumulation of such social capital. This interpretation allows one to argue as follows: Just because no binding rules are made, that does not mean that the process of negotiating for a special water allocation during abnormally dry spells has no role to play. It may be considered to create the conditions that are the prerequisite for the harmonious resolution of the problems that abnormally dry spells cause, in that stakeholders gather under a single roof, share the same viewpoint, renew their awareness of the rules that have been established, and carry out necessary adjustments under the more severe conditions that prevail.

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8. INSTITUTIONAL POLICY DESIGN FOR ACCUMULATING SOCIAL CAPITAL In this section, I discuss recent policy measures implemented in Japan, which has continuously developed irrigation systems embracing irrigation water facilities such as reservoirs, head works and canals as well as institutions of collective water management among farmers, namely water governance. Implementation of the measures has also generated close mutual relation with social capital accumulation which is connected with rice paddy irrigation and has characteristics mentioned above. All the government-supported irrigation projects in Japan have been executed under the systems of the Land Improvement Act which came into force in 1949. This act was never designed for promoting a certain social capital, but this has been an important result which has contribute to rural development in Japan. To give a clearer understanding about the relation between this act and social capital accumulation, we need first to consider the typology of policy measures relating to social capital. Figure 7 shows a basic concept flowchart of how social capital should be measured and used in deciding policy, depending on the role of social capital within the policy. There are three types of policies. The first type policy aims at just measuring and evaluating accumulated levels of social capital but doesn’t aim at using its assessed results as an indicator to be used for a particular policy. In this case, analysis and evaluation will be done on the variation in the accumulated level of social capital among several groups, or on whether or not the accumulation of social capital has reached a certain level. In contrast, when the accumulated level of social capital is measured and evaluated as an indicator to be used for a specific policy, it is necessary to clarify whether or not an increase in the accumulated level of social capital is itself an objective of the policy or if it is a tool for facilitating collective cooperation to make the achievement of a policy goal easier. The former is the second type of policy and the latter is the third type. If an increase in the accumulated level of social capital is indeed one of the objectives of a specific policy, it will be appropriate to compare the change in the accumulated level of social capital in target areas before and after implementation of the policy, where the policy has been implemented for a certain period, with the change of that in the control areas where the policy has not been implemented and social conditions and the accumulated level of social capital can be regarded almost the same as the target areas. The specific evaluation measure.

Social Capital Accumulation through Building up Irrigation Water Governance… 203

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Figure 7. Flow of Social Capital (SC) to be measured and used, depending on its roles in policies. Source: Yamaoka, Kazumi, Tatsumi Tomosho, Masaru Mizoguchi and Mikiko Sugiura (2008)

will identify increments in accumulated level of social capital in target areas which exceeds that in the control areas by a certain degree after implementation of the policy. On the other hand, if it is difficult to determine the control areas, for instance where the policy is to be implemented in a blanket fashion on a national scale, the evaluation measure will have to merely identify the accumulated level of social capital that exceeds a certain threshold, regardless how much social capital existed before implementation of the policy, or to analyze by how much, proportionally, the probability distribution of the accumulated social capital level in the area under investigation has shifted before and after the implementation of the policy. In contrast, if accumulated social capital is regarded during policy implementation as a tool (condition, environment) for attaining the specific policy objective efficiently and costeffectively, the accumulated level of social capital should be assessed before policy

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implementation, and if its accumulated level meets the specified criterion, it should be deemed to provide an appropriate condition for implementing the policy effectively. If, on the other hand, the accumulated social capital level does not meet the specified criterion, implementation of the policy should be postponed until it has been ensured that the accumulated social capital level has reached the specified criterion, by implementing special measures to increase the accumulated level. Japanese Land Improvement Act has combined the functions of the second type of policy with the third one.

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9. MECHANISM OF ACCUMULATING SOCIAL CAPITAL THROUGH THE LAND IMPROVEMENT ACT When Japan’s Land Improvement Act came into force in 1949, it enabled tenant farmers, and not only land owners, to become official applicants of irrigation projects and land consolidation projects. Under the conventional system, land consolidation projects, in contrast to irrigation projects, were unpopular with so-called parasitic land owners who had no interest in improving labor productivity. The Land Improvement Act, in conjunction with drastic agricultural land reforms from 1947 to 1950, helped the emancipated farmers to collectively set up land improvement projects, i.e. irrigation projects for main and lateral canals and land consolidation projects for smaller sub-lateral canals and ditches with simultaneous readjustment of farm land lots. Requirements stipulated by the Japanese Land Improvement Act are: (a) a project must involve at least fifteen agricultural land owners and/or tenant farmers, (b) an area for which the project is intended should be determined and the project must be agreed upon by at least two thirds of the people in the intended area that will be benefited by the project, and (c) the beneficiaries in the intended area must establish a Land Improvement District that is responsible for the operation and management of water distribution services and the maintenance of irrigation facilities. The Land Improvement Act provides a mechanism that initially verifies a background level of social capital which will ensure the successful operation of the Land Improvement District. The social platform on which the District organization is based consists of mutual trust, norms and networks, which will allow for collaborative actions. The requirements stupilated under the Land Improvement Act are clearly set out by the Japanese government prior to the approval of each land improvement project, ensuring a consistent approach in implementing government-support projects throughout the country. The land improvement projects implemented under the Land Improvement Act institutionalize the participation and involvement of the non-government sector in these projects, thus ensuring that potential government failure caused by the government’s absolute control is diminished, and the promotion of democratic values and public interest is maximized. Land improvement projects have been implemented for more than half a century, since just after the Second World War and they have attained many achievements. In contrast to ordinary public works projects in Japan, which are led by the public sector in a monopolistic fashion, land improvement projects have two remarkable features: (1) They ensure that the existing level of social capital exceeds the required criteria prior to project implementation, and (2) The building of the physical infrastructure (dams, canals, and water

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Social Capital Accumulation through Building up Irrigation Water Governance… 205 control structures) proceeds hand-in-hand with the development of the governance system (the organization as the leading actor). Land improvement projects have realized effective achievement of development policies in the target areas, thus enhancing the efficiency of the national budget that is spent on such projects. For example, as water users who benefit from a project must bear a part of the project cost, direct accountability by government engineering officials to beneficiaries was required so that the beneficiaries can fully understand the function and design of the project facilities as well as how the budget is spent on the project. This implies a helthy tension between project beneficiaries and authorities. Public works projects generally create a tension between the government and parliament as representating tax payers but land improvement projects add more direct relationships with project beneficiaries from a different perspective. Moreover, with regard to the purchase of land on a site designated for a project, the land owner is often a project beneficiary, or someone who is close to the beneficiary. This facilitates smooth cooperation and enables the saving of transaction costs on negotiations and site acquisition. At the national level, land improvement projects contribute to land conservation and social stability by facilitating the sustainable accumulation of social capital. Especially during the period of high economic growth in Japan during the 1960s and 1970s, urban-rural income disparity increased and the rural workforce, especially the young generation, poured into the cities. Under these circumstances the effect of maintaining land and water conservation and social stability in rural regions by local communities, accompanied by forming water governance and accumulating local social capital, was significant. Those effects were becoming more significant because land improvement projects were implemented as fundamental public works throughout the country - from north to south, from suburbs to mountainous areas and in every rural village. As explained above, social capital, which is accumulated simultaneously with the implementation of public works projects, has the potential to generate substantial public benefits, depending on how projects are implemented. Therefore, it can be concluded that there is a certain significance and necessity in the government’s support in facilitating the formation and accumulation of social capital through public policies as a key source of public goods for sustainable rural development. Rural and urban areas in Japan will be markedly transformed from the falling birth rate and expansion of an aging society, thus causing a further decrease in population and further socio-economic shrinking. It is inevitable that the budgets allocated for general public works projects involving maintenance of roads, rivers and sewerages will become more limited. Under these circumstances, public works projects can also be implemented in conjunction with the formation of governance and one can expect that this integrated approach will have the effect of promoting the accumulation of social capital. In addition, from the perspective of the efficient use of limited budgets, the level of accumulated social capital above a certain criterion should ideally be set as a requirement prior to project implementation. These public works projects are implemented with the goal of providing infrastructures for economic activities, but an integrated social approach will add a new project goal, which is to strengthen social coherence and build social capital which will benefit the larger society. This is an important argument to be considered in ensuring that public policies promote effective outcomes of public works projects, as budgets become more limited.

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10. SYNERGIES BETWEEN WATER GOVERNANCE AND SOCIAL CAPITAL The rural development policy measures that have grown out of Japan’s 1949 Land Improvement Act offer a development model that has relevance to other countries in the Asian monsoon region. Of course, the socio-economic situations among these countries are different and fundamental social systems such as land holding and water rights are varied. However, it is conceivable to introduce policy measures which have similar conceptual features as the systems of the Land Improvement Act into the current developing countries in this region. It is recalled that Japan’s economy was in a developing stage in 1949. The term Participatory Irrigation Management (PIM) refers to a particular type of arrangement within a modern large-scale irrigation system. Farmers are induced to set up a water user's association (WUA), then the facilities at the periphery of the network and technologies for managing water distribution, along with responsibility over them, are transferred to those farmers from the government sector. This is the kind of setup that over the past two decades institutions like the World Bank have been fostering through both formal and informal action in an effort for aiming to encourage each individual farmer’s participation and ensure a sustainable balance between benefits and burdens through empowerment, i.e. the improvement of a farmer’s self-governing capabilities and good governance. This action came in response to a growing concern. That the large-scale irrigation systems constructed through national and international financing from the 1950s onwards, had by the late 1980s begun to suffer serious leakage and other problems due to long-term deterioration. Therefore, the efficiency with which water was transported declined and the cost of management increased. This problem occurred because the government sector designed, built, owned, and managed the dams, water channels, and other facilities, as well as taking charge of water distribution plans. Therefore farmers failed to participate actively in these processes and thus developed no sense of having a personal stake in the management of facilities and of water distribution. Efforts to turn this situation around through the introduction of participatory management forms have in a few cases achieved a certain degree of success with backing from international financial institutions. But more often these efforts have foundered, for farmers are unhappy about having (as they see it) the irrigation management burdens of thrust upon them, without adequate motivation or government support (Yamaoka 2004b). The following background can explain the reasons why social capital has become the focus of attention in the field of aiding developing countries. Firstly, the demands by many developing countries in need are gradually shifting from agricultural development aid, in order to save people from poverty and starvation, to rural socio-economic development aid with the main focus on narrowing the disparity in living standards between rural and urban areas. Secondly, increases in yields and increases in agricultural incomes in an entire area (averages) were conventionally used as indices for evaluating project performance, and governments were inclined to intervene rather directly and generously in pursuit of their own mission to achieve targets, causing ballooning organizations and financial pressures within those governments. So, the new policy directed at reducing government involvement by requesting governments to provide rural community members with mechanisms that enable them to develop their capacities and responsibilities in addressing their own issues, including

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Social Capital Accumulation through Building up Irrigation Water Governance… 207 disparities and unequal opportunities, expanded among individuals together with economic development. However, many PIM initiatives in paddy rice irrigation districts in monsoon Asia have given rise to frustration among farmers and, in many cases, they struggle to make progress. One of the main causes is believed to be insufficient incentives and support being provided by government to farmers. Through PIM initiatives, farmers have come to take part in PIM by providing labor and technology, with which they partly replace the role played by government engineering officials contributing to the improvement of regional capacity in resource management and the realization of participatory-type regional and social development. However, there often seems to be a lack of understanding of these social benefits among government engineering officials and farmers. Economic benefits are usually considered too simplistically as the goal of irrigation development when the biggest advantage that can be brought about by farmer-participatory irrigation management is the accumulation of social capital. Under PIM initiatives, those who benefit from water supply services and those who are responsible for irrigation management work together in a healthy governance system that facilitates collective communication and swift, yet careful, actions. Paddy rice irrigation systems in a humid climate, where agricultural water governance is well-established, provide a typical example of this potential. In order to make a success of such PIM initiatives, there must be social capital, such as trust and reciprocity among farmers, which has already been accumulated to a certain level within their local community. Furthermore, a moderate degree of tension, not only by reciprocity among farmers but also by mutual monitoring, also contributes to a further improvement in water distribution efficiency. Especially in the event of abnormally dry spells, interaction among individuals must be taken care of more sensitively than at times of normal rainfall when there is plenty of water available for everyone. In this setting a network of more sensitive reciprocity and mutual monitoring, i.e. social capital accumulated to a high level, takes governance a step further in facilitating water saving and efficient water distribution. When regarding social capital as a type of capital in a general context, questions will arise, such as how much to invest in social capital and how can the returns be calculated? These points are indeed debated by experts but here, the author takes the liberty of explaining it as follows: Focusing on paddy rice irrigation systems in humid climate regions where agricultural water governance is in place, community members learn how to use social overhead capital through the experience of governing their irrigations systems. The role of cooperation, restraint and coordinating diverse interests in facilitating the distribution of water reinforce this social overhead capital. Those experiences in governance are regarded as an investment in the accumulation of social capital. Moreover, an increasing level of accumulated social capital lowers the hurdle of experience when there is an opportunity to take governance to the next level, which is “the distribution of services (water supply)” that are harder to realize, and this successful experience is regarded as reinvestment in the further accumulation of social capital. This cyclic process therefore progresses in a spiral synergistic fashion. Another big advantage of participatory irrigation management is evident in the activities of investment in infrastructure, i.e. facilities to supply agricultural water. When the same individuals (farmers) are involved both as managers and as beneficiaries at the same time, they notice capital deterioration and damage at an earlier stage, before such problems begin to

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have an adverse effect. As farmers repeatedly make small investments (money, time and labor) in infrastructure, the deterioration of and damage to infrastructure becomes more controllable and is thus minimized. This also demonstrates that the realization of good governance activates good communication and swift, yet careful, actions, and similarly to the abovementioned case of the distribution of services (water supply), a certain level of social capital accumulation, such as mutual trust and reciprocity among rural community members, becomes an essential requirement. Figure 8 illustrates the explanation given below.

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Figure 8. Double spiral of synergistic effects between the level of governance and social capital accumulation in paddy rice irrigation systems. Source: Yamaoka, Kazumi, Tatsumi Tomosho, Masaru Mizoguchi and Mikiko Sugiura (2008)

Moreover, when capital deterioration and damage progresses and the need for serious restoration and facility improvement becomes obvious, considerable investment must be made in cooperation with the governmental sector for such major capital restoration, often along with a drastic modification to facility performance, including technical sophistication. In this situation, again, under the condition of a higher level of social capital accumulation, i.e. a higher level of trusting relationships among farmers, they experience a higher level of governance where they jointly invest in the facility to enhance its functions. This can be explained similarly to the previous case: the experience of community members in governance becomes an investment for accumulating social capital, as they learn to accumulate small investments on a day-to-day basis in order to increase capital for controlling the deterioration of and damage to social overhead capital, i.e. irrigation facilities.

Social Capital Accumulation through Building up Irrigation Water Governance… 209 And in the same way as a case of “the distribution of services”, an increasing level of accumulated social capital lowers the threshold of experience necessary to take governance to the next level, which is “the joint construction of water use facilities” that are harder to realize, and this successful experience is regarded as reinvestment in the further accumulation of social capital. This cyclic process therefore progresses in a spiral synergistic fashion. To summaries what has been explained above, a synergistic effect is created in two ways in managing social overhead capital, i.e. irrigation systems: between the accumulation of social capital and the accumulation of experience in two types of governance over the distribution of services and the investments put into infrastructure. By these synergistic effects, the level of governance and the level of accumulated social capital can grow simultaneously with forming a double spiral between them.

CONCLUSIONS

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Social capital has been the unseen force underlying the successful management of paddy rice agriculture in Monsoon Asia during many thousands of years. The norms and traditions that have evolved during this time, and as the result of facing many hardships ranging from floods to droughts, offer an invaluable storehouse of management resources that still has relevance today. This paper has shown how social capital allows farmers to cooperate during periods of drought in a way that not only solves the immediate crisis of efficient water distribution, but which also strengthens the social fabric in the process, in preparation for facing the next crisis when it occurs. The dynamic of self-generating social capital can also be applied to the challenges of governing large-scale, highly technical irrigation systems. The experience of participatory irrigation management (PIM) points to the potential for addressing irrigation development as an integrated challenge where the infrastructure improvements (new dams, canals, automated gates, etc) are not viewed as management solutions in themselves, but as the physical dimension of an integrated socio-technical development. The process of how the infrastructure improvements are introduced determines how successful the long-term governance will be. When physical improvements are introduced with social capital in mind, the end result is a better functioning technical system embedded in a strong management system that continuously strengthens the stock of social capital on which the management system is based. Investing in social capital can yield valuable returns.

REFERENCES Coleman, James (1994): Foundations of Social Theory, The Belknap Press of Harvard University Press. FAOSTAT (2005): http://faostat.fao.org/faostat/collections?version=extandhasbulk=0. Halpern, David (2005): Social Capital. Policy Press. Hanifan, L. J. (1916): The Rural School Community Center, Annals of the American Academy of Political and Social Science 67: pp. 130–138.

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Hardin, G (1968): “The Tragedy of the Commons”, Science, 162, pp.1243-1248. Hawken, P., Lovins, Amory B. and Lovins, L. Hunter (1999): “Natural Capitalism: The Next Industrial Revolution”, Nature, 402(6757), p13. Iida, Jiro (2002): Irrigation Management and Social Capital, Social Capital and International Cooperation [Case Study Edition] (in Japanese), Institute for International Cooperation, Japan International Cooperation Agency, pp. 85–105. IWMI (2003): “Improving water productivity: How do we get more crop per drop?”, Water Policy Briefing, http://www.iwmi.cgiar.org/waterpolicybriefing/index.asp. IRRI (2005): http://www.irri,org/science/ricestat/index.asp, Atlas of Rice and World Rice Statistics. Jacobs, Jane (1961): The Death and Life of Great American Cities - The Failure of Town Planning -, Penguin Books Ltd. pp. 154–251. Johnson Ⅲ, S. H., M. Svendsen and F. Gonzalez (2002): “Options for institutional reform in the irrigation sector”, Sixth Irrigational Seminar on Participatory Irrigation Management ― Keynote presentation, Ministry of Water Resource, P.R.China, World Bank, pp.16-66. Mayama, Tatsushi (2002): Development of Decentralisation and Local Governance (in Japanese), Doushisha, Vol. 54, No. 3, p. 100. Ministry of Agriculture, Forestry and Fisheries of Japan (1995): Report on Facts of Drought in 1994 and Future Measurement (in Japanese), pp.17-23. Morotomi, Toru (2003): Environment (in Japanese), Iwanami-shoten, pp.6-8, pp.16-21. Nakajima, Yasuhiro (2006): A Study of Agricultural Environmental Policies in the EU, Agricultural and Rural Development Technical Investigation Report 2006 – Examination on Agricultural Environmental Policies in the UK and France, The Japanese Institute of Irrigation and Drainage (in Japanese), pp. 91–126. Putnam, Robert. D., Robert Loenardi and Raffaella Y. Nanetti (1993): Making Democracy Work. Civic traditions in modern Italy, Princeton NJ: Princeton University Press, New Jersey. Putnam, Robert D (1995): “Bowling Alone: America’s Declining Social Capital”, Journal of Democracy, 6(1), pp.65-78. Ren Yongfuai, Masayoshi Satoh, Kazumi Yamaoka, Tatsumi Tomosho and Naoki Horikawa (2004): “A Case Study on the Effects of Water Pricing on Water Saving Irrigation”, The Collection of Theses of International Academic Forum for 2260th Anniversary of the Founding Du Jiang Yan Irrigation System in Chengdu, China on 8-10 August 2004, pp.77-83. Sato, Hiroshi (2001): Aid and Social Capital: Potentials of the Concept of Social Capital (in Japanese), Institute of Developing Economies, Japan External Trade Organization. Sakata, Shozo (2001): Social Capital and Development (in Japanese), Assistance and Social Capital, Asia Economic Research Institute, pp.11-21. Shuller, Tom (2007): Reflections on the Use of Social Capital, Review of Social Economy, Vol. LXV No.1, pp.11-28. Sugiura, Mikiko & Kazumi Yamaoka (2008): “Irrigation water management developed through conflicts: A case study of Kagawa prefecture in Japan.”, abstract of XII World Congress of Rural Sociology, p.149, & website of XII World Congress of Rural Sociology (Working Group 28 – Historical and Contemporary Perspectives on Rural Water Governance). http://www.irsa-world.org/XII/papers/28-4.pdf

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Social Capital Accumulation through Building up Irrigation Water Governance… 211 Sugiura, Mikiko (2005): “Factors of Water Trade in Japanese History: Case Study of Kamiyokoyama village in Niigata Prefecture,” Journal of Water and Environmental Issues, vol.18, pp.1-14. Svendsen, M., J. Trava and S. H. Johnson III (1997): “Participatory irrigation management: Benefits and second generation problems. Lessons from an International Workshop held at CIAT”, Cali, Colombia, 9-15 February 1997, Economic Development Institute of the World Bank, Washington, DC. Tassanee Ounvichit, Masayoshi Satoh, Somboon Chantanusart, and Kazumi Yamaoka (2006): ”Cost Sharing and Sustainability of Pongsak Muang Fai Irrigation System”, Paddy and Water Environment, 4(2), pp.81-88. Tomosho, Tatsumi and Kazumi Yamaoka (2004): “Can PIM Overcome Social Dilemma and Attain Sustainability”, The Collection of Theses of International Academic Forum for 2260th Anniversary of the Founding Du Jiang Yan Irrigation System in Chengdu, China on 8-10 August 2004, pp.89-93. World Bank (1996): “Handbook on Participatory Irrigation Management”. Yamaoka, Kazumi (2003): ”The Relationship between Water Use in Paddy Fields and Positive Externalities: Japanese Perspective and Proposal”, Agricultural Water Quality And Water Use: Developing Indicators For Policy Analyses, Proceedings of an OECD Expert Meeting, Gyeongju, The Republic of Korea, pp.188-215. Yamaoka, Kazumi and Yasuhiro Ochii (2003): ”A Message from Japan and Asia to the World Water Discussions”, Minato-ku, Tokyo, The Japanese Institute of Irrigation and Drainage, 153pp. Yamaoka, Kazumi (2004): Water for Agricultural Use (in Japanese), The Characteristics and Advanced Technology of Water –For Agriculture, Foods, and Medicals–, NTS, Bunkyo, Tokyo, Japan, pp. 105–115 Yamaoka, Kazumi; Yasuhiro Ochii and Toru Mase (2004): A Study on Integrated Water Resources Management and Participatory Irrigation Management (in Japanese), Journal of Japanese Society of Irrigation, 72 (3), pp. 217–221 Yamaoka, Kazumi, Naoki Horikawa and Tatsumi Tomosho (2004): “Water Productivity and Economic Externalities of Rice Paddy Agriculture in the Asian Monsoon Region”, The Collection of Theses of International Academic Forum for 2260th Anniversary of the Founding Du Jiang Yan Irrigation System in Chengdu, China on 8-10 August 2004, pp.303-311. Yamaoka, Kazumi (2005): ”Multifunctionality of Paddy Field Irrigation for a Basin Scale Water Cycle and Bio-diversity in Japan”, Proceedings of the International Workshop on Multiple Roles and Diversity of Irrigation Water, Beijing, China on 14 September 2005, International Commission on Irrigation and Drainage (ICID), pp.123-142. Yamaoka, Kazumi, Yukinobu Ichida, Kota Asano, Tatsumi Tomosho, Naoki Horikawa and Ren Yonghuai (2006): “Social Capital and Economic Rationality in Transferring Agricultural Water to Domestic Use during Abnormal Dry Spells”, The 3rd Asian Regional Conference - Transforming Irrigated Agriculture into an Efficient Engine of Growth, International Commission on Irrigation and Drainage (ICID), A-43 (1-15) Yamaoka, Kazumi (2006a): “Paddy Field Characteristics in Water Use: Experience in Asia”, Agriculture and Water: Sustainability, Markets and Policies, Organization for Economic Co-operation and Development (OECD), ISBN 92-64-02256-2, pp.287-315

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Yamaoka, Kazumi (2006b): “Development of Agricultural Water Governance and Social Capital under the Humid Climate”, International Network for Water and Ecosystem in Paddy Fields (INWEPF) 3rd Steering Meeting and Workshop “Rice Paddy: Now, Tomorrow and the Future”, Kuala Lumpur, Malaysia, 2006/09/18 Yamaoka, Kazumi, Yukinobu Ichida and Kota Asano (2006): “Agricultural Water Management as a Safety Net for the Domestic Water Supply during Abnormal Dry Spells: An Analysis on the Behavioral Science in Water Management”, Innovation and Development of Urban Agricultural Engineering, China Waterpower Press, Beijing, pp.41-57. Yamaoka, Kazumi (2007a): “Applying the Concept of Social Capital to Agricultural and Rural Development Policies”, The 4th Meeting of International Network for Water and Ecosystems in Paddy Field, Bangkok, Thailand, 2007/07/05. Yamaoka, Kazumi (2007b): “Paddy Field Characteristics in Water Use: Experience in Asia, Water and Agriculture –Sustainability”, Markets and Policies, Organization for Economic Co-operation and Development, ISBN 92-64-02256-2, pp.287-315. Yamaoka, Kazumi, Masayoshi Satoh et al. (2007): “Guidelines for On-farm Irrigation Development and Management in Monsoon Asian Countries”, ISBN 978-4-904159-00-2, The Japanese Institute of Irrigation and Drainage. Yamaoka, Kazumi, Tatsumi Tomosho, Masaru Mizoguchi and Mikiko Sugiura (2008): “Social capital accumulation through public policy systems implementing paddy irrigation and rural development projects”, Paddy and Water Environment, 6(1), pp.115128.

In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 11

SOCIAL CAPITAL: A CATALYST FOR SOCIAL AND RURAL DEVELOPMENT IN GHANA? Frank S. Arku∗1, Cynthia Arku2 and Glen C. Filson1 1

Rural Studies Program School of Environmental Design and Rural Development University of Guelph, Guelph, Ontario, Canada, N1G 2W1 2 Northern Alberta Development Council 15 Nipewon Road, Lac La Biche, Alberta, Canada, T0A 2C0

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ABSTRACT Social capital in the form of friendship, mutual assistance and trust are said to be important for community and social development. This paper offers an assessment of the impact of a water project - particularly water committees - on the social capital among rural residents in the Volta Region of Ghana, and the extent to which the social capital could contribute to improving their social well-being. The findings show that although social capital has long existed, this was strengthened by the presence of the water committees that oversee water projects within the communities. The water project provided opportunities for community dialogue, and social capital was improved in the process, which encouraged cross-family support for children's education and bereaved of poor households, and development projects. The study recommends projects that improve community interaction be promoted to facilitate community-driven initiatives that could sustain the social well-being, hence social development of rural households.

Keywords: Social capital, rural, water committees, well-being, Ghana.

∗

E-mail: [email protected]

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INTRODUCTION Like many concepts in development, the concept of social capital eludes a precise definition. Many have identified its genesis through the work of Bourdieu, Coleman and Putman. Precedding them, Hanifan (1916: 131) contended at the turn of the twentieth century that social capital was the “goodwill, fellowship, mutual sympathy and social intercourse among a group of individuals and families who make a social unit.” Hanifan (1916) came to this conclusion as a result of events that followed a community meeting in the rural school of Hundred in West Virgina, marking the beginning of community projects such as agricultural fair, a school libriary and improved roads within the district. Hanifan (1916: 131) acknowledged the importance of social capital to community development when he maintained that:

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When the people of a given community have become acquianted with one another and have formed a habit of coming together upon occasions for entertainment, social intercourse and personal enjoyment, that is, when sufficient social capital has been accummulated, then by skillful leadership this social capital may easily be directed towards the general improvement of the community well-being.

Hanifan’s observation implies that people must first get together in order to build social capital. Murray (2000: 101) added that “a sense of hope... opportunities for engagement ... and opportunities to nurture community services like-skills” are fundamental to making development possible. Scholars such as Bourdieu, Coleman and Putnam built on the work of Hanifan. Bourdieu developed the concept of social capital for over two decades. In the process, he at times referred directly to various forms of capital while at other times used social capital as a general metaphor for power or social advantage. Bourdieu (1997: 51) eventually came to a definition of social capital as an “... aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition which provides each of its members with the backing of collectively-owned capital.” Coleman (1988ab) and Putnam (1995, 2000) building on the work of Bourdieu have brought the concept of social capital to the fore, exploring the relation and application of social capital to the field of development studies, particularly community development. Moreover, other fields, like sociology, have been applying their inherent themes to community and informal social structures (Wilson, 1975). Following close in time to Bourdieu’s study of social capital in France, James Coleman (1988ab; 1990) has been credited with the substantial contribution to the development of the concept of social capital. Coleman (1990: 315) defines social capital by its function noting that “Although it is a resource that has value in use, it cannot be easily exchanged. As an attribute of social structure in which a person is embedded, social capital is not a private property of any of the persons who benefited from it.” Like Bourdieu, Coleman juxtaposes social structure with the actions of individuals in his definition of social capital. Trust is a central component to Coleman’s (1990: 105) concept of social capital and he maintains that “... persons who lack alternative potential friends in whom to place trust should be far more trusting and require far less time to develop trust than

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persons who have many alternative potentials friends” and that a couple …can confide in other … without fears of other’s misuse of the trust” (Coleman, 1990: 307). Newton (1997: 576) also emphasized the importance of trust to social capital when he noted that social capital is what makes people co-operate and understand each other and that three attributes, namely trust, friendship and reciprocity are central to social capital. Fukuyama (1995: 26) defined trust as:

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…expectation that arises within a community of regular honest and cooperative behaviour, based on commonly shared norms, on the part of other members of the community. These norms can be about deep value questions like the nature of God or justice, but they also encompass secular norms like professional standards and codes of behaviour.

Newton (1997) differentiates three types of trust - ‘thick’, ‘thin’ and ‘abstract’. Each form of trust is associated with different notions of democracy and leads to a different understanding of social capital. Thick trust occurs in small face-to-face communities and is generated by intensive daily contact between people. In comparison, modern society builds upon thin trust. Thin trust produces weak ties that “constitute a powerful and enduring basis for social integration in a modern, large-scale society” (Newton, 1997: 579). According to Newton (1997) in modern society, abstract trust may be growing in importance given the size, complexity, impersonal nature, fragmentation and speed of change that makes it difficult to depend on more personal forms of trust. Abstract trust is the foundation of imaginary, reflexive communities, and makes dealing with the “complexity, uncertainty and risk” of modern society more manageable (Newton 1997: 580). Arguably, social movement organizations and mass media and education (teaching the art of cooperation and an understanding of abstract ideas such as citizenship, trust, fairness and equality) may be important for generating abstract trust (Newton, 1997). However, the role that media play in the formation of trust is debatable. In Fukuyama’s (1995: 25) view “when the information age’s most enthusiastic apostles celebrate the breakdown of hierarchy and authority, they neglect one critical factor: trust, and the shared ethical norms that underlie it. Communities depend on mutual trust and will not arise spontaneously without it.” Bourdieu indicated that norms are equally important for social capital formation and this was central to Coleman’s concept of social capital. Coleman (1990) maintains that social norms specify actions that are regarded by a society to be correct and incorrect, and that they are purposively generated, in that those persons who initiate or help maintain a norm see themselves as benefiting from its being observed or harmed by its being violated. According to Coleman (1990: 242) norms create a status group, allowing entry to the group to those who act in conformity to the norms and that norms can both produce actions that bring positve and negative externalities to a few or all community members. An example of norms that could benefit all community members is the norm of reprocity or mutual assistance. Furthering the work of Coleman (1990), Putnam (1995:76) popularized the concept of social capital as a “social organization such as networks, norms and social trust that facilitate coordination and cooperation for mutual benefit.” For Coleman, trust, norms of reciprocity or mutual assistance and friendship are imperative to social capital formation, and that social capital built through people getting together could promote rural development.

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However, the impact of induced social organizations, particularly, development committees - formed purportedly to facilitate development of tangible communty assets within rural communities – on social capital and consequent repercussions for the well-being of both women and men of rural households in developing countries is understudied. Using Volta Rural Water Supply Project (VRWSP) in Ghana as a case, the aim of this study therefore was to determine whether and how committees formed in rural communities to plan, implement and manage Rural Water Supply Projects (RWSP) affect social capital formation within their communities, and to assess the subsequent impacts of the changes to social capital on the well-being of households.

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WATER COMMITTEES AND THE VOLTA RURAL WATER SUPPLY PROJECT The RWSP have been conceived by the international community as one effective and efficient means of delivering clean water to rural people in developing countries. During the Water Decade (1981-1990) rural communities were encouraged to take an active role in the planning, implementation and management of their RWSP (WHO, 1986). The Water Decade put emphasis on community involvement in the water projects with the reasoning that by involving people in decision making, they will be more committed to their implementation (UNESCO, 2000; Abu-Zeid, 1998). It was clear from the Water Decade that since rural communities are knowledgeable in ways to protect and manage their traditional resources, involving them in decision-making process would enable them to incorporate this knowledge into their water projects, so that access to water becomes sustainable over the long-term. Even though more rural people after the Decade had access to clean water, about a billion people residing mainly in rural areas still lacked access to clean water. Young et al. (1994) identified several reasons why the Water Decade did not achieve its goal. Chief among the problems which prevented universal access to clean water was a lack of community involvement in project planning and implementation. Although the Decade identified the need for community participation, this frequently occurred late in the management process (UNDP, 2003). That is, communities were often given projects to manage only after their construction so many communities failed to assume the desired ‘ownership’ of projects, which resulted in poor operation and management of the water systems. In addition, the utilization of western technologies in water projects, which were often unfamiliar to local artisans, hampered the success of the Water Decade (Aduko, 1994). As challenges in defining the role of local people in communities were at the core of most problems during the Decade, a re-orientation, which included women’s role in decision making through all phases of the RWSP, was articulated at the 1992 United Nation’s Earth Summit (Sitarz, 1993). Also, application of the concept of Demand Responsive Approach (DRA) to RWSP was introduced at the Summit (Bajrachary and Deverill, 2001; Gross et al. 2001; Deverill et al. 2001; Rall, 1999; World Bank, 1997). The overriding principle of water as an economic good is fundamental to the DRA, thus water supply must be driven by demand from users. The users therefore become the initiators, implementers, managers and owners of water projects. Also in the DRA approach is the ‘beneficiaries’ of the water projects ought to contribute to the investment costs of their projects and as well pay for their

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daily uses of clean water, on the assumption that people take better care of resources and facilities which they pay for. Communities were to form water committees that include both men and women and the committees were charged with the responsibility of planning, implementing and managing their water projects in collaboration with development agencies or partners of the RWSPs. The Volta Rural Water Supply Project (VRWSP) in Ghana which started in 1992 is among RWSPs in which water committees have been allowed to take on significant roles in planning, implementing and managing the projects. The Danish International Development Agency (DANIDA) and Government of Ghana (GOG) financed the majority (95%) of the investment cost of the VRWSP (DANIDA, 1993; Gyau-Baoke and Ampomah, 2003). ‘Benefiting’ communities were required to contribute the remaining 5% of the cost in cash. The water committees were the communication piece between the communities and external stakeholders (e.g., GOG and DANIDA) and normal operation and maintenance of point sources of water systems were also their responsibility (Gyau-Baoke and Ampomah, 2003; Andani, 1996).

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DATA COLLECTION Multiple sources of evidence from case studies were used to address the study’s objectives. Multiple data sources or triangulation of data sources are likely to make conclusions from these case studies much more convincing, valid, accurate and enhance overall quality. Secondary data from the Ho Municipal Assembly (HMA) - the local government authority responsible for development initiatives including water projects assisted in selecting communities with VRWSPs. Three communities housing VRWSP, namely, Dededo, Taviefe Aviefe and Avenui Awudome, in the Ho Municipality of the Volta Region, Ghana were selected for the study. In order to confirm the existence of VRWSP in the three selected communities, interviews with opinion leaders were carried out. To assist with selecting sample households for the study, households in all three communities were counted since information on the number of households in these communities was unavailable. A household in the study area comprised a group of people who shared meals from one cooking-pot, usually consisting of a wife and husband, and their children and extended family members. However, for the purposes of this study, only adult men and women of 18 years and above, including those in polygamous households, were involved. The count of households showed 69, 59 and 50 households in Dededo, Taviefe Aviefe, and Avenui Awudome, respectively. Almost all the households had married couples. Seven out of the 69 households in Dededo consisted of either teachers of local schools who spent most weekends in their home communities outside Dededo or city dwellers visiting relatives and were likely to know little of local happenings, thus non-permanent, were excluded. All the 62 households comprising 60 married and two single individuals – a male and a female participated in the study. Polygamy is a common practice among the households in the area, and16 of the 60 households were men with two wives. Thus, 61 men and 77 women from Dededo were involved in the study (Table 1).

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Frank S. Arku, Cynthia Arku and Glen C. Filson Table 1. Number of Men and Women surveyed

Dededo Taviefe Avenui Total

Households 62 50 40 152

Men 61 50 40 151

Women 77 63 51 191

Total 138 113 91 342

Of 59 households in Taviefe Aviefe, two of them were non-permanent and were therefore excluded. Out of the remaining 57 households that were qualified to participate, 50 (87 per cent) of them were selected randomly, and all the 50 selected households had married couples. Thirteen of the 50 selected households practiced polygamy, thus, 50 men and 63 women from Taviefe Aviefe participated in the study. A sampling process similar to what was applied to Dededo and Taviefe Aviefe was applied to Avenui Awudome for consistency. There were 50 households in Awudome Avenui. Seven of them were excluded because they comprised non-permanent residents. Out of the remaining 43 households, 40 (93 per cent) were randomly selected as study participants. Since there were 11 polygamous relationships of men with two wives, the number of participants totaled 40 men and 51 women from Avenui (Table 1). For all three communities, a sample of 342 individuals; 151 men and 191 women were involved in the study, and a survey was administered to all of them. Key informants such as water committee members were interviewed in the study process. Data were also collected through participant and direct observations. The research team, consisting of three males and females lived in the selected communities for a week through the data collection period. They participated in activities including church, farming and house chores of host households, and communal labor and funerals in order to gain experience as ‘insiders’.

FINDINGS

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Water Committees The water committee in each of the community comprised five members: a chair, a secretary, a treasurer and two other members. The committee members are appointed by the community members and they did not have any fixed term office. However, when a member misbehaved, for example by spending cash realized from the sale of the clean water for personal gain, the community members could ask the person in question to resign. A member can also voluntarily resign. The committee members had no power to ask a member to resign for any wrong doing without approval of the community members. The committee members were not to receive honoraria, but observation and interaction with some the members showed that they sometimes collected clean water without paying cash. There were no bylaws guiding the operations of the committees. The chairs and the secretaries of the three committees – Avenui, Dededo and Taviefe were males while the treasuries were females. Two of the remaining five committee members

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in Avenui were males, while one male and one female were the remaining committee members in Dededo and Taviefe. Thus, the water committee in Avenui was comprised of a female and four males, while the committees in both Dededo and Taviefe were comprised of three males and two females. The committee members met at least once in month to render accounts for cash realized from the sale of clean water and the cash spent in repairing the water systems. They maintained that they normally made profits which were deposited in the committees’ bank accounts. Whenever cash needed for repair work is more than sales for a particular month, they had to use money deposited in the bank. They met the community members at least once a month to update them on progress and issues. The committees could not recollect cash they contributed towards the 5% of the investment costs because of lack of financial records during the implementation phases of the project. They, however, maintained that there were mandatory contributions of cash from each of the community members and the wealthy members contributed voluntarily in addition to the mandatory contributions towards investment costs. In addition, they voluntarily contributed farm products for sale, locally referred to as nunene, towards the investment costs. Guests, especially wealthy ones from the neighboring communities and the cities were invited to participate in the nunene. Nunene is a popular way of raising cash for development projects in the Volta Region and prices are not tagged on the farm products, but they are auctioned.

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The Presence of Social Capital All the 342 respondents agreed that social capital in the form of friendship, mutual assistance and trust has long existed in their communities before the implementation of the VRWSP. The traditional relationships such as kinships are a strong part of the communities of the Volta Region, and Ghana at large. People from the same clan are expected to be supportive of each other and the influence of inter-marriages has brought many clans closer. Community activities such as, child naming ceremonies, funerals, chief installments, meetings of trade/profession organizations and community meetings all bring people together. The market place is also a venue for initiating and nurturing friendship. Thus, opportunities for developing friendship, mutual assistance and trust, in other words social capital, already existed in Dededo, Taviefe and Avenui prior to the VRWSP. In order to get a sense of any changes to social capital from additional opportunities for community gathering and dialogue through water committees, respondents were asked to indicate what they feel the impact of water committees have been on their social capital in the form of friendship, mutual assistance and trust. Almost all (99 per cent) - 339 of respondents indicated that the water project, along with the water committees have strengthened friendship, mutual assistance and trust within their communities (Table 2). Reporting the reasons, respondents mentioned that their water committees in consultation with community members set a fee to be paid for collecting water. The water committees met at least once in a month with the community members, providing updates on money obtained from water fees. Also, expenses on operation and repairs of broken water systems are accounted for by the committees during these meetings. At the community meetings, a decision is reached on how any excess revenue from the sale of water should be used.

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Frank S. Arku, Cynthia Arku and Glen C. Filson Table 2. Social Capital Strengthened by the Presence of the Water Committees

Female count % gender Male count % gender Total count % gender

Friendship 18 9.5 10 6.7 28 8.3

MA 23 12.2 14 9.3 37 10.9

Trust 5 2.6 9 6.0 14 4.1

FA 105 55.5 87 58.0 192 56.6

FT 7 3.7 10 6.7 17 5.0

MAT 12 6.3 8 5.3 20 5.9

FMAT 19 10.1 12 8.0 31 9.1

Total 189 100 150 100 339 100

MA = Mutual Assistance FA= Friendship and Mutual Assistance FT= Friendship and Trust MAT= Mutual Assistance and Trust FMAT= Friendship, Mutual Assistance and Trust

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Further interaction with the community members and observations showed that the excess revenue is often put towards development projects. They reported that the development projects undertaken with the water revenue included repair of damaged schools, expansion of water systems to improve access to water for residents living far from water point sources and new projects that addressed their priority needs. However, a small portion of the respondents (1 per cent) thought that the presence of water committees have not strengthened their social capital. The 339 respondents were asked the extent to which the presence of the water committees has strengthened the various forms of capital and their combinations, namely: Friendship, Mutual Assistance, Trust, Friendship and Mutual Assistance, Friendship and Trust, Mutual Assistance and Trust, and Friendship, Mutual Assistance and Trust. Although friendship, mutual assistance and trust were said to have improved due to the presence of water committees, Table 2 shows that the form of social capital most strengthened by the presence of the water committees is Friendship and Mutual Assistance, scoring 55.5 per cent for females and 58 per cent for males. On the contrary, trust was least scored, and more men than women thought that trust has been strengthened by the presence of the water committee. An informant was asked why she thought trust was least common among the community members, and this is what she said: When you tell people a secret and ask them not to tell others, everybody within the community gets to hear it the next day. It is better to keep quiet over one’s secret. The only person that I trust is my husband because when he reveals my secrets in public, he has revealed his own secret because we are one body.

Another woman added: I had a friend, whom I often discussed my marital problems with. I told her to advise my husband to stop taking too much alcohol. My brother! This friend I am talking about is now a second wife to my husband. She took advantage of our closeness. I have learned my lessons. The pastor of our local church is currently the mediator between my husband and me. I can say that my marriage is better now with the help of my pastor. I am better of trusting my pastor than a fellow woman.

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When a man who indicated that the presence of water committees has improved trust within his community was asked why, this is what he had to say: I trust all my three male friends, we are masons and we repair the boreholes when broken. Whenever, I had no money they give me. Last week, for example, I had no money to give to my wife to prepare meals, and none of them also had any money. However, one of them borrowed money from his uncle, who is a member of the water committee, for me. We will be working on one of the bore holes next week. Do you think that he would have gone to borrow me money from his uncle if he does not trust that I will pay back?

Respondents were asked to identify in what ways the improvement in friendship, mutual assistance and trust have contributed in enhancing their social well-being. Three hundred and thirty-eight out of the 339 respondents reported that areas in which these benefited them included: payment of children’s school fees, support for bereaved families and facilitation of development projects (Table 3). According to them they were able to help to pay school costs for children whose parents did not have cash at the time that payment was required because of friendship. The benefit of social capital to children’s school costs scored the highest for both female and male respondents (Table 3). Funerals were largely not the sole responsibility of bereaved families as there was increased mutual assistance. Participant observation showed that the community members usually contributed cash to support bereaved families in funerals, and volunteers could share the entire cost of a funeral in cases where the bereaved family could afford it. Community members also provided firewood which is used to cook food for attendees of the funeral. A man for example maintained:

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Last year one of my wives died and unfortunately her death coincided with the planting season, so I had no crop to sell to purchase a coffin for her burial and also buy food to prepare meals for the guests. Hmmm, my neighbor, organized members of this community and everything needed for the funeral was provided. They helped me because I helped them with the little cash I had and assisted with anything I could do when their relatives died.

Additionally, respondents reported that they are able to organize communal labor more frequently because they have appreciated the benefits of collaborating efforts to reduce the cost of projects through advice from water committee members. Communal labor events in which men were repairing broken classroom blocks during the study period attested to this. Table 3. Importance of Social Capital

Female count % gender Male count % gender Total count % gender

Pay school cost 76 40.2% 60 40.3% 136 40.2%

Help at funerals 68 36.0% 38 25.5% 106 31.4%

Speed projects 45 23.8% 51 34.5% 96 28.4%

Total 189 100% 149 100% 338 100%

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Respondents also said they were able to assist each other on their farms during land clearing, planting and harvesting periods when more hands are needed, and could rely on the labor of friends to repair their broken houses. To verify the importance of social capital in promoting social well-being among the respondents, a chi-square was used to test the statistical significance of the results in Table 3, and it was found that it was statistically significant at the p < 0.05 level.

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DISCUSSION OF FINDINGS Social organizations - both induced and self-initiated - which work towards community projects can improve social interactions serving as an impetus for development projects that enhance the social well-being of rural people. Hanifan (1916) and Putnam (1995) writing on social capital, maintained that social organizations and networks facilitate coordination and cooperation for mutual benefit. This assertion was demonstrated by evidence from this study. Water committees responsible for overseeing water projects on behalf of their communities, often interacted with community members on the issues relating to water fees, proceeds from selling of clean water, and investment of excess revenue. Through both water committee and community meetings, members were able to reach consensus on costs related to the operation and maintenance of water systems. They were also able to make collective decisions to expand water systems and repair school classrooms for children. The influence of leadership of water committees, community interactions concerning common goods, and friendship, trust and the spirit of mutual assistance developed in the interaction process encouraged more frequent and generous participation from residents in communal work to support development projects. Thus, the value of development interventions that provide opportunities for social interaction cannot be over-emphasized; the social capital that is built through social organizations, especially those that eventually become fairly self-supportive, relying on a constant flow of revenue from development projects, facilitates rural development. The success of development projects in promoting the social well-being of rural people can partly be measured by the extent to which the projects create and maintain social interactions and also allow communities to manage projects that provide sustained collective revenue from projects. When friendship and mutual assistance in rural communities is enhanced through social organizations, poor families and their children can largely benefit from it. Evidence from the study shows that community members contributed to pay the school costs for children whose parents could not afford them, supported families of bereaved members to carry out funerals, and sometimes volunteered to share the costs of funerals in instances where the bereaved were too poor to afford to pay. This suggests that an improvement in social interaction and interdependencies that occur through friendship and mutual assistance among people of rural communities could provide a safety net for the poor and support the education of their children. Although development projects that promote the creation of community groups, for example, water committees, could considerably improve social capital in the form of friendship, mutual assistance and trust, trust among community members appears as not a precondition for community development. Evidence from this study reveals that while only a

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small proportion of men (6.0%) and women (2.6%) considered access to water to have strengthened trust among community members, a substantial proportion of men (58.0%) and women (55.5%) indicated that friendship and mutual assistance were the most improved forms of social capital. And yet community members helped each other in difficult times, made collective decisions on how to improve their social well-being and mobilized their efforts to develop projects. Thus, trust may not accompany friendship and mutual assistance, but friendship and mutual assistance seem to go hand in hand. Besides the evidence that trust is the least built form of social capital among community members when they have more opportunities to interact, evidence from this study of the variations between men’s and women’s views on how water committees promoted trust among community members suggests that men are more likely to trust other men but this is less so for women. Reasons for this situation could stem from the general nature of men’s and women’s roles. Farming within these communities is often labor-intensive and households may depend heavily on mutual assistance, especially during land preparation, planting and harvesting periods. While women play a major role in planting, it is a man’s responsibility to organize other men - within or outside their families - to assist with land preparation and harvesting. Also, mending of broken homes is a mutual task mostly reserved for men. Men depending on social capital, in all forms to perform these roles, rationalize their rather quick trust for fellow men, perhaps out of necessity. On the other hand, women’s reproductive work is usually home-based, not requiring assistance from other women outside their households since most of their work - cooking and washing - may be regarded personal or confidential, except when a woman has a new child at which time other women could help with her workload while she regains her health. It appears that people trust each other not because of time spent together, but rather by virtue of one’s ability to confide in and protect the interest of each other. Evidence from this study shows that religious leaders and husbands seem to be the most trusted individuals by women. Some of the women indicated that they trusted their pastors, usually males because they could help to resolve their marital problems. Women also trusted their husbands because they could keep their secrets as it is shameful on both spouses if they told unpleasant secrets of their spouses to others. Trust among couples in the study communities supports Coleman’s (1990: 307) statement that a couple … “can confide in other … without fears of other’s misuse of the trust”. Also, women trusting their religious leaders, whom by virtue of their authority from a higher being are revered by community members, suggest that channeling the pursuit of strategic gender objectives such as women’s empowerment through religious leaders has the potential for effective outcomes within rural communities.

CONCLUSION Social capital can be fundamental to sustaining the social well-being of rural people and to rural development. Easy access to clean water through VRWSP enabled the creation of community water committees to oversee water projects and involvement of the wider community in planning, implementing and managing these projects. Although social capital has long existed in communities of this study, the findings show that the increased interaction among community members during water committee and community meetings related to

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proceeds from water charges, operation and maintenance of water systems and point sources and uses of excess revenue from water fees strengthened their social capital - friendship, mutual assistance and trust. With the improvement in their social capital, community members were able to better support each other with contributions towards children’s school expenses and funerals. More frequent communal labor, and expansion of water projects to improve access to water for residents, and new projects such as repair of damaged schools were undertaken. These findings suggest that projects that promote the creation of community committees and interaction among community members with potential to generate sustained collective revenue could improve social capital and consequently facilitate social well-being of rural people. It also suggests that rural development could occur within a non-trustful environment, and strategic gender programming such as women’s empowerment could be more effective in rural communities if carried out by their male religious leaders.

ACKNOWLEDGMENT The authors are grateful to International Development Research Centre (IDRC) which provided the financial support for this research.

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REFERENCES Abu-Zeid, M. (1998). Water and sustainable development: the vision for world water, life and the environment. Water Policy, 1(1), 9-19. Aduko, G. (1994). Affordable water supply and sanitation: Ghana’s rural community water management. Presented in 20th WEDC conference held in Colombo, Sri Lanka. Andani, S.M. (1996). Reaching the unreached: Challenges for the 21st century community water supply in the Volta Region. Presented in 22nd WEDC conference held in New Delhi, India. Bajracharya, D. and Deverill, P. (2001). People and systems for water, sanitation and health: Developing a poverty focused, demand responsive approach. Presented in 27th WEDC conference held Lusaka, Zambia. Bourdieu, P. (1997). Forms of capital. In Halsey, A. H., Lauder, H., Brown, P. Wells, A. S. (Eds.) Education: Culture, economy, society (pp. 46-58). Oxford: Oxford University Press. Coleman, J. S. (1988a). The creation and destruction of social capital: Implications for the law. Journal of Laws, Ethics and Public Policy, 3, 375-404. Coleman, J. S. (1988b). Social capital in the creation of human capital. American Journal of Sociology, 94: S95-S120. Coleman, J. S. (1990). Foundations of social theory. Cambridge, Massachusetts: The Belknap Press of Harvard University Press. DANIDA (Danish International Development Agency). (1993). Rural drinking water supply and sanitation project in Volta Region: Inventory and assessment of hand dugs wells. Vol.1.WRRI.

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Deverill, P., Bibby, S. Wedgwood, A. and Smount, I. (2001). Designing water and sanitation projects to meet demand: Interim report. Loughborough University: Water, Engineering and Development Centre (WEDC) March 2001. Fukuyama, F. (1995). Trust: The social virtues and the creation of prosperity. Toronto: Penguin Books Gross, B., van Wijk, C. and Mukherjee. (2001). Linking sustainability with demand, gender and poverty. Washington D. C.: International Water and Sanitation Centre. Gyau-Boake, P. and Ampomah, B. Y. (2003). Water pricing and sector reforms information studies in Ghana. Water International. 28(1), 11-18. Hanifan, L. J. (1916). The rural school of community centre. Annals of the American Academy of Political and Social Science, 67, 130-138. Murray, M. (2000). Social capital formation and healthy communities: Insight from the Colorado communities initiative. Community Development Journal, 35(2), 99-107. Newton, K. (1997). Social capital and democracy. American Behavioural Scientist 40, 575586. Putnam, R. D. (1995). Bowling alone: America’s declining social capita. Journal of Democracy, 6 (1), 65-78. Putnam, R. D. (2000). Bowling alone: The collapse and revival of American community. New York: Simon and Shuster. Rall, M. (1999). The demand responsive approach to community water supply and sanitation as interpreted and applied by the Mvula Trust. Available at: www.mvula.co.za/ur/reports/strap/The_demand_responsive_approach.pdf, on June 15, 2007 Sitarz, D. (1993). Agenda 21: The earth summit strategy to save our planet. Colorado: Boulder. UNDP (United Nation Development Programme). (2003). Mainstream gender in water management: A practical journey to sustainable development. New York: UNDP. UNESCO (United Nations Education and Scientific Cooperation). (2000). Participatory process in water management: Proceedings of the Satellite Conference to the World Conference on Science (Budapest, Hungary 28-30 June 1999). Paris: UNESCO. Wilson, J. Q. (1975). Thinking about crime. New York: Basic Books. WHO (World Health Organization). (1986). Guidelines for planning community participation activities in water supply and sanitation. Geneva: WHO. World Bank. (1997). Main draft report of the regional workshop on demand responsive approaches to water supply. Held in Malawi (June 23-26 1997). Washington D. C.: World Bank. Young, G. J., Dooge, J. C. I. and Rodda, J. C. (1994). Global water resources issues. Cambridge: Cambridge University Press.

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In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 12

LAND REGULARISATION FRAMEWORK: A HIDDEN SOCIAL CAPITAL IN FORMALISING INFORMAL SETTLEMENTS IN CITIES OF SUB-SAHARAN AFRICA Magigi W1*, L. Shuaib2 and A. W. Drescher3 1Moshi University College of Cooperative and Business Studies (A Constituent College of Sokoine University of Agriculture), Moshi-Kilimanjaro –Tanzania 2Urban Harvest-International Potato Center (CIP), CIP Country Liaison Office Kampala-Uganda 3Albert-Ludwigs-Universität, Freiburg, Germany,

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ABSTRACT Spatial land use planning, cadastral surveys and land registration for informal settlements are prerequisite to enable local communities to secure land tenure, ensure sustainable use of land and improving livelihoods. These land regularization processes require mobilisation of financial, human and institutional resources to invoke social capital for planning, implementation and monitoring that would enhance secure tenure in the informal settlements. This contribution analyses the options for land regularisation and suggests a framework for urban land regularisation that could harness social capital in Southern African Cities using the example of Tanzania and Uganda. It discusses the driving forces, policy strategies, shortcomings, and practical needs of land regularization including consideration of the land tenure ‘continuum’ based on experiences in Dar Es Salaam and Kampala. The paper argues the process of land regularization requires building and mobilisation of local community’s assets, institutional linkages, proper and accurate information flows and communication towards formalising informal areas. Policy and legislature reconciliation, mechanisms for dispute resolution, mediation and the Authors for correspondence: [email protected]; [email protected]; [email protected]

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W. Magigi, L. Shuaib and A. W. Drescher recognition of informal rights are needed to ensure that the poor are protected to assume a formal and participatory role in urban development. Advocating for pro-poor land regularization processes needs not to negate middle and high income groups as well, otherwise the process might lead to further marginalisation of the poor. Informal networks between local leaders, retired civil servants, planning institutions and communities have a potential to invoke the untapped social capital and enhancing community’s willingness to participate in spatial land use planning and implementation to achieve acceptable outcomes. Besides, reluctance of planning institutions to address communities’ needs, local mechanisms of conflict resolution and arbitration are serious challenges. In this contribution, we argue that for effective and sustainable urban development which aims to make poverty an end in rapidly growing African cities, social capital and networking is important in formalising informal settlements. The government and other development partners may opt working together, in order to develop a legally binding instrument in the fight against poverty specifying the roles communities. This may help balancing voices of different actors, improving land use planning practice, resolve land conflicts, enhance ethnical and relation ties of people within and outside the geographical settings for improved urban livelihood in cities of Sub-Saharan Africa.

Keywords: Land Regularization, Land Tenure Continuum, Social Capital, Formalising and Informal Settlements.

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INTRODUCTION Informal settlement proliferation and need for upgrading have been discussed widely (Kombe, 1995; 2002; Amin, 1996 and Magigi et al, 2006). Initiatives of settlement upgrading have attempted to financially and socially empower communities at local level in order to improve security of land tenure. On one hand, planning processes, which among others include process for securing land tenure and offering official document for granting formal land ownership to residents appears to be cumbersome, bureaucratic and costly which discourages local communities to engage in the process (Magigi et al, 2006). On the other hand, necessary steps for a person to involve in land use planning processes to secure land tenure are not clear to the majority of residents and local leaders. Particularly, at the grassroots levels in informal settlements, where residents who want their lands to be secured, face a time and resource requiring procedure. Therefore the option of developing land without local authorities official endorsement and approval is apparent in Sub-Saharan African cities. The question is whether urban planning approaches really aims at enabling people secure land tenure in informal settlements. Land regularisation is one of the urban planning approaches partially implemented in Sub-Saharan Africa cities, including Dar es Salaam in Tanzania and Kampala in Uganda, towards formalising informal settlements. With uncontrolled urbanisation, the pace for settlement formalisation through community involvement is yet to be achieved intandem with growing need for desirable outcomes. Magigi et al. (2006), show that among the key factors constraining the pace of formalisation include increased length in land use plan preparation, approval, cadastral survey and subsequent offering of title deeds to enable residents to be granted right of occupancy. Others include poor information flows, mul-functioning of planning institutions and poor financial mobilisation. In addition, social capital has not been

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actored in the planning processes yet it is important in engaging local communities and other interested stakeholders in the process to achieve the goal of securing land tenure in informal settlements. The involvement of different stakeholders can play a great role in contributing to country efforts in poverty reduction and attaining the Millennium Development Goals. In supporting the above, the need for social capital mobilisation, creating links, partnership and networks in formalisation of informal settlement through land regularisation is a requisite. This is important to mobilise resources and putting local communities at the centre of planning processes. Likewise, it helps improving urban settlements, livelihoods of the people and enables monitoring of further development. Particularly, in urban areas where high housing density exists and in new areas for urban development. Therefore understanding social capital theory in this context becomes important to explore the case. The social capital theory has been discussed widely (Jacobs, 1961; Olson, 1965; Robert, 1994; Pretty et al, 2001). To explore the linkages of communities and authorities involved in the urban planning process, the social capital theory appears to be rational. This was important in understanding and explaining decisions and actions by different actors, policy interventions and understanding the civic engagement in participatory urban planning processes. The theory also provides a useful framework on understanding how various actors interact to effect the changes in the formal urban land use planning and management.

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URBANISATION CHALLENGES IN TANZANIA AND UGANDA: A NEED FOR LAND REGURALISATION FRAMEWORK FOR FORMALISING INFORMAL SETTLEMENTS The magnitude of informal settlements and population worldwide are expanding and therefore seem to be endangering urban land development. Cities in Sub-Saharan Africa are characterized by uncontrolled urbanisation and the poor enforcement of land development policies and legislations. There is an urgent need for cities in Sub-Saharan Africa region to adopt participatory planning frameworks to be able to coordinate and control land development (UN-Habitat 2006/7). Such a framework will assist coordinating different land use functions and may be used to meet the needs of expanding populations, add value to land and enhance security of tenure to majority of urban poor living in informal and unplanned settlements. Table 1 summarises the increasing informal settlements in the region. Tanzania inter alia, is noted to high population living in informal settlements compared to Uganda. These types of settlements endanger the future of urban life, food security, access to land resources and may increase social conflicts due to insecurity over land. This calls for a participatory spatial urban land reguralisation framework to ensure proper enforcement and conditions for implementation. According to a United Republic of Tanzania (URT) census report (2002:5), Tanzania’s population has been increasing tremendously since independence in 1961. The report shows that in 2002, the population was 34 million people and with a population growth rate of 2.8% per annum.

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Table 1. Informal settlements population projection, 1990-2020 in Sub-Saharan Africa region Country

Angola Congo Kenya Lesotho South Africa Uganda Tanzania Zimbambwe

Informal settlement population (Thousand) 1990

2001

2005

2010

2015

2020

2,193 1,050 3,985 168 8,207 1,806 5,601 116

3,918 1,852 7,605 337 8,376 3,241 11,031 157

4,839 2,276 9,620 434 8,439 4,010 14,113 179

6,300 2,945 12,905 596 8,517 5,231 19,205 202

8,201 3,810 17,311 817 8,597 6,825 26,133 232

10,677 4,930 23,223 1,121 8,677, 8,904 35,561 266

Informal settlement population projection target 11 (Thousand) Reduce % 1990 2001 2005 2010 2015 020 by half 1990-2020 2,193 3,918 4,743 6,077 7,814 10,075 5,412 1,050 1,852 2,231 2,840 3,629 4,650 2,499 3,985 7,605 9,432 12,460 16,522 21,972 11,771 168 337 426 576 781 1,062 568 8,207 8,376 8,254 8,147 8,039 7,930 4,398 1,804 3,241 3,931 5,047 6,503 8,403 4,513 5,601 11,031 13,840 18,551 24,962 33,685 18,024 116 157 172 194 219 247 135

Source: Magigi, W (2008) quoting UN-Habitat, State of the World Cities 2006/7.

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Land Regularisation Framework

In Uganda, the population living in urban areas has increased from 635,000 in 1969, to 938,000 in 1980, to 1.9 million in 1991 and 3.7 million in 2007 (UBOS, 2007). Urbanization has been slow in Uganda (Table 2) but despite this slow rate, it poses a challenging task of ensuring environmental sustainability especially in metropolitan areas. Due to changes in the criteria used in defining urban centers, it is difficult to compare regional and country-wide urbanization which obscures the increasing densities of settlements that previously were defined urban in 1991 in Uganda, and this is common in other African cities. This is also coupled with changes in the administrative boundaries of certain urban areas. This indicates that countries in the Sub-Saharan region are among the most rapidly urbanising countries in Africa. The urbanization in African cities, including Dar es Salaam and Kampala can be traced in history before, during and post colonial era. Although it is not properly documented, urbanization did occur in the pre-colonial period. In Uganda where the system of administration (i.e. Buganda) was based on the Kingship institution, the seat of the King always had sizeable population in orderly and planned settings that could make such settlements urban. Settlements were laid out systematically for different classes of the population. The 1900’s saw deliberate efforts to establish towns that were planned and through out the period up to 1970’s. In Tanzania, cities like Kilwa, Bagamoyo, Mafia and Dar es Salaam were established during colonial periods. The urban population of Tanzania is estimated at 30% and increasing at 11% per year with Dar es Salaam being by far the largest city in the country. Dar es Salaam was estimated to have more than 2.8 million inhabitants in 2006 compared with 2.5 million inhabitants in 2002 (URT, 2003; UNDP, 1998; 2006). Kampala, a major city has evolved from a township extending 170 acres gazetted in 1902, 3200 acres by 1929 and 195 sq km by 1968 (Van Nostrand, 1994) ). This expansion of the city was mainly through annexing adjacent townships to Kampala. As the city boundaries were extended the urban population in Kampala also kept on increasing and continuing at an average annual rate of 3.7%. Meanwhile for the rest of Uganda, urbanisation occurred mainly through establishment of administrative centers for exchange of produce and industrial activity. These urban centers have sluggishly grown over the last 30 years contributing to urbanization levels of Uganda from 6.6% in 1969 to 12.3% in 2002 (UBOS, 2007). Kampala city remains the primate city but is also a mixture of opportunities and challenges. The challenges include housing, services, infrastructure, employment and getting adequate serviced land for development. The latter being due to the complex land tenure system of freehold, leasehold and customary land tenure with overlapping land rights across the tenure systems. Table 2. Urbanization in Uganda, 1969-2002 Index

1969

1980

1991

2002

2007

Urban Population Urbanization Level % of Urban Population in Kampala

634,952 6.6 53.9

938,287 7.4 47.9

1,889,622 11.3 41

2,999,387 12.3 39.6

3.7m 13 38

Source: UBOS (2007).

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This presents challenges in the urban planning and management of African cities including Kampala and Dar es Salaam, which calls for community involvement in the urban planning processes.

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COMMUNITY INVOLVEMENT IN URBAN LAND DEVELOPMENT Local community involvement in managing urban land development in decentralised governance was born from new concepts of public sector and private sector management (Friedmann, 1987). Many of the latter were derived in the private sector particularly from the United States towards resolving urban problems and improving urban conditions. Rakodi et al (1993) add that the management of urban land development to meet city level and national objectives of economic growth and improved equity requires an integrated process of planning, investment construction, operation, maintenance and rehabilitation. They call for joint partnership in urban planning and management tools and principles. These tools and principles include that on the use of master planning, zoning and cadastral survey. Master plans have been a major urban management tool in land development of cities and towns in Sub-Saharan Africa cities. Dar es Salaam has a master plan developed in 1979 which until to date, 2008, has never been revised to capture the changes emerging in the city. The plan reported to be inflexible, insensitive to socio-economic changes, too comprehensive and often excludes stakeholders (Armstrong, 1989). Environmental Planning and Management (EPM), Strategic Planning, land regularisation schemes are participatory planning interventions aimed at involving the community in plan preparation and implementation so as to ensure sustained outcomes. They provide a need for a conceptual process to guide spatial development patterns taking into account rapid urbanisation trends and their impacts on land development and management through participatory policy and legislative measures. In Kampala, community involvement in planning has only recently begun to be mainstreamed in the urban planning process. The most recent plans for the city are the 1972 Master Plan and the 1994 Structure plan. The former was formulated with minimal involvement of the communities and is therefore technocratic, the latter involved communities especially with parish level detailed plans. One key issue of community input and involvement was the realization of the development control procedures that developers especially of low income and the poor found difficulties in, following the development control mechanism. Structure Plan proposal was a creation of decentralized one-stop-centers37 with local committees to scrutinize development plans for approval. Despite this important strategy for mainstreaming community involvement, none of these one-stop-centers have ever been established which may partly explain the continued informalisation of developments across the city. Urban development therefore is following an informalised pathway characterized by informal exchange of land, informal housing development, informal servicing and informal access to infrastructure. The supply of buildable land in Kampala occurs in different modes depending on the sub market and nature of the actors involved (Lwasa, 2006). Land supply is largely controlled by land owners and or speculators who release relatively small pieces of land on to the market 37

In Case of Kampala refers to areas proposed for establishment at Municipal office in Kampala where intending developers would get information and services related to submitted plans Norstrand (1994).

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either as shock absorber for economic and social perturbations or as a result of land market information for better returns. Open and agricultural land remains the most vulnerable to conversion although due to speculation in the intensified informal land market tracts of land still remain undeveloped due to the various modes of land supply at the community level. An estimated 71.4 % of developers in Kampala acquire land through purchase compared to 25.5 % who acquire through inheritance. The proportion of the purchased land is indicative of the release of buildable land by owners and or speculators but which does not occur at once and in a short period of time. At neighbourhood level through community involvement in many ways, owners and or speculators release bits by bits of land to either benefit from the market conditions or remain with some land for better future market conditions. But land owners have also devised other modes of releasing land for development. This is through formal or informal land subdivisions. This mode of supply involves owners who prefer to get higher values and have land titles for the land. Land is subdivided creating access to the plots before introduction to the market. This is a common practice in the high-income and middle-income sub markets. The demand for titled land in Kampala has dictated such mode of supply for buildable land. This mode also tends to follow the formal procedure of plan approval but it is common for the developers to determine what kind of land use to undertake depending on return value to investment which also signifies community involvement in urban development. Policy and legislative support can be important to strengthen planning processes in African cities.

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POLICY AND LEGISLATURE STRATEGIES FOR LAND REGULARIZATION IN TANZANIA AND UGANDA In Tanzania, the Land Act of 1999 No.4 provides the need for integrating community needs and priorities through land regularisation processes important to ensure security of land tenure. The purpose of a scheme of regularisation is to facilitate the recording adjudication, classification, registration of the occupation and use of land (Sec. 56 to 60). First, it facilitates the upgrading of unplanned residential areas through involvement of different actors. Secondly, facilitates the orderly development of rapidly growing areas existing and open up new areas. Thirdly, facilitates the planned development of relative vacant areas expected to develop into residential areas and other urban uses. Section 56-60 of the Land Act of 1999 in Tanzania provides procedure for involvement in land use planning through regularisation process. In summarised form, the Commission for land is responsible for its declaration and appoints authority responsible to engage in the scheme. The authority appointed will describe and analyse the existing situation with compensation schedule. Local communities will help to show the existing situations of their settlement. However, meeting and consultation will be made before engagement of the preparation of the regularisation scheme. The local authority will endorse the scheme, compensation made and subsequent approval of the scheme. This scheme like a land use plan will facilitate cadastral survey and land registration for improving urban land governance. The Land Act of 1999, inter-alia provides provision for the landholders to show their intention/interest in land use plan preparation. Also before the scheme coming into effect public meetings, hearings and views are considered but the Commissioners for Lands may

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refuse the considerations under compulsory acquisition as stated in the Act and in the Town and Country Planning Ordinance (CAP 378). The procedure from declaration, initiation to the implementation of the scheme seems to be too long that it can not provide sufficient room for people motivated in the process to act. This shows that even the project sustainability may be forfeited. More humanistic, the Land regularisation scheme provides room for negotiation and therefore considers people’s interest. Resource mobilisation of funds is suggested in this legal document, but no clear guidelines stated to affect this. As a general or detailed planning scheme, land regularisation schemes is the brainchild of the Town and Country Planning Ordinance (Cap 378) stated differently in Land Act of 1999 sect 56-60. Its participatory planning approach distinguishes it from the master plan approach as previously discussed. The Land Act of 1999 in Tanzania requires the landowners to be involved in formulation of regularization scheme in order to avoid discontent from the general public38. Under the public participation, initiation of the project comes from the government but with view of obtaining consent from the local residents who offer their views. Principally, this type of participation seems to belong to the government (Local and central) who formulates particular policy or project and delivers the contents down to the grassroots. Each participant is to give his/her opinion regarding that policy/project as the procedure shows. In this case the ability and degree of awareness of the local citizens to participate in policy formulation toward achieving urban land development at local level by implementing local plans is limited though the policy has good intentions. For example, the Ministry is the one which decides whether to declare a scheme of regularization and not the local community intention and needs to prepare scheme of regularization as per this act. Also section 60 (1) and (2) provides that the implementation be responsible to the commissioner, urban authority/village authority which shows the room for landholders’ involvement is not sufficiently provided. In Uganda, there are several policy and legal instruments guiding land management, planning and the development in the city. The legal instruments include the Constitution of Uganda 1995, 1998 land Act, Registration of Titles Act CAP 230 all of which are concerned with administration and management of land in Uganda; other legal instruments include the Town and Country Planning Act 1964, Local Government Act, the Public health Act which guide planning while the 1994 Kampala Structure Plan is the instrument for guiding development in the city. The most fundamental legal basis of land management and land issues is the 1995 Constitution of Uganda. According to the 1995 Constitution Article 237 clause (1), land in Uganda belongs to the citizens of Uganda and shall vest in them in accordance with the land tenure systems provided for in the Constitution. The Constitution also recognizes that Government or a local government may, subject to article 26 of the Constitution, acquire land in the public interest; and the conditions governing such acquisition shall be as prescribed by Parliament including the consultation of local residents and reaching a consensus as indicated in the Land Act 1998. The Government or a local government as determined by Parliament, by law, holds in trust for the people and protect natural lakes, rivers, wetlands, forest reserves, game reserves, national parks and any land to be reserved for ecological and touristic purposes for the common good of all citizens.

38

See Section 57 to 60 of the Land Act, 1999 in Tanzania.

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In clause 3 of Article 237, land in Uganda is owned in accordance with the customary, freehold, mailo39 and leasehold land tenure systems. The Constitution of Uganda recognized the transformation of land under customary tenure to freehold land ownership by registration, which clause was meant to improve land ownership through regularization. The relationship between bonafide and lawful occupants on land was also highlighted in the Constitution with a provision that gave Parliament powers to enact an appropriate law under clause (9) of article 237 that would offer the lawful or bonafide occupants of mailo land, freehold or leasehold land security of occupancy on the land through regulating the relationship between the lawful or bonafide occupants of land referred to in clause (8) of article 237 and the registered owners of that land and providing for the acquisition of registrable interest in the land by the occupant. The Constitution of Uganda does not only give powers on land to the people but was also intended to reverse the implications of the earlier laws as well as ensuring that land could be owned by not only bonafide occupants but also women. The article in the Constitution also forms the basis for the formulation and enactment of laws regarding land ownership, administration and management which framework culminated into the 1998 Land Act. The 1998 Land Act introduced the rules of ownership of land and the most marked was the introduction of land rights held by bonafide occupants on the basis of time period of occupancy on land. The 1998 Land Act which has just been reviewed and amended to include co-ownership of land by spouses elaborates on how land owners can claim their rights and defines the different types of land rights. On the other hand the Registrar of Titles Act CAP 230 spells out the procedures for land regularization. This legal instrument lays the procedure for formal land rights exchange and alienation. The steps for titling and or transfers include the following; • •

•

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•

• • • •

39

Applicant must have a piece of land held under customary tenure Applicant visits the District Land Board in his district and with assistance of the land officers, fills in the Land Form 2 (scan from RTA) and attaches a sketch map of the pieces of land to the form A land officer at the district cross checks on the land applied for using a general map (on which all land already applied for would be indicated) so that land is not applied for twice After cross checking and finding that the land in question has not been applied for, he indicates on the application that the land is available and free for leasing. He also demarcates the particular piece which has been applied for on the map The applicant pays a sum of one thousand shillings as provided for by the law as deposit fee Application is registered and given a reference number Application is sent to the District Land Board (DLB) Secretary who coordinates and arranges for the DLB to visit and inspect the land applied for (site) The DLB visits the site (inspection, transport and allowance should be provided by Government) though of late the applicant provides both

Refers a form of freehold land that started with the landmark 1900 Buganda agreement after which individuals were allocated land in fractions or multiples of square miles

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• • • • • •

•

• • • • • • • • •

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• • • • • • • • • • •

If the DLB finds that the land is free of disputes and really belongs to the applicant, they sign the application form and advise the Uganda Land Commission (ULC) to grant lease to the applicant The Secretary to the DLB writes a covering letter to ULC through the Land Officer The application is received and registered in Kampala by ULC The application is put on the agenda for discussion by the commission in its next convenient session ULC sits at least once every two months though this depends on availability of funds to consider pending applications and other matters Decisions of the commission come out in the form of minutes The approved application is sent to valuation section (Lands Department) in Kampala for determination of terms of assessment of premium and annual ground rent ULC writes a covering letter to the Land Officer of the district where the application originated giving the decision of the commission, specifying the minute number, the area approved, the number of years granted, user premium valued and the annual ground rent The Land Officer writes out lease offer to the applicant giving a detailed account of the conditions how the lease is to be held and the fees to be paid Applicant pays fees A permanent file is opened up The District land Officer requests the senior staff surveyor stationed in the district to survey the land The Senior Staff surveyor forwards the requests to survey to the Commissioner Survey and Mapping (Entebbe) who actually issues the instructions to survey Instructions to survey received at the district survey office Survey carried out by surveyors from the district survey office The survey results are checked and confirmed by the senior staff surveyor Deed plans of the surveyed land and its survey file is forwarded to Commissioner, Survey and Mapping (Entebbe) for cross-checking and plotting Signing of Deed plans by the Commissioner Singed Deed plans are forwarded to branch office Land Officer writes instructions to prepare lease agreements to Commissioner Land Registration through the Commissioner Land Administration Commissioner for Lands checks if payment of the required fees were met (Kampala) Registering of lease instructions in Land Office – Kampala Registering of lease instructions inland Registration Department – Kampala Lease instructions perused by Registrar of Titles – Kampala Typing and checking of lease documents Payment of stamp duty, which is 5% of premium and 2 ½ % of ground rent Payment of income tax – amount depends on income tax liability of the lessee. It is assessed by Income Tax Department Execution (final signing) of the lease document by the parties (ULC, the lessee and witness)

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Issuing of Leasehold Certificate of Title Certificate of Title should be dispatched to the branch office but the registered proprietor normally picks it up Typing of Memorandum of Registration – notification of the certificate issued to branch office and other departments Full Term: Inspection of the development carried out on the leased land is carried out by land Inspectors stationed at the branch office where the land is situated The signed inspection report by the inspector is sent to ULC through Commissioner for Lands (Kampala) The inspection report is signed by Chairman and Secretary (ULC) Full Term endorsed on the certificate of Title by the Chief Registrar of Titles after payment of 3,000/= Three thousand shillings as statutory fees Certificate of Title (Full Term) should be dispatched to branch office but normally proprietor picks it up

The preceding discussion indicates that earlier efforts between 1960 and 1975 in Uganda to resolve the land question that also tried to regularize land have led to confusion, uncertainty and declining investments on land. Several studies, some of which were commissioned by government, were done to try and come up with possible recommendations on the unresolved questions on land. The introduction of certificates of customary ownership and institutions such as the land Boards to oversee the land matters was meant to regularize land with community involvement. This was intended to improve security of individuals’ rights over land that they had occupied for a long time. Although the Act is still under implementation and review its implications to urban planning and development as well as the environment and social matters are well documented in (Mugambwa, 2002).

ATTEMPTS TO IMPROVE INFORMAL SETTLEMENTS IN KAMPALA AND DAR ES SALAAM

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Some specific lessons were learned from the 1970s and 1980s attempt to upgrade unplanned settlements in Tanzania. •

• •

In-situ upgrading was more successful than provision of serviced plot schemes because it did not require extensive relocation and allowed better targeting of lowincome communities. Direct and indirect benefits of upgrading programs were substantial, but were undermined over time by inadequate operation and maintenance. Poor maintenance was attributed to a number of interrelated factors including: o Lack of public sector financial resources for maintenance. o Undefined roles and responsibilities for operation and maintenance of infrastructure by key stakeholders. o Low property values and poor cost recovery from the beneficiaries through property tax.

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W. Magigi, L. Shuaib and A. W. Drescher Limited involvement of the beneficiaries in the design and implementation of the projects. o Lack of sense of ownership from the concerned communities and local urban authorities. A top-down planning approach, which denied active involvement of residents and local urban authorities attributed to lack of sense of community ownership and commitment by the urban councils where the project was introduced. Security of land tenure was not part of the programme o

•

•

In the case of Uganda: •

•

Down raiding by middle and high-income groups have led to one of the ‘best practice’ in Uganda and Africa, Namuwongo40 housing projects having largely transformed physically but not socially in regard to the targeted beneficiaries. Another lesson in Uganda is the need to plan for urban housing of all social groups other than specific one. The two projects in Uganda of Namuwongo and Masese women’s project provided a lesson that urban housing needs to be planned for poor as well as middle and high income people otherwise over emphasis on the poor leads to middle and high-income people taking opportunities for the poor that would come out of housing regularization initiatives

COMMUNITY INITIATED LAND REGULARISATION PROCESSES IN DAR ES SALAAM AND KAMPALA FOR SECURING TENURE Ubungo Darajani, a subward in Dar es Salaam, shows the community-led land reguralisation processes towards securing land tenure. However, the link, interaction and resource mobilisation created by the local communities and other preparatory authorities in land regularisation processes signifies the role of the social capital in urban land development processes.

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Initiation Tanzania has been coordinating and controlling urban land development using Master plan approach. Under this approach, 1979 Dar es Salaam Master Plan, Ubungo Darajani was zoned as hazard land, with a provision that in future could be used as industrial zone. This was done despite extensive mushrooming of private housing development that already existed since 1960’s. It should be noted that the Master Plan was prepared without taking into account landholders views, preference and inputs. The 1979 plan proposal for Ubungo Darajani was not implemented at the time. The interviews with Subward leaders revealed that 40

Refers to low cost housing project in a previously informal settlement of Kampala which transformed 500 housing units into an organised and planned environment. Managed by Kampala City Council, Ministry of Housing and Urban Development, UN-Habitat and financed by UNDP, Shelter-Afrique between 1988 and 1995.

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the majority of landholders were not even aware of the existence of such a plan. Many continued to subdivide their land for sale without regards to the 1979 plan proposal. In 1990, the government declared the need to acquire this neighborhood for the function mentioned. However, it should be noted that the preparation of the plan adopted a top down approach and therefore landholder’s exclusiveness was experienced. Non-inclusiveness may be attributed to the deficiencies in the government circulars of dissemination of approved plans at local level41. Ubungo Darajani community embarked on land regularization process in order to improve infrastructure facilities and services, preventing haphazard housing development and encroachment on roads and improving their security of land tenure. However, improving security of tenure (land legalization) was the first priority according to the landholders’ decision made in 1997. It involved establishing contacts with local authority, consultations with various institutions42 for support. In late 1998, the Ubungo Darajani Community Organization (UDASEDA) approached the UCLAS with a view to seek their support in preparing a regularization plan. Before contacting UCLAS, the community organization had consulted local authority (i.e. Kinondoni municipality) seeking its support in preparing a land use plan, a cadastral survey and land registration. The local authority directed the landholders to consult the Ministry responsible for Lands and Human Settlements Development (MLHSD). From the interviews with local authority officials, it was revealed that the local authority was hesitant to give the community a go ahead because there were unclear issues regarding regularization policy and approach. This includes declaration protocols, appropriate planning standards, budget, and compensation matters. With this respect, the local authority referred the community to the MLHSD in order to comply with Land Act of 1999 section 58(1) requirements, which states;

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“…the Minister may, of his own motion or at the request of urban authority or a village council within an urban or peri-urban area, either direct the Commissioner to consider, or appoint an inquiry under section 18 to consider the question of whether any area to which section 60 to 64 declared to be an area of regularization”.

When the MLHSD received the proposal, it asked the community to follow-up a reply after some weeks. After a month the Ministry endorsed the community request, but verbally advising them to contact UCLAS. However, promised its support to meet the community’s endeavor. In a way, the MLHSD endorsed the community request informally i.e. verbally and not in writing because it was hesitant to commit itself (in writing) as it was not sure whether the community would be able to mobilize resource for carrying out the regularization plan –

41

The government circular No 5 of 1999 issued instruction directing that plans prepared should comply with intentions of the Master Plan or the land use scheme in terms of density, broad zoning, major roads, approved planning standards etc. The instruction required that a copy of the approved layout plan be distributed to Regional Land Development Officer, District/ Municipal Land Development Officer, Regional Surveyor, District Development Director (DDD), Valuers, Utility Agencies (Water, TANESCO etc) and Regional/District Engineers. Local leaders including Ten cell, Subward and Ward leaders were not mentioned in this order. 42 Eight consultations with University College of Lands and Architectural Studies (UCLAS) today namely Ardhi University and four with the Ministry responsible for Land and Settlement Development were made before embarking in the processes in 1997-2004.

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i.e. plan preparation and its subsequent implementation including paying compensation in accordance with the Land Act of 1999. During this initiation stage, a total of 14 general meetings were recorded in which mechanism of participatory decision making were built within the settlement through the use of general meeting and use of ten cell leaders. During this period University College of Land and Architectural Studies (UCLAS) was engaged as consultants to elaborate on the regularization process and provide legal guidance. Respondents argued in initiating meetings that, the process of regularization was too bureaucratic, therefore they did to seek UCLAS. Likely, it appears that retired civil servant in initiation stage catalyzed the process. Some of them had started surveying their plots but failed due to prohibitive costs. Some residents in the settlements had swindled by unregistered surveyors, these factors created solidarity among the settlement because they had faced common problem. Presence of a community championship who was selected during the first community general meeting helped in the success of the case. He was a retired civil servant, a landholder and a Subward leader. This built trust and he was able to make follow-ups and calls for meetings by inviting politicians during land use planning processes. The land regularization initiation in this settlement took duration of two years.

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Decision Making Processes Ubungo Darajani adopted a bottom up approach to engage in the process after receiving advice to approach UCLAS from the Ministry responsible for Lands as previously discussed. Consultation with the Ministry responsible for land was made and verbal explanations for going ahead with land regularisation process reached. The verbal expression given by the Director of Human settlements Development at the Ministry responsible for Land and Human Settlements Development helped the community make the final decision to engage in land use planning process. The landholders and tenants in Ubungo Darajani were active participants in the planning processes. They had interaction as well as two-way communication with other planning institutions before a decision was made. This was an important step and opportunity for integrating their land development problems in their plans preparation. Respondents in Ubungo Darajani argued that the process of regularization was too bureaucratic, therefore they sought UCLAS for help. Based on the Land Act of 1999, Sect. 56-62, some issues were not considered when decision making was taking place for allowing land regularization in Ubungo Darajani. These include the compensation schedule of landholders who had been owning land in the area. The Director of human Settlement in the Ministry responsible for Lands was hesitant to allow them by providing them with a written explanation understanding that compensation was important to be made before a decision is reached in land use planning processes. More important in this case, no compensation was given to any landholder, instead volunteering to offer their land for public use was common. This helped building solidarity among actors as all had the same felt problem. The volunteering and attending meetings during decision making built solidarity of the group and subsequently enabled them to implement their spatial land use plan. This habit provides lessons to urban planners and managers on how to mobilise and tape this social capital at local level potential for urban land use planning implementation.

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Social interactions and meetings appear to be important to achieve community involvement in land use planning and subsequent implementation of the plans.

Preparation

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The community thus contacted UCLAS and a contract to engage was drawn. Among other things, the contract required the consultant to produce a regularisation plan (detailed land use-layout plan) as one of the outcomes43 (Figure 1). Other phases, which were considered but not included in the agreement, were cadastral survey and land registration. In land use planning, UCLAS undertook the following activities: Field reconnaissance, conducted a general assembly (meeting) where the regularisation process was explained and clarified to the community members. Also, preparation of base maps, forms for negotiation and property registration were prepared together with identification of areas for community facilities such as major roads and other public services. Other activities include plot demarcation through negotiations and layout planning. Submission of the layout plan to the local authority scrutinisation, endorsement and presentation to the Ministry for Lands approval was also done by UCLAS. UCLAS was also involved in making follow-ups in collaboration with the community organization leaders in which, a total of 64 trips were made.

Source. Adopted from TPD No.DSM/KND/27/102002 for Ubungo Darajani neighborhood. Figure 1. Extraction of Ubungo Darajani land use plan. 43

The cost of its preparation amounted to TShs. 1,260,000/= equivalent to 1,167 USD in the respective year.

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The preparation and approval of the detailed layout plan in the second stage took duration of 3.5 years. One wonders why land use planning took years despite the presence of institutions and experts available within the same area of jurisdiction. This is common practice in most of African countries with the fact that urban planning is more centralised.

FINANCIAL SOCIAL CAPITAL MOBILIZATION DURING LAND USE PLANNING PREPARATION Landholders and tenants living within and outside Ubungo Darajani settlement were involved and contributed both in cash44 and in kind. In preparation for the detailed layout plan only 162 (60%) landholders contributed out of 269. 40% of landholders did not contribute because of various reasons including misconception and distrust of local leadership and poverty. Among the 60% landholders who contributed in cash, 27% contributed in installment in which 28 were women and 74 were men. It was also noted that 15% of landholders paid the full amount, among them 10 were women and 50 were men. Not only that but also 58 % was contributed by high-income people to compensate those who could not raise sufficient funds. This implies that high-income people made the project fruitful (Table 3). Table 3. Landholders contribution in cash during land use planning phase Land holders

Instalment payment (TShs.2000/=)

Women Men Total No.

28 74 102

Total amount Percentage

204,000/=

Full Payment (TShs.6000/= ) 10 50 60 including high income 360,000/=

15%

27%

High-income Volunteer-20 @ (TShs.36, 000/=)

Contri bution (%)

20

23 77

Landholders Not contributed 42 65 107

80 189 269

40%

100%

Total land holders

760,000/= 58%

100

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Source. Magigi et al, (2006).

Implementation The land use planning process took not less than six months from the date of application as the Ubungo Darajani case shows. This discouraged people who were to implement their land use and avoiding their money from being swindled. This shows disjointed urban planning practise in the city. Principally this indicates the need for working in partnership

44

Efforts to get the total cost used for the preparation in March, 2007, to the Ministry responsible for Land and Human Settlements Development was difficult to be obtained during the field survey as more procedure to request the Ministry expenditure seems to be a confidential aspect for the government operations. But one wonders why? And no fruitful answers were given during the study follow-up.

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towards implementing land use planning output. Similarly, the community involves in infrastructure improvement including drainage construction to prevent flooding.

Drainage Construction In the case of Ubungo Darajani, after preparing the land use plan, they went further by involving in infrastructure improvement and cadastral survey, which are part of the land use planning output implementation. The infrastructure improvement including drainage construction and water provision were done. After the plan was prepared, the community used the plan to construct a 900-metre drain. The drainage construction helped to prevent floods especially during the rainy season and therefore improved their living environment and other health consequences. Landholders and tenants within the settlements contributed 785 USD for the construction of the 3 drainage and 2 culverts facilities. Local labour residing in the neighborhood that did not pay in cash in land use planning helped with drains constructions. People with vehicles contributed in terms of bringing sand and cement for the construction. This helped to improve the situation as and well shows importance of tapping social capital for settlement improvement.

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Cadastre Surveying After the layout plan was approved by the MLHSD in November 2002, local leaders convened a general assembly involving all landholders to inform them about the approval of the detailed layout plan and commencement of the second phase, which comprise cadastral survey. The meeting endorsed the progress and directed the community spokesman to identify a surveyor who could help to survey their area. In order to strengthen the community organization, new committee members were elected to assist the old committee namely Community Land Development Committee (CLDC). The CLDC in collaboration with UDASEDA leaders were given overall charge of the process of carrying out the cadastral survey and title preparation. In an attempt to start the surveying work, UDASEDA and local leaders consulted Kinondoni municipality, who directed them to contact UCLAS. The surveying department at UCLAS submitted an estimate showing that the cadastral survey of 26 hectares would cost TShs. 21 million equivalent to 19,500 USD. Another surveyor in Morogoro (a city in Tanzania) quoted TShs. 28 million equivalent to 26,000 USD. The CLDC leaders informed the community about the cost quoted by the surveyors in a general assembly. The general assembly resolved that the committee should approach the MLHSD for help. On learning about this, the MLHSD referred them to Survey Consults, a private firm that agreed to undertake the work, at a much cheaper charge. After visiting the site, the consultant (Survey Consults) asked the community organization leaders to submit to them an approved layout plan for costing purposes. The cost for the cadastral survey by the firm was 3,800 USD for 237 plots. This excludes the 32 plots already surveyed. In order to be in position to start the work the firm (Survey Consults), asked the community to seek survey instructions from the local authority. The community representatives to this effect wrote the letter. The processing of the survey instruction by the local authority took nine months, i.e. from February to October 2003. Following the issuance of the survey instruction, from

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November 2003 to February 2004, the community mobilised and collected funds for implementation. At this stage the Councilor and the Member of Parliament stepped in to sensitise the community to contribute cash in order to implement the plans. In short, the process involves: Sending a written request for community or individual intention to survey the area with a purpose to the Local authority. The Local authority writes to the Ministry of Lands and Human Settlements Development informing of its intentions. Once the Ministry accepts it instructs the Local authority to write to the applicant the survey instructions and be the overall supervisor of such land development implementation. In this case Kinondoni and Temeke Municipal Councils were the local authorities consulted. The developer is then given estimates for surveying his plot. UDASEDA chairperson signed a contract with the Survey consultant to survey the area at a cost mentioned previously. Out of the 269 landholders, 182 contributed in full payment (59%) while others in installment (16%). The amount contributed summed up to 75% of the total cost of the cadastral survey. This shows that 25% of the amount requested was not paid. This implies that only 68% of landholders contributed while 32% landholders did not contribute though it was noted that the latter were joining the community in the cadastral survey implementation process. In this phase a bank account of 2780 USD was opened and residents were depositing their contributions. Adopting flexible payment for land regularisation was the most important factor, which enabled the community to raise funds. People who joined then were accommodated after those people who have to pay for them. This was noted to be a sign of prestige of some landholders who contributed.

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Monitoring and Evaluation This stage is very important in spatial land use planning and helps us understand why it is necessary to plan cities. If the government is able to monitor and evaluate the effectiveness of land use planning on a regular basis, it is possible to understand the rationale of land use planning for coordination and control of settlement development and therefore achieve the objective of urban land governance. Key areas to be addressed in monitoring and evaluation of land use planning include setting specific standards or expectations for making meaningful monitoring and evaluation possible. The Town and Country Planning Act of 1956, Land use Planning Act of 2006 and Urban Planning Act of 2006, identify issues that must be addressed in detailed land use planning schemes45, general land use planning scheme46 and intervals for review47. It does not set specific standards or expectations for monitoring and evaluations

45

As per Urban planning Act of 2006 sect. 16 (3) states shall consist of a survey in respect of the area to which the scheme relates and carried out and maps and descriptions as may be necessary to indicate the manner in which the land in the area may be used. 46 As per Urban planning Act of 2006 sect. 9 (2) include a technical report on the conditions and resources and facilities in the area, a statement of policies and proposals with regard to the allocation of resources and the locations for development within the area. Others include description and analysis of the conditions of development in the area, relevant studies, data and reports concerning physical development of the area, and maps and plans showing present and future land uses and development in the area. 47 The planning authority shall review every detailed planning scheme, within five years or at an extended time as the Director may determine.

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based on the sensitivity of the resource decisions and flexibility of the local realities presented for making meaningful evaluation. Planners need to ask themselves, what are they trying to promote, or to prevent? The case shows that we need to be explicit about our values driving the land use planning process. The link between quality of life, economic development and land use planning as a way to sustain the economy and the environment becomes meaningful when landholders participate constructively in the spatial land use planning process. Equally, recognising that land use planning is an ongoing process, not a product to be produced and placed on a shelf. It is important to link the present to the future using visualization and alternative futures techniques. Building monitoring and evaluation strategies into plan implementation may help integrate urban agriculture livelihoods in city land development processes and capital mobilisation. Thus, monitoring and evaluation becomes necessary in urban land use planning processes.

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Monitoring Monitoring needs to be done at least annually and should be documented in the form of a tracking record or report. The report must be available for public review48. The report can also describe management actions proposed or undertaken to implement land use plan decisions and can form the basis for annual budget documents. In subsequent years, reports need to document management actions that were completed and what further actions are needed to continue implementing land use plan decisions. In the three case studies processes have not been initiated nor completed. For example, the land use plan for Ubungo was prepared and approved in the year 2003. No assessment has been made by the local authority to show the achievements of this plan or how it can be reviewed after five years according to the Land Use Planning Act of 2006 to show sustainable impacts. Likewise, it has been hard for the land use planners and the government to replicate the practice elsewhere. This enhances the missing links between theory and practise. A monitoring strategy must be developed as part of the land use plan. This will involve identifying indicators of change, acceptable thresholds, methodologies, protocols, and timeframes that will be used to evaluate and determine whether or not desired land use planning outcomes are being achieved. The two cases studied have not achieved this and therefore the planning institutions responsible for land use planning are important in influencing this. Likely, social networking in terms of connectiveness, finance to foster housing and land management in the planning processes appeared vital to foster sustainable urban development in African cities as Uganda case shows.

SOCIAL NETWORKS AND LAND FOR HOUSING IN UGANDA Land for housing is an important component for spatial growth of a city. The growth and development of cities largely depends on the amount of land available for the accommodation 48

One way to accomplish this is an annual planning update, which can be sent to those who participated in the planning process or have expressed an interest in receiving the report.

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of the city's activities and land supply is one of the most background factors of urban housing. It is also the basic requirement for shelter and housing development or home ownership. Therefore the mechanisms through which it is exchanged and rules for ownership influence the modes of provisioning. As noted earlier, in Uganda, elaborate but complex systems of ownership do exist with limited land in urban areas owned by the state or municipalities. Much of the land is owned by individuals who exchange and use it at their discretion. Because the demand is high due to the ‘housing enabling approach’, that encourages private ownership, scarcity is created in order for land to gain value. Acquisition of land is a prolonged procedure of negotiations between both the 'agents' and the owner of the land for the buyer. Social relations play a dominant role in which agents introduce potential buyers either as good friends or relatives to landlords with whom they have special relations. As a buyer you must have social relations to the seller many of which are created by the agent who connects the buyer to the seller. There is also a common feeling amongst landowners (most of whom are aged) that land should only be exchanged with people related to them or those from their own tribes. Therefore as opposed to the formal land market which deals with legally registered land, the informal land market has been established on the basis of social networks amongst the actors. It is a dominant feature of urban land management in Kampala City which is a primate city with over 80% of the land owned by individuals and organisations rather than government and City authorities.

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SOCIAL NETWORKS IN HOUSING In Kampala housing and the social services are inadequate. Government divested itself of the unlimited responsibility of providing housing to public servants and urban populations in general. Housing provision criteria which were based on the concepts of 'entitled', 'eligible', and other or 'unentitled' have since 1992 been dropped. Private ownership has been encouraged and 'enabled'. Thus with the widespread poverty and social exclusion, housing is still a main problem of many urban populations in cities. Although rental housing dominates the housing markets, experience shows that many people access housing either because of kinship, friendship, neighbour relations and linkages between occupiers and owners by intermediate agents. Housing space has also become limited that other functional space for garages, boys' quarters is used by households in order to access their need. This phenomenon explains the high occupancy rates of 7-9. Varying arrangements of occupancy exist from subsidised renting to free occupancy and integration into the nucleus family. The implication of this social process is that housing is still a collective or social affair and need. Social responsibility manifests itself more explicitly in these modes of provision. It also means that the current modes of housing provision reflect both a problem and coping method as facilities adjust to the current environment in the cities. Therefore any efforts to attain sustainable development of these cities must have a component for integrating these often overlooked but important methods of coping by the communities. The question is ‘how best can this need be sustainably met’ in the wake of the changing roles of government and readjustment of relations between the public and the state.

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SOCIAL NETWORKS AND HOUSING FINANCE Apart from land, housing finance is an equally important component of housing especially for owner occupied or private housing. But with the compression of public sector salaries, increasing unemployment and the growing dominance of the informal or popular economy, housing finance is a resource far from many to attain. Without disregarding the formal housing finance mechanisms, informal mechanisms have developed along side the informal housing and provision. Personal borrowings, financial gifts and right claims from kinsmen are dominant modes of housing finance provisioning. All these are dependent on the social relations between the actors. Community groups pooling financial resources together in form of housing cooperatives have also been part of the process in housing provisioning. In Kampala City, housing finance is largely through private savings of households but research findings reveal an increasing role of dependency of relatives for acquisition of land and materials. These processes reveal an intrinsic process of the different modes of provisioning around which sustainable institutions for continued mobilisation of funds can be built. Rather than looking at such networks as a burden or just informal means, considering their potential would give a base for the future sustainability of housing provision and sustainable urban development. Much can be borrowed from the relatively successful micro-finance institutions, which have uplifted many poor peoples’ incomes through short term and flexible loan schemes.

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LAND AND HOUSING COOPERATIVES Housing cooperatives can be in different forms depending on the initiatives and income group involved. These range from regular housing cooperatives (for middle income groups), aided self help (for the formal sector low income) and pure self help (for the informal sectorlow income) (Dolicho 2002). These co-operatives can play significant roles in promoting home ownership and reducing the housing problem. They bring together communities or groups with similar characteristics and housing needs in an organised way in order to meet their most pressing needs. They can be legal and formal as well as illegal and informal. In Kampala numerous informal self-help housing co-operatives do exist to support groups in the provisioning of household. There are groups of a few households in different localities but cooperation is also evident amongst linkages between kinsmen in urban and rural areas. The most prominent housing co-operative which however was an intervention by the state is the Namuwongo low cost housing project which transformed 500 housing units into an organised and planned environment. Building materials were locally produced. Local people did the masonry work with technical guidance after training. This project improved ownership of both land and housing although over 40% of the target allocatees transferred their plots or housing unit. The failure to have all the targeted population was an indicator of social inequalities of some urban policies. Catering for the poor without replication for the middle income groups meant unequal access to housing more so at the time of transition from state provided to private provided and ownership of housing. This needs to be an important aspect in any urban policy which addresses social problems. There is need to take into account the different social groups and how such policy would affect all the groups.

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PRACTICAL NEEDS OF LAND REGULARIZATION AND ROLE OF ACTORS The success and failure of land use planning in the study settlements is influenced by different factors: These include: High proportion of landholder settlers and support from other stakeholders: This revealed important factors as the ratio of occupations among landholders and tenants explained the case of Ubungo Darajani. Existence of higher landholders relation than tenants made it possible to donate land for infrastructure service provision as well as contributions ideas in general meetings where decisions were made. Similarly, it helped facilitate the local authority and consultant in giving proper information for effective land use planning processes. Tenants disseminated information to those landholders living outside the settlement, and also provided labor for infrastructure provision such as digging water trenches. Donor community provided funds for project execution. UCLAS as a consulting institution facilitated in the preparation and implementation of land use plans. Tribal and religious groups helped in resolving conflicts in areas where conflicts were predominating. The media helped in disseminating the information in writing ad therefore create awareness among residents particularly during conflict occurrence in Ubungo Darajani. Role of the community land development committee: In both cases Community Land Development Committees (CLDC) persist. These play a great role in mobilising and sensitising residents, funds, initiating meetings and giving feedback to landholders. Likewise it helps resolving boundary land use conflicts in both cases during the preparation and subsequent plan implementation. These roles observed were important for success of Ubungo Darajani and likewise establishing collaborating with government officials i.e. networking. Political support: In both cases politicians and local government officials were involved. Ward Councillor and Member of Parliament were invited to chair meetings in Ubungo Darajani. The Ward Councillors facilitated approval of their land use plans. Using these government decision bodies, trust was built among landholders in Ubungo Darajani to engage in land use planning process. Deployment of grassroots leaders- (ten cell) and social groups: In case of Ubungo Darajani, the community organization operating in the settlement used ten cell leaders to assist in information dissemination and resource mobilisation. Ten cell leaders were for instance active in information dissemination, sensitisation and mobilization of the tenants and landholders living within their cells. This enhanced the role and position of the CBO in land development. Other factors of prime importance include educational background of local leaders and commitments to solve commonly felt problems. Similarly, information flow, communication and availability of technical knowledge and acceptance of the community responsibility in both cases were catalysts for the case success. Existence of community organisations with committed leadership: In this respect, presence of self-motivated leaders in Ubungo Darajani was important in community mobilisation, making follow-ups and other roles earlier discussed. This enhanced local communities success in preparation, consensus building and implementing of the agreed planning standards.

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Existence of (locally enforced) norms: In the case of Ubungo Darajani community, immediately after land use preparation, UCLAS left a copy of the land use plan, which was used to guide development. However, local leaders in collaboration with community organisation leaders, were able to put in place unwritten norms to prohibit further subdivision and public space encroachment as agreed. In the other two cases land use plans were not left to guide and control ongoing land development activities. The action of leaving land use planning output to local communities caused more questions in interventions. For example, what could happen if the community prepared plan was not endorsed and approved by the responsible planning authorities? This question poses the need for effective urban land management through stakeholders’ involvement at different levels. Contribution by high-income settlers: In the Ubungo Darajani case, local landholders mobilize funds for the land regularization process implementation. In most African cities, informal settlements upgrading is government and development partners financed oriented through budget and or basket funding. Each landholder in the case was required to contribute 19.5 USD (equivalent to Tshs. 20,000/=) by the year 2004. The low-income earners were subsidised by those who ‘have’ to recover their cost. This shows the importance of tapping local social capital for managing urban land development through involving land holders in spatial land use planning practise. Existence of a committed community spokesman (championship): In case of Ubungo Darajani, the community spokesman made several follow-ups and provided feedback. He also collected contributions (funds) from the landholders and deposited the same in the project account. However, the spokesman was the leading actor in follow-ups both within and outside the settlement. His role was critical in the achievements recorded.

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CHALLENGES AND PROSPECTS OF LAND REGULARISATION The societal developments process indicates that fighting poverty always is multidimensional. However, a framework for dispute resolution, mediation and the recognition of informal rights are needed to ensure that the poor are protected while they assume a formal and participatory role in land use planning and management principles. Different challenges and shortcomings were noted during the land regularisation in Ubungo Darajani and in Kampala. These challenges and shortcoming are related to policy and legislature, social culture and values and reluctant of planning institutions to responds to community felt problems once initiated or reported to the local authorities:

Land Use Conflicts, Shortcomings and Community Led Mechanisms Adopted for Resolution Conflicts between neighbouring property owners over the boundaries of their properties, public space encroachments and haphazard housing development to public areas demarcated during land use planning and cadastral survey processes and approved by responsible authorities emerged during the exercise. Major actors involved in land development control and conflict resolution before and after plans approval were landholders, tenants, local leaders

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including ten cell, Sub ward and Ward Executive Officer (WEO), individual households members and Kinondoni municipality.

Case One: Public Space Encroachment Mr. N is one of the landholders living in Ubungo Darajani. In 1999 Mr. Ngunda decided to close the road that had served residents in the adjoining areas for more than 12 years after land use plan approval. Due to the importance of this road the community leader tried to negotiate with him to open it up, however, he refused. According to Building Rule No.5 of 1931 made under the Township Ordinance (Cap 101) second schedule, it is unlawful for a landholder or any individual fronting into roads in residential areas for any type of development such as housing or electing any business stalls and prohibit residents to access other areas in an urban settlements. Inter alia Land Act of 1999 no.4 section 148,153-156 deals with access to landlocked, application for community right of way, determination of creation of public right of way, power of the registrar and compensation in respect to public right of way respectively, also support the argument and provide for procedures to be applied. These provisions however, seem to favour planned settlement while the informal settlement seems to be neglected by the local authority. This may rise dilemma in cases where there are local attempts to manage land development activities by grassroots actors including land use conflict resolutions. In resolving the above conflicts the community established a task force to deal with the conflicts and other land disputes that emerged during the process. The task force comprised Subward leaders, ten cell-leaders, community champion/representatives, and experts from UCLAS who gave technical advice49. Subward leader issued letters to be sent to parties in conflict and their ten cell leaders who also informed the neighbours. The letters were signed by the Subward leader to show that the committee has given mandate. Conflict resolution process involved invitation of parties to the conflict in a meeting where parties presented their position to the committee and through negotiations and involvement of friends and relatives of the disputants/parties in conflict. This shows the importance of social capital and networking in land conflict resolution in informal settlements. In an attempt to resolve the access problem, local leaders in collaboration with community representatives and three selected landholders reported the case at Kinondoni municipal council, in March 2000. The council promised to send an official to the site. Until the surveying processes took place in the settlement February 2004 no action had been taken by the Municipality, as the result the local community demolished the structure and this becomes the solution. The reluctance of local authority i.e. Kinondoni municipality to respond to the case reported can discourage the local communities initiatives and attempts in efforts to prevent further haphazard housing development once the land use plans are endorsed and approved by the responsible authorities. This calls for more attention of the central and local government to support the initiative once reported. Policy support and 49

The author’s experience in Ibungilo and Isamilo in Mwanza city Tanzania upgrading projects, January 2001 to July 2002 revealed that task force formulated to resolve conflict and monitoring the planning process comprised Subwards leaders of each subwards, community organisation leaders who were also mtaa leaders, 4 community representatives, consultant, donor community member and Mwanza city Town Planner. The task force was formulated among the agreement between the donor community funding the project, CBO leaders and municipal authority. This was different from task force formulated at Ubungo Darajani. The difference is

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regulation empowering local community to control land development in their areas appears to be important to prevent further informal settlement proliferation once upgraded.

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Public Space Encroachment after Land Use Plan Approval Following the completion of land use planning phase and the commencement of cadastral survey, community leaders instituted a regulation which bars construction of building structures without adhering to a detailed layout plan. Most landholders were constructing houses or extended rooms in order to rent, as well as to improve accommodation for their households. Some tenants were involved in building temporary structures but after agreements with landholders. Some of the structures put up by tenants were however, encroaching on public space. Local leaders including Ten cell, Subward, Ward and community organisation were involved in convening meetings, to assess facts and evidences presented by the disputants and verify boundaries. During focus group discussions majority of landholders reported that they were aware that there are laws and regulation governing land development in urban areas. But they wondered why the same are not being adhered to and enforced in their settlement which was formerly informal neighbourhoods. Mr. S who had constructed a house enclosing the road access had therefore violated this regulation. But since he was not ready to cooperate, the community decided to take the law in their hands and demolished the house. Before demolition the community had already contacted the Kinondoni Municipality and Ministry of Lands and Human Settlements Developments. Although Kinondoni municipality had promised to make follow50 up on the issue, no reply or action had been shown and taken until 2004. The Ministry of Lands and Human Settlement Development (MLHSD) informed the residents that the local authority (i.e. Kinondoni Municipality) had the mandate to demolish the encroachment on the public access. However, the official cautioned that an investigation has to be made to establish landholders rights, years of stay and compensation. MLHSD noted that the investigation would help the local authority to avoid legal action on grounds of being a corporate body. Land Act of 1999 no.4 section 148 and 151 state that where public way is landlocked by a landholder that has adverse effect on other adjacent settlement access, procedure of easement and public way should apply. The MLHSD insisted that it is the local authority responsibility to make follow-ups on such disputes and advised to take one of the three main procedures to be adopted in resolving land development disputes especially once investigation by Local authority is complete: •

The first option is the use of participatory Environmental Planning and Management, which provides for negotiation necessary to resolve conflicts without going to the court of law. In this case it is the responsibility of the community itself and their leaders to negotiate and convince landholders not to encroach those areas left for public use and put in place local norms to safe guard public and private interests in

that, that of Mwanza was donor driven while in Ubungo Darajani was local community driven. However, techniques used to resolve those conflict was the same that include negotiations. 50 The Municipal official stated that the procedure has to be reported to the Municipal engineer who writes note/stop order to that person. Sent Municipal valuer and Town planner to the site in which reports of the two officials will be submitted to the UPC. Thus, local authority official advised the local community to return back and wait for the process. However, the local authority did not mention when those steps will be taken and expressed verbally.

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•

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•

land. The best approach is through meetings involving friends and relatives to mediate conflicts. The second option is use the courts of law. According to the MLHSD officials, in this respect, the community has to go to the Court of law and seeking remedy through Land Act of 1999 section 146,148,152,153 and 154 on easements and public ways. It was also pointed out that the time of stay of a landholder and investment done on plots in the encroached areas in formal area unlike in informal settlements need to be carefully considered and evidenced by the local authority. Third option is where the government investigate and understands the need to provide access to residents from the landholders violating community needs. This option mainly concerns procedures regarding land acquisition for public way leave or plot for public use. In this respect the MLHSD official reported that, after approval of detailed layout plan, the following procedure has to be followed in order to formally acquire land required for public needs such as way leaves for roads; o The local community reports the case to the local authority o Local authority sends the valuer to the site to assess the problem and prepares costs to be incurred and during that time evidences such as photographs are taken to show progress in construction of the building o The valuer submits to the Urban Planning Committee (UPC) a report and cost for compensation o The local authority sends a request to the MLHSD to acquire the land in question o The Commissioner for Lands considers the request, investigates and if satisfied with the case in question forwards the request to the Minister to acquire that land on behalf of the President. At the same time, a budget for the activity is submitted to the Minister for incorporation in the incoming financial year under the public appropriation budget.

Following the above clarification and explanation from the MLHSD and from the local authority, the local community found that the legal procedures were very cumbersome and intolerable especially considering the fact that Mr. S was continuing with the construction work. They therefore decided to pull down the structure. Mr. S’s plea for police intervention was in vain. The police condemned his act of blocking the public way. Not satisfied with the move, he went to the WEO, who like the police did nothing to assist him. This was a lesson to other landholders in the settlement. The action by the community shows the importance of collective efforts and how the community can benefit from standing together.

Case Three: Haphazard House Construction Urban land development control with regards to construction of fences and walls around homes in informal settlements have been left to developers themselves who determine the height and material used. Sections 35 to 39 of the Township Rules made under Cap 101 provide for an Area Planning Committee with instruments to deal with construction of fences and walls such as building permit for wall fence construction standards in which requires to construct wall fence not beyond the required standard of 1 to 2.5 metres. The permit also gives specification of materials. For instance, the section stipulates that use of corrugated iron sheet of 2.5 metres during construction. These standards and material specification are

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important but they are not adhered to in most urban settlements. It was noted that 40% of the houses are fenced with concrete blocks in the settlement, preventing water flow during rain season. As seen in the case of Mr. S and other cases in Ubungo Darajani, landholders are erecting fences and even blocking the public access without any permission or authorisation from local authority.

Case Four: Boundary Conflicts- Mr,YZ and Mr.MT On the 14th Nov 2003 Mr YZ bought a dilapidated building Plot XXY from Mr. NS who was a neighbour of Mr. MT. The transaction deal was concluded without contacting or informing the latter to verify boundaries of the property acquired. Later on, Mr YZ constructed a wall fence encroaching upon Mr. MT. Plot xxx. This resulted into a conflict between the two neighbours. The interview held with the parties involved in the conflict showed that the case was reported at Kinondoni municipality after the attempt by the Subward leader to resolve the matter failed. The Municipality official referred the parties back to their subward leaders noting; “We are not supposed to resolve boundary conflicts in informal settlements; we don’t know your boundaries and even the basis of such conflict resolution. You should seek help from your Subward and Ward leaders please”

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On one hand, it is true that it is difficult for the official at municipality level to understand plot boundary conflicts in the settlement because there are no layout plans, formal demarcation or survey beacons. On the other hand, the response from council shows that still the government seems to be at cross roads with little help to the growing informal settlements because there are no instruments for controlling and directing land development51.

Source. Fieldwork sketch November 2007. Figure 2. Boundary conflict area-sketch.

51

In discussions with some landholders on 23/11/006, they complained that the non-respond of the government in resolving boundary conflict while it is collecting tax does not show government seriousness towards supporting community efforts to guide land development. They added that this is an indication of not being recognised formally.

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If the government hesitates to mediate conflicts within informal settlement, it shows a policy gap in so far as land development control in the informal settlements52 is concerned. This culminates into problems of promoting and supporting grassroots efforts towards informal land management. Lack of policy and legislative framework on the development control in informal settlement appears to increase environmental problems and difficulties to local communities who want to create liveable city in their living environments particularly in the informal housing areas. It appears that although laws seem to empower local authorities to demolish properties built without their consent, local authorities hesitate to act because of fear of being sued by landholders. In short, the informal land development sector seems to be an area not adequately exploited in terms of putting policy and legislative strategies to prevent informal housing proliferations mechanisms and conflict resolution tools and modalities. It appears therefore that conflicts and increased poverty occurs in informal settlements, where government failed to support the local communities in their initiatives.

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Land Tenure Modalities Security of Land tenure is an agenda of concern in National and International policy forums (Simba, 1998; Drescher and Iaquinta, 2003; Tibaijuka, 2006). Land tenure deals with granting access to use and own land, which can be formal or informal. In Tanzania, all land is a public land and remain vested in the Presidents as trustee for and on behalf of citizens of Tanzania (Sect 2 (i) of the Land Act of 1999). The questions of particular interest in this respect is on how urban residents categories occupying land in urban area can have the granted right of occupancy to ensure their formal occupation. Does the formal process favour and encourage them to engage in this process? What type of right of land occupation exists and how can these rights enable to improve the existing situation of the urban poor? In attempting to answer these questions, some difficulties in practice are reflected in the case study areas reflected in this context, which need improvement. Both granted right of occupancy and customary system of land occupation and tenure recognised in Tanzania Government Tenure classification (Land Act of 1999: Sect 4 (3)). Section 23(3) of the Act stipulates the need to offer short-term lease, which may be granted to a landholder for 1 year (Sect 23 (2)), 5 years (Sect 83 (2)) and to 21 years (Sect 83 (1)). The 5 to 21 years can be leases with condition for future development and pays rent and can be offered verbally or unwritten to a person who wants that land. This seems to be what is supposed to happen to periurban dwellers. Their rights in holding land is by paying land tax and receiving fair compensation to move outwards the city once expansion and declaration of the planning areas ripe for urban development pronounced by planning authority. The length of the term of right of occupancy is 33, 66 or 99 years (Sect 32 (1)). And the holder of the 52

Study conducted by Kombe, (2003) in Mlalakua informal settlements, revealed that the local community with their Mtaa leadership had attempted to negotiate with landholders to demolish part of their buildings which had encroached the public way. The demolition was intended to facilitate expansion of road facilities and allow other utilities to be provided. A total of 26 landholders demolish while 57 did not respond. Some of these landholders whom their buildings were earmarked to be demolished have filed a case in the court of law. The fate of the court decision is yet to be known. This may suggest lack of clear policy framework on land development controlling in informal settlements.

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occupancy is subjected to pay an annual rent53 (Sect 33 (1)). Payment in instalments and at any interval of time during a year is allowed (Sect 33 (2)). Likewise, the law states the change of use procedure once a person is granted the right of occupancy (Sect 35 (1)), but no such provisions are stipulated in case the land is owned under customary in urban area. Fair compensation in such occupation seems important in case of compulsory acquisition for public interests. The law is silent on what happened to right occupancy under customarywhich mainly is land occupied by the urban poor. Formalisation is an effective anti-poverty measure particularly, when security of tenure appears to be a top priority in managing population growth in urban areas, preventing the development of slums and increases access of the urban poor to access financial betterments from various financial institutions. This can show importance of legal title as an essential requirement in this connection in poverty alleviation once local communities capitals mobilised and mechanisms for process continuity laid down to title offering to all landholders. Adopting participatory planning process will require trust and confidence building, including to the local community in the processes and the governance structures for support, which are some crucial conditions appeared to be potential for the success of formalisation schemes. Otherwise, it can be difficult to land regularisation initiatives to be fruitful results of alleviating poverty in urban areas once initiated. In Kampala based on a city-wide study of land regularization, it is important to note the key challenges include overlapping interest on similar pieces of land, speculation in the urban land market, information access on land and the poor state of the land records. Because of the challenges, regularizing land has failed to meet the needs of a sizeable proportion of land developers in Kampala. The gap so created has paved way for informal and socially regularized land delivery mechanisms which derives partly from the regulation in the formal sector. This phenomenon has led to a process of housing development that is not only characterized by unguided developments but unusually difficult to describe in terms of sequence of activities. Housing starts, occupation and completion does not follow the logical sequence through out for the developers but rather indicates diversity due to developer preference, the issue of rights definition and capability on the part of the developer. Thus housing development has tended to follow a largely informal process creating an imprint of haphazardly developed housing but most important a layering of interests in, first land as differentiated from those of the property on land. As a consequence in Kampala, non-core activities and the requirements of the bureaucratic processes of the municipality, (especially development control) take most of the time of the planning which leaves no time to work on large scale planning, prepare detailed action plans, survey land, administer land records and management in its development. Large scale or long range planning has been replaced by piecemeal planning which is not only uncoordinated but dictated upon by the operations of the land market. The guidance and control system has only remained on land held under the public system or mailo system which supports at least official documentation of proof of ownership. It is the lack of a land regularization mechanism which drives the different regimes of planning that are both informal and formal planning.

53

Up to May 2008, the study showed that the annual rent range from 10USD to 400USD per households occupying land in the city. In hotels and Business zones the range is higher than 400USD per year.

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A FRAMEWORK FOR LAND REGULARIZATION

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The question of land tenure goes together with the right to use and own land for production purposes. Land demarcation and ownership registration is essential for increasing local authority revenue, using land sustainably, poverty reduction, and increasing city productivity. Thus, land use planning becomes essential in meeting such obligations. Equally, conditions set for use of land are essential once local communities are organised in the city. Likewise, infrastructure improvement including water provision is essential in reconciling formal and informal land management principles including right to own and use. This can be achieved where housing density (i.e. formal and informal) and mixed land uses exist, and therefore settlement upgrading becomes an obligatory strategy for improving livelihoods of the poor in informal settlements.

Source. Magigi (2008). Figure 3. Land regularisation typology.

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The practise shows main driving forces for involvement in land reguralisation and processes continuation to land registration and offering formal granted right of occupancy includes, but not limited to economic, policy and legislative support, political, technological and participation mechanisms (Figure 3). In supporting the processes, development conditions after plan approval can be set on the upgrading outset. This can be achieved once land use planning in urban areas is prepared through community participation, conditions for developing and controlling such land known to landholders and other interested stakeholders for enhancing urban growth and development. In particular, the land regularisation typology in figure 3 reflects new institutional arrangements potential for understanding the typological processes required, possible conditions and driving forces for community involvement in land reguralisation processes in informal settlements towards securing land tenure.

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NECESSARY CONDITIONS FOR SUCCESSFUL IMPLEMENTATION OF LAND REGULARIZATION FRAMEWORK The contribution in both cases of Dar es Salaam and Kampala analysed important conditions for the successful of land regularization from land use planning, implementation to monitoring and evaluation. It should be noted that involving in cadastral survey, infrastructure service provisioning including housing architecture and land registration are integral parts of land use planning output implementation of the land use planning output. The total implementation forms the basis for formal settlements or planned urban environments. Likewise, helps landholders to have granted right of occupancy on use and ownership of land and therefore can be used for accessing financial betterments for improved livelihoods. The necessary conditions appeared to be crucial include: Financial resource: This observed important in both levels of land reguralisation initiation to implementation. Mechanism for residents in their neighborhoods, local authority, central government and development partners involvement appears rational to facilitate regularization process. Likewise, flexible modalities in terms of financial contribution to people with low income and substituting the group with other contribution including providing labour to some land use planning activities is crucial. In achieving this, country policy and legislative guidelines to support local financial mobilization observed logic to be in place once the land regularisation processes are initiated. Human and institutional support: Both local and central government appeared to play important role in enhancing community awareness to involve in land use planning process and subsequent process in land reguralisation. Presence of high learning institutions support such as UCLAS in Tanzania supported the achievement reached. Links and networking: The presence of retired civil servant in government institutions connections to government officials helped in mobilizing the local communities and volunteered to facilitate in communicating with local and central government agencies for help once the need arose. This connectiveness shows the links that the community can benefit once mixed residents’ live in the same areas. Likewise, neighbors and friends in the settlements and other geographical settlements were used to resolve conflicts that arose during land use planning and cadastral survey. This shows the social ties built in the local

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community neighborhood that can facilitate the upgrading programmes in informal settlements. Relations and lobbying: Rerired civil servants help in finding information through their established connections already built while they were working in government institutions. Different roles are assigned to these civil servant and some are selected to be members in the formulated task force in dealing and finding important information for land regularization process. The relations and lobbying helps to reduce bureaucratic procedure from the local authorities which then help the local community to have adequate information for land reguralisation processes initiation and subsequent preparation and implementation modalities. Information flows and Communication: Information flows within the settlements appeared to be important for awareness creation in the neighborhood. Conducting meetings, linking with friends and local authorities and central government in geographical setting were critical in success of the case Time frame: Once the community initiates the land reguralisation plan, 85% of respondents show that they expect to finalise the project within 3-6 month from preparation, approval by responsible authorities to implementation. Increased bureaucratic procedure appeared to lead the process in taking more than 5 years. This situation appears to discourage local communities who want to improve their settlement through involvement in land reguralisation schemes. A duration of 3-6 month suggested by local communities in preparation and subsequent implementation processes appeared impossible and more time noted. The suggested time appeared good and appropriate once funds are available and local authorities collaborate with local community in implementation. This helps them to mobilize funds, otherwise the long time looks to be disincentives to local communities and therefore it may be difficult to effect land regularization processes. Mechanisms for dispute resolution and mediation: Once the land reguralisation is initiated, community task force and committee need to be formulated to lead the processes. Otherwise, reporting mechanism on land regularization, the progress and mechanism for conflict resolution and mediation need to be in place. The task force helps to resolve conflict, negotiating with residents who don’t want to offer land and helping experts who assist during land reguralisation. The groups need to understand on relation existing from one resident to another, ethical values of tribal settings and social ties within a geographical setting that can be integrated in resolving conflicts emerging during the process as the case indicated. The recognition of informal rights: Informal settlements dwellers own land under informal arrangements. Residents in informal settlements own land through buying from neighbours, inheritance and given by friends. Recognition of ownership rights and mechanisms of ways to improve land value and management through involvement in land regularisation appears to be important to enable residents to feel with adequate sense of land and process ownership, recognition of their rights, resource use and may therefore become one motivation for their involvement. Neglecting their rights and inadequate documentation of their land assets can constraint land regularisation processes once initiated.

Trust and Volunteerism Trust building in the local community appeared to centre on personal involvement in community work, faithful in use of public assert or goods, self esteemed and involvement in

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decision making processes that affect neighbourhood development, wealth integrity and continuous follow-up of community common problems to various institutions and bring appropriate feedback to local communities. This was an important aspect and was done during the selection of task forces to deal with various issues of follow-up during land use planning and subsequent implementation processes. Likewise, volunteering in terms of offering land for public use for instance for roads extensions, providing labour free of charge in community based works and use some own money to make follow-up of community activities appeared important to strengthen and enhance the continuation of community works.

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REFLECTIONS: POLICY AND PLANNING IMPLICATIONS National land policy of 1995 is focusing on land tenure, management and its administration in Tanzania. The policy is centrally based on the direct participation of land users and planning institutions in the management and administration of land. The policy provides that the process of planning, allocation and disposition of national land are initiated and discussed at ward level and district committees. The policy provides room for landholder’s participation through a Swahili word “Baraza la Wazee la Ardhi54”. However, it also provides that the ultimate control, use and disposal lie in the community land decisions. When land conflicts arise, ward tribunal is responsible to oversee. The situation in practise appeared to institute in informal settlements once land conflicts emerge. Section 6.4.1 of the Land policy also provides that the upgrading plans will be prepared and implemented by local authorities in collaboration with their local community organization. Other policy statements include: Local resources will be mobilized to finance the plans through appropriate cost recovery system. The later provides room on how to sustain the preparation and execution of land use planning land regularization processes. The policy does not state how and which approach should be used for its effectiveness. In practice, this deficiency increases the practical and policy needs gaps towards enhancing land regularization process and conflict resolutions for informal settlements likelihoods. The case studies show that once the permit is offered it is rarely to make and ensure monitoring and evaluation. This observed retarding the country in general and the city in specific efforts towards ensuring sustainable development through ensuring security of tenure to urban landholders. In recognizing such deficiencies and need to redress the situations, the policy states: Building and construction standards shall be revised so that they become functional and performance based rather than prescriptive. They shall be flexible and affordable. Also provides that local authority shall be duty bound to issue building permits within thirty days. In case the applicants do not get reply in time, they can appeal to the Minister responsible for Town Planning

54

This is a village committee headed by village chairman, Ward executive office and other local leaders in line to discuss various land development laws and activities. In view to Local government reforms has changed to become Ward land tribunal which deals with resolving land use conflicts at ward level. It effectiveness due to lack of technical expertise put many stakeholders to doubt its effectiveness.

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To put the policy statement in total, the building regulations and human settlements development policy, views the housing development as one component affecting sustainable land governance to be set within a criteria to enable its development within planned land. The introduction of performance criteria and flexibility standards is important in rapid developing cities. These can be achieved when the policy enforcement is in place and community awareness raised and priority setting in planning becomes a motor in urban residents during land regularization. Therefore this looks as a products outcome rather than processes. In view to human settlements development policies process oriented is emphasized. For instance, time reduction in offering building permits and planning consent is an important ingredient towards enhancing land governance in informal settlements. The government may wish to put in place modalities for offering such permits to help coordination and control of informal settlements once upgraded through land reguralisation where security of tenure becomes a priority. In view to land use matters and associated conflict resolution in Tanzania, before 1995 all were handled by district courts to resident court of Tanzania situated in regions. The new land Act of 1999 sect 62 and The Land Regulations subsidiary legislations supplementary No 16 of 2001, provide three institutions dealing with land use matters and conflicts at ward, district and Central government level. These include ward tribunal, District tribunal and Land division of the high court of Tanzania. The Land Act of 1999 in collaboration with the Land Disputes Court Act No. 2 of 2002 provided these Land conflict resolutions institutions powers to punish, to put penalty and other procedural laws in land acquisition and land disputes hearing. The conditions set within these Acts in land conflict case hearing includes,

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The case should not merit to more than USD 3,000 for the ward tribunal The case should not merit to more than USD 3,000 to 4,000 for District tribunal The case should worthy to more than USD 4,000 for the Land divisions of the high court

The practice shows little adherance as professional dealing with such land disputes including urban planners, land valuers and lawyers are lacking at ward level. Other constraints observed was inadequate knowledge of landholders to approach these planning institutions. This attested to the fact that 70% of landholders assume they don’t have rights to send such cases in wards or other tribunal as they fear themselves on eviction in informal settlement. This limits their efforts to improve and solve conflicts in informal neighbourhood in African cities, where to large extent urbanisation control is inadequately enforced. The urban expansion practice takes place in Sub-Saharan Africa cities with poor awareness of the landholders who stayed in the area for quite some time. Despite, the expansion also hardly acknowledges the compensation schedule to the affected landholders during plan initiations, but only considers city boundary expansion and imposition of regulations and rules in operation (Urban and Local Authority Act No 7 and 8 of TanzaniaURT, 1982). Correspondingly, the land use planning process does not go hand in hand with land allocation in practise, where planning institutions, links and networking for improved urban land governance are sensible as the study settlements indicates. Land department in local authorities the case of Tanzania, used to allocate and deliver land to landholders and hardly communicates to urban planners in practise. The land allocation is done after land use

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planning and cadastral survey55. Tracing the chain shows the significance of land use planning and outcome implementation in improving the social well-being of the urban poor. This is the point where land allocation and delivery becomes important to understand the cycle on where and how best community felt problems identified can be integrated in land regularisation processes towards securing tenure. It is within these regards where strategies for enhancing access of the urban poor in urban and urban landholders for urban land and modalities of tenure negotiation can be explored. The motivation and priorities of the government through the Ministry responsible for land to engage in land use planning for the settlement, depends on the purpose, priority setting and funds available. The government seems to forget the untapped social capital at local community level, which can be mobilised and used to facilitate the land use planning. The non-consideration of the untapped capitals for decades, appears to make many land use planning outputs not implemented. This was due to the use of master plans, which put planners in offices when preparing plans without visiting the sites and include existing development and community priority during plan making. This situation is common in Tanzania and Uganda cities but also in other Sub-Saharan African cities where planner remain technichnical and less of facilitators to enable innovation among the people. Following the Dar Es Salaam Master Plan, the zoning was done despite extensive mushrooming of private housing development that already existed since 1960’s in the settlement. It should be noted that the Master Plan was also prepared without taking into account landholders’ views, preferences and inputs. Likewise, the plan proposal was not implemented at the time. The interviews with the Subward leader revealed that the majority of landholders were not even aware of the existence of such a plan. Many continued to subdivide their land for sale without regards to the 1979 plan proposal. The subdivision increases housing density as land is getting smaller and smaller (i.e. incremental development). This observation of land subdivision appears to be common in others SubSaharan Africa cities with the same context. The community wanted to have regularisation agreement forms which should have to be issued to confirm plot boundary negotiations and agreement. They correctly argued that the agreement remains but no one had such document to validate signed agreement56. Provision of such documents however, goes against the Land Act (1999) section 22(1)(e) which prohibits issuance of unofficial document to land unsurveyed. This may be a sound position in legal terms but looked at from the local context the need for a paper to authenticate and document agreements reached particularly with respect to boundaries is justifiable and logical demand. Otherwise one wonders how can disputes be handled if any of the parties involved passes away or transfers his/her properties after the agreement. In implementing land development and management activities, Ubungo Darajani community through their community organisation adopted numerous strategies that led to a 55

This has created land use conflicts and fragmented type of land development the case of Goba settlement (Chapter six) 56 The author involvement in upgrading project in Mwanza noted the same problem. Landholders in both Ibungilo and Isamilo wanted to have land negotiation registration forms. The agreement on the basis of which the document were prepared were informal but have value to landholders when it comes boundary conflicts in the course of one selling his plots or family matter. These forms were signed by Mtaa leaders, landholders neighbours, landholders and CBO leader. The study in Ibungilo and Isamilo noted that during plot negotiation and boundary demarcation, the process of signing these forms helped in building trust and commitment to engage in the regularisation process.

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successful implementation. Among the key strategies adopted include participatory planning and implementation process, sensitisation and education of the key actors to appreciate their roles and obligations, persistent follow-ups and considerations to varying capacities of the residents to contribute in cash or in kind. Others are recognition of local potentials including social capital of the residencies and competencies of the local settlers and cooperation collaboration with institutions ready to support community land development and management initiatives. In Kampala, the emerging issue is that the inadequate land regularization present constraints to a proper development of the city. Plans have been prepared but no one knows the extent to which such plans have been implemented. Although there are several factors that explain the failure of plan implementation, the problems posed by the informal land development operations have become significant in Kampala. In light of these problems and challenges, recommendations for consideration in dealing with development in Kampala within the context of leveraging social capital are presented below;

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In reference to the existing plan for Kampala which is The 1994 Structure Plan, guidance and control of land developments was conceived to progress utilizing a `One Stop Center´ for plan processing at the parish level. This would involve parish development committees operating within the neighborhood to allow close monitoring of development. This meant that development proposals would have to be screened and examined by the local parish development committee for consideration before the district council sanctions such developments. Because land market operations have intensified while the plan approval process has not been currently taken on by the parish committees, the local administrative machinery (LC’s) has been compromised by the operations of the land market through charges on covenants. Despite being compromised, it is recommended that the same structure of committees can be used as means of regularizing land. Secondly, under the decentralization policy, parish development committees (PDC’s) have been established mainly to initiate and oversee development planning at parish level. Building on these structures, the PDC’s can be charged with overseeing the land subdivision and exchange transactions. This would be used for maintaining standards, checking double sales, fraud and contributing to development control so as to have a guided development that follows the designed plans. Information concerning the arrangement would have to be provided to ensure that individuals become aware of the `one stop center´. In the light of the foregoing it is mandatory that as part of the regularization of land administration there is need to support the incremental formalization of the informal land sector. This is because it is not possible to have a quick change but the strategic combination of the informal and formal land management systems is considered an unavoidable policy. The challenge is, therefore, to balance between private actors in the management and planning of urban land. Another recommendation is to recognize existing informal institutions. The social regularization process and its institutions have unlike the formal sector institutions tried to cope with the changing social, economic and political situation and even adapted some of the prevailing normative values (Kombe and Kreibich 2000). This

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implies adopting a progressive policy that includes identification and backing of neighborhood institutions. These institutions include the interaction between authority of local leaders and council agents of the municipality who do most of the enforcement, development control and general planning of the neighborhoods. There is need to provide a supportive legal, fiscal framework and incentives as an intervention for integrating informal land delivery systems in planning and urban land management. The Town and Country Planning Act 1964 which is under review, needs to allow local people to cause prepare or prepare their own development plans and submit such plans to the planning authority. This is ideal for regularizing land development in informal areas, quite in consonance with the spirit of supporting informal land development, particularly empowering communities to take up more responsibilities in land development. Such an undertaking would remove the adhoc type of planning driven by perpetuality over land rights. It is also recommended to consider a review of the laws such as the Registrar of Titles Act to have specific clauses so as to legitimize informal land subdivisions especially such as kibanja ownership type as an integral part of the urban landdevelopment process. It is important to build on the on-going systematic demarcation in which land is surveyed and registered in what ever ownership type by the Ministry of Lands, Water and Environment. Concurrent with the legitimization is the need to define a simplified statutory framework which actors in the informal land market have to comply with. Thus the local authority would be responsible for putting the institutional structure in place for steering the informal land regularization process and defining a mechanism for sharing costs and benefits. By integrating informal land subdivision into the urban land management, it would enable to reconsider land use planning as a public process through which individual land is appropriated followed by the superimposition of regular plot sizes and forms in an area. There is also a need for putting in place a mechanism to control developers who do not comply with community norms. The case of public action is therefore both economically and politically legitimate. Whilst the need for the public sector to cooperate with local level actors in the informal sector is indisputable, it is necessary to preserve the dynamism of the informal sector. Another recommendation concerns information flow in the land markets. There is need to create channels of communication of information concerning land. Making these channels clear and accessible would reduce on the informalization of the formal sector. But it would also improve the efficiency of the urban land markets. Information is a vital resource in efficient operation of the urban land markets. Associated with information is the need to establish mechanisms of continuously updating the land value information for urban land market assessment. For plans to be responsive in this context, up to date information on values is required. Given the nature of land market influence on land use changes and the strong indication that the periurban areas will change more rapidly than possible, the gentrification of the core-urban areas, an urbanization policy is necessary to regulate urban sprawl. An urbanization policy that will address issues of conversion of land to urban, support of secondary towns to play functional roles that would indirectly deer immigration to large towns, placing control and regulation of urbanization in a

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regional planning unit, industrialization policy linkages to urbanization and land use information management and its provision. Another important area for policy is capacity building. Basing on the informalization of the formal sector and the continued informalization even at high-government levels, capacity building for planning and plan implementation management needs to be addressed. Plan implementation management has tended to be left for planners with a thinking that the responsibility rests to professional planners. Other officials including managers, leaders, law enforcers need capacity to manage plans and definition of roles. This will help in the continued conflicts of plan implementation management. It is also important that for the public sector to more efficiently manage land delivery and control developments, capacity building is a necessity. From land information management, planning and plan implementation including statutory development control measures, the capacity of the public sector to manage these processes is very important. It is therefore recommended that in consonance with the earlier recommendations, capacity in terms of training, facilitation and equipping the public sector personnel should be perused. This would be for Kampala City council or the metropolitan area, ministry and other agencies for harmonization of operations.

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CONCLUSION The paper has empirically demonstrated process, policy setting and conditions for formulating land regularisation typology as a hidden social capital in formalising informal settlements. The general situation in Sub-Saharan Africa shows land regularisation processes is often partially implemented that appears to limit local communities access to resources in the city and therefore aggravating poverty level among the urban dwellers. Awareness of security of tenure through proper land use planning and its contribution to poverty reduction and improved urban environment is at an increase. Efforts of local authorities can be observed in a number of African cities including Dar Es Salaam and Kampala influenced by urbanisation process is documented. Urbanization in Africa shows unguided land development, poor policy and legislature enforcement, outdated policy inherited from colonial period and inadequate community involvement in spatial land use planning processes. This uncontrolled situation increases urban poverty, and informal settlements proliferation in African cities. The implications generated by these factors suggest that poor urban land governance and weakness of planning institutions to realise and adapt to the new challenges that local community initiatives and priorities wants to achieve at a reasonable time. Bureaucratic procedures in decision making once land reguralisation processes initiated. The study also describes some of the exceptions with legislative and policy in theory and their enforcement in practice towards coordinating land use planning processes and controlling urban development. In fact, the land use planning, policy enforcement and management of urban land calls for good governance in Sub-Saharan African cities. Good land use plans can only be implemented and enforced effectively if there is a good governance system in place where community involvement and

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partnership are central. In addition, political support, information access and awareness campaigns are essential. Based on policy and institutional framework, a variety of mechanisms must be established for citywide building activity to happen and to be promoted at different levels for effective initiation, preparation to implementation land reguralisation process towards securing tenure. The process must be holistic and not ad-hoc. Solutions should focus on participatory planning methodologies with true decentralisation and empowerment modalities. For this to succeed, there must be political and administrative will, including cooperation and partnership between planning and development institutions. Others include accommodating community needs in order to ensure implementation and sustainability of land use planning. In addition, putting in place clear processes and awareness to landholders to secure land and improve their surrounding is necessary. Lack of financial and human resources keeps many land use plans from being implemented as is the case of the study areas and in the city as a whole. Inadequate human resource mobilization, training and means for outsourcing funds by the local authority add to the problem. Mechanism for mobilizing resources for local communities and other development partners are essential. This helps to tap local social capital and make the implementation successful. Otherwise, many land use plans may fail to be implemented. Likely, private-public sector partnership is important as different development partners may be required to provide funds, and to organise groups who show interest in land related development programmes. This also requires experts who can write fundable project proposals to help upgrading initiatives to attract funds. Generally, the implementation strategies fall under the question of planning, budgeting and investment planning and responsibility. This indicates that human, financial and information resources are a concern in implementation. It requires commitment, transparency and assigning roles and responsibility. Local community involvement including both planning and development institutions and networking can potentially enhance decision-making processes and subsequent land use planning implementations. It is important to provide informed prospective informal settlement policies, participatory workable and practical strategies and help to predict, prevent and accommodate the likelihood of informal settlements emergence and growth, which will eventually improve the quality of life in urban areas. We conclude that for effective and sustainable urban development which aims to make poverty an end in rapidly growing African cities, social capital and networking are important in formalising informal settlements. The government and other development partners may opt working together, in order to develop a legally binding instrument in the fight against poverty that will take the limiting roles which faces implementation of a land regularisation typology. This may help balancing voices of different actors, improving land use planning practice, resolve land conflicts, enhance ethnical and relation ties of people within and outside the geographical settings for improved urban livelihood in cities in Sub-Saharan Africa.

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REFERENCES Amin, A.T.M.N. (1996) : Editorial Introduction, "The Informal Sector Paradigm: Analytical Contributions and Developmental Role", Regional Development Dialogue, Vol. 17, No. 1 (Spring), pp. vi-xxviii. Armstrong, A. (1987): ‘Master Plans for Dar es Salaam-Tanzania’, Habitat International, Vol.11, No.2, p.133-145. Catanese, Anthony and James Snyder, eds. (1988): Urban Planning.New York: McGraw-Hill. Dar es Salaam City Council, (1999), Strategic Urban Development Planning Framework (SUDP), Stakeholders’ Edition, Dar es Salaam. Dolicho E, (2002): Review of community based low income self help housing co-operative practices in Addis Ababa, Ethiopia, Sixth International conference on planning legislative, housing and environment in Jinja-Uganda. Drescher, A.W., and Iaquinta, D.L. (2003): Urbanization – Linking Development Across the Changing Landscape. Economic and Social Department Publication (ESAC), FAO, Rome. Friedmann, J. (1987): Planning in The Public Domain: From Knowledge to Action. Princeton: Princeton University Press. Jacobs, J. (1961): The Death and Life of Great American Cities, Random, New York. Kombe, W. J. (1995): ‘Community Based Land Regularisation-Prospects for Decentralised Planning’, TRIALOG, Vol.55, p.27-31. Kombe, W. J. (1995): Formal and Informal Land Management in Tanzania. The Case of Dar es Salaam City, Spring Research Series Vol.13, Dortmund. Kombe, W. and Kreibich, V. (2000): ‘Reconciling Informal and Formal Land Management. An Agenda for Improving Tenure Security and Urban Governance in Poor Countries’, Habitat International, Vol. 24, p. 231-240. Lwasa S., (2006): Informal land markets and residential housing development: implications for planning in Kampala. Ph.D.Thesis, Makerere University, Kampala, Uganda, 2006. Lwasa S, (2002): Informal land markets and residential housing development in Kampala: processes and implications to planning; paper presented in IHDW 2000, Bonn. Magigi, W., (2008): Improving Urban Land Governance with Ephasis of INTEGRATING Agriculture Based Livelihood in Spatial Land Use Practises in Tanzania, PhD Thesis, Freiburg University, Germany. Magigi, W. and Majani, B.B.K. (2006): Community Involvement in Land Regularisation for Informal Settlements in Tanzania. A Strategy for enhancing security of Tenure in Residential Neighborhoods. Habitat International, Vol.30 Number 4. Mugambwa, T. J. (2002): Source Book of Uganda's Land Law. Kampala, Fountain Publishers. Van Nostrand, J. (1994) Kampala urban study part II. Final report: Structure plan, 1994. Kampala City Council, Kampala. Obudho, R. A. and J. Peter (2002): The Role of Urbanisation and Sub-urbanisation Processes in Urban Land management Practice in East Africa. Urban land Management in Africa. O. H. Washington, Volker Kreibich. Dortmund, Spring Center. 40: 379. Olson, M. (1965): The Logic of Collective Action. Public Goods and the Theory of Goods. Harvard University Press, Cambridge.

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Pretty, J. and Ward, (2001): ‘What is Social Capital’, World Development, Vol. 29, No.2, pg. 209-227. Rakodi, C. and Devas, N. (1993): Managing Fast Growing Cities. New Approaches to Urban Planning and Management in the Developing World, Longman, New York. Robert, D.P. (1994): Making Democracy Work, Civic Traditions in Modern Italy. Princeton, New Jersey. Simba, I. C. (1998): Land Tenure and Housing in Tanzania. In Tibaijuka, A.K. (ed.)(1998), Social Crisis of the 1990s. Strategic for Sustainable Systems in Tanzania, Ashgate. Spellerberg, A. (2001): Framework for the Measurement of Social Capital in New Zealand, Wellington , New Zealand. Tibaijuka, Anna. 2006. UN-HABITAT’s Contribution to Security of Tenure. In “Legal Empowerment - a Way out of Poverty” Issue 2, December 2006. Mona Elisabeth Brøther and Jon-Andreas Solberg editors. Published by: The Norwegian Ministry of Foreign Affairs, Oslo. Topfer, K. (2002): Re-assessment of Urban Planning and Development Regulations in Africa Cities, Habitat, Nairobi Thebe T.R 2002, Informal Economies and sustainable urban development: challenges for land use planning in Botswana. UBOS, (2007) : Uganda Population Report. Kampala, Uganda Bureau of Statistics: 87.and Housing Census. Entebbe, National Census Office: 12. UN-Habitat. (2007): State of the World’s Cities 2006/7-The Millennium Development Goals and Urban Sustainability: 30 Years of Shaping the Habitat Agenda, Earth Scan, London. United Republic of Tanzania, (1956): Town and Country Planning Ordinance-Cap 378 Revised in 1961, Government Printer, Dar es Salaam. United Republic of Tanzania, (1979): Dar es Salaam Master Plan, Government Printer, Dar es Salaam. United Republic of Tanzania, (1982): Local Government Act No.7 and 8, Government Printer, Dar es Salaam. United Republic of Tanzania, (1995): The National Land Policy. Government Printer, Dar es Salaam. United Republic of Tanzania (1999): Land Act, Government Printer, Dar es Salaam. United Republic of Tanzania, (1999): Government Notices, Orders, Technical Instructions and Circular Commonly Referred to in Pursuance of Human Settlements Development, Dar es Salaam. United Republic of Tanzania, (2000): Human Settlement Development Policy, Government Printer, Dar es Salaam. United Republic of Tanzania (2002): Population and Housing Census Report, Government printer, Dar es Salaam. Uganda Government, (2000): Registration of Titles Act -CAP 230 Pg 100. Uganda Government (1995): The 1995 Constitution of Uganda. Uganda Government (1998): The Land Act, 1998. Act 16: 83. World Bank, (2002): Community Infrastructure Upgrading Project in Dar es Salaam, Unpublished document under DHV and UCLAS Consultants, Tanzania.

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In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 13

THE ROLE OF SOCIAL CAPITAL IN HOMOGENEOUS SOCIETIES: REVIEW OF RECENT RESEARCH IN JAPAN Eiji Yamamura Department of Economics, Seinan Gakuin University, Fukuoka, Japan

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ABSTRACT It is widely and increasingly acknowledged that social capital plays a crucial role in economic performance, which covers various facets of human behavior. A growing body of literature has sought to investigate the role of social capital mainly in heterogeneous societies such as the United States, whereas works concerning homogeneous societies have yet to be sufficiently conducted. From a comparative point of view, therefore, research on homogeneous societies is needed. In this paper I introduce research to explore how social capital has affected the socio-economic outcomes of Japan, which is considered a relatively homogeneous society. Recent preliminary empirical work provides interesting data for Japan, covering the following topics: (1) Issues for undesirable behaviors such as crime, modes of dangerous driving, and suicide; (2) lawyer demands for conflict resolution; (3) cinema and baseball attendance;(4) voter turnout, census data, and protection against natural disasters; (5) diffusion of knowledge, efficiency improvement and industrial development; (6) quality of life in terms of health; and (7) formation of trust in communities. As a whole, this data indicates that social capital enhances collective action, which leads to benefits, although such effects change over time.

1. INTRODUCTION Since the beginning of the 1990s, when some influential works emerged in the various fields of social science (Coleman 1990, Putnam 1993, Fukuyama 1995), the analysis of social capital has grown with the perceived importance of its impact on socio-economic outcomes

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(Dasgupta and Serageldin 1999, Castiglione et al. 2008)57. In this paper I consider the role played by social capital from the standpoint of economics. In the real world, mutually beneficial exchange is often hindered by rises in transaction costs caused in part by opportunistic behavior, which then impedes economic development58. The enforcement of contracts is costly because there is the possibility that agents will breach them. Following the argument advanced by Putnam, in this paper, social capital is defined as “features of social organization, such as trust, norms and networks that can improve the efficiency of society by facilitating coordinated action” (Putnam 1993, p.167)59. Social capital thus seems to play a critical role in preventing agents from engaging in opportunistic behavior and raising efficiency, thereby promoting economic development (Hayami 2001)60. Such a general view has triggered much research to assess how and the extent to which social capital, considered as trust and networks, favors economic growth (e.g., Knack and Keefer 1997, Knack 1997, Hall and Jones 1999, Whiteley 2000, Zak and Knack 2001, Beugelsdijk et al. 2004, Iyer et al. 2005, Beugelsdijk and van Schaik 2005a)61. Degree of development is determined not only by economic indicators such as GDP and total factor productivity, but also by alternative indices covering various facets of life. In addition to growth, social capital encompasses multiple aspects of development issues62. If

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There are studies from before the 1990s that use the term ‘social capital’ (e.g., Jacobs 1961, Loury 1977, Bourdieu 1986). 58 In certain circumstances, such as in some modern developing countries and other historical situations, the reason why market mechanisms do not ideally function might be the lack of appropriate formal institutions to provided the fundamental market conditions. In such situations, instead of formal institutions, informal institutions become relatively more important in enhancing exchange among agents (Greif 1993,1994, 2002; Okazaki 2005 ) through informal enforcement mechanisms in which agents change their partners over time and the breaking of a rule invokes sanctions by other members (Kandori 1992). Accordingly, social capital, which seems to provide a base for informal institutions, draws particular attention in the field of development economics (e.g., Dasgupta and Serageldin 1999, Hayami 2001, Francois and Zabojnik 2005). 59 Despite its tremendous influence on social science research, the notion of social capital is ambiguous, and thus there seems to be little agreement as to how it should be measured and conceptualized (e.g., Paldam 2000, Sobel 2002, Durlauf 2002, Bjørnskov 2006 a, Fafchamps 2006, Callois and Aubert 2007). For instance, some researchers consider interpersonal networks to be social capital (e.g., Annen 2001, 2003; Fafchamps and Minten 2001, 2002). Others consider social capital to be the magnitude of trust (Glaeser et al. 2000, Berggren and Jordahl 2006). The magnitude of civic participation is also regarded as social capital (Fidrmuc and Gërxhani 2008). 60 Contrary to the evidence provided by most research supporting the assertions of Putnam(1993, 2000), Miguel et al. (2005) found that in the case of Indonesia initial social capital is not associated with subsequent industrial development. This result is consistent with the argument put forth by Olson (1965, 1982) that the existence of social organizations, acting as specialized groups of interest, might decrease efficiency, leading to limits in growth possibilities. Indeed, some studies have directly focused on this ‘Olson-Putnam Controversy’ (Knack 1997, Pena López and Sánchez Santos 2007). 61 Besides studies directly examining economic growth, various empirical works on social capital concern the key factors of growth such as innovation(Hauser et al. 2007), diffusion of technology (Barr 2000), formation of market channels ( Sporlender and Moss 2002, Fafchamps and Mantin 2001, 2002; Rauch 2001, Rauch and Trindade 2002), size of informal sectors (Lassen 2007), and the development of financial and credit markets (e.g., Udry 1994, Besley and Coate 1995, McMillan and Woodruff 1999, A’Hearn 2000, La Ferrara 2003, Guiso et al. 2004, Karlian 2005, Cassar et al. 2007). 62 Besides the issues discussed in this paper, there is a wider range of topics related to social capital. For instance, in labor markets a large number of works examine the mechanism of how people find a job through interpersonal networks (e.g., Granovetter 1974, Montgomery 1991, Rebick 2000, Munshi 2003, CalvóArmengol and Jackson 2004, Calvó-Armengol and Zenou 2005, Wahba and Zenou 2005, Antoninis 2006). The role of social capital on sustainable development is discussed especially in the field of agricultural economics (Rainey et al. 2003, Schmid 2003), whereas from the psychological perspective interdisciplinary

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social capital causes economic development, therefore, one might naturally ask the question of why and how social capital can be generated. A number of empirical studies have attempted to cope with such fundamental questions (e.g., Alesina and La Ferrara 2000, 2002; La Ferrara 2002, Uslaner 2002 , Leigh 2006a, 2006b)63. It has been found that magnitude of trust is affected not only by economic factors64 such as income inequality (Bjørnskov 2006b, Gustavsson and Jordahl 2008) and trade openness (Chan 2007), but also by institutions including legal structures, the security of property rights (Berggren and Jordahl 2006), and religious structures (La Porta et al. 1997). Furthermore, social structures such as social heterogeneity is also considered a key determinant of social capital (Knack and Keefer 1997, Charles and Kline 2006). From this existing literature, I derive the argument that the degree of social capital and its effect on outcomes varies according to the respective social conditions. The sociological features of Japan are thought to be more homogenous than those of nations previously explored in research65. As argued by Inoguchi (2002), social capital has increased steadily under democracy in Japan’s post-war period. Under such conditions, some relational-specific systems, such as the central bank system (Aoki 2001, Ch. 13) and the manufacturer-supplier relationship system (Asanuma 1989), have emerged and developed in Japan66. In light of these developments, several questions arise. How does social capital affect these systems? How is the role played by social capital in Japan different from that in other countries? Although not sufficient to comprehensively compare Japan with other countries, there are a number of existing empirical analyses of Japan. This paper surveys these preliminary findings in terms of how social capital affects a relatively homogeneous society such as Japan, and focuses on the following issues67. (1) Issues for undesirable behaviors such as crime, dangerous modes of driving, and suicide; (2) lawyer demands for conflict resolution; (3) cinema and baseball attendance;(4) voter turnout, census data, and protection against natural disasters; (5) diffusion of knowledge, efficiency improvement and industrial development; (6) quality of life in terms of health; and (7) formation of trust in communities.

research has investigated how social capital is associated with life satisfaction (Bjørnskov 2003, 2006b; Bjørnskov et al. 2008, Helliwell 2003, 2006; Kingdom and Knite 2007). 63 Formation of social capital has also been theoretically analyzed, such as through the infinitely repeated prisoner’s dilemma approach (Vega-Redondo 2006) and individual-based optimal investment frameworks (Glaeser et al. 2000). Charles and Kline (2006), following Glaser et al. (2000), examined the interaction between individual and community characteristics according to racial group. 64 Fischer and Torgler (2006) shed light on the psychological facet of income when social capital is examined. They measured relative income position by difference between the individual’s income and regional income and examine its impact on social capital. 65 The Hirfindahl-type index of the ethnic fragmentation of Japan presented is 0.02. As suggested in Alesina et al. (2003), the value of Japan is smaller than that of not only the United States (0.49), but also other countries such as France (0.10), the United Kingdom (0.12), and Germany (0.16). 66 Social structure containing norms not only affects economic activity but also is continuously reconstructed as a result of economic outcomes (Granovetter 1985). 67 It has been observed in prior empirical works that residential mobility and community centers are negatively and positively associated with social capital, respectively (Kan 2007, Putnam 2000). In Japan, fire fighting teams are voluntary organizations operated by community members, which results in contributions to social capital formation (Goto 2001). In most of the research introduced in this paper, the effects of social capital are measured by the degree of residential mobility and number of fire fighting teams.

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2. REVIEW OF SOCIAL CAPITAL ON SOCIO-ECONOMIC OUTCOMES IN JAPAN 2.1. Deterrents to Various Problems (Crime Prevention, Driving Manners, Suicide, Lawyers Demands for Conflict Resolution) In the modern society of Japan, formal rules appear to play more crucial roles than informal ones because the society becomes more anonymous along with increased economic development. The classic work of Kawashima (1963) focused on the cultural preference for informal mechanisms of dispute resolution in Japan, and asserted that the harmonious nature of Japan discourages people from litigating68. I interpret this view as being in line with the modern theory developed in economics that personalized relationships, which are sustained by informal rules, endure as modes of exchange and conflict resolution despite the possibility of anonymous markets based on formal rules (Kranton 1996). Such informal systems, however, disappear when markets sufficiently grow to allow individuals to easily engage in market transactions (Kranton 1996, Hayami 2001). The question then arises of whether the role of informal rules disappears in highly developed and anonymous societies such as Japan. Some empirical works have been conducted to explore this issue. Yamamura (2007a) examined the extent to which social capital as a reinforcer of social norms can be effective and act as a substitute for formal laws through an examination of the determinants of the demand for lawyers in the society. The main findings are as follows.

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Finding 1 A high stock of social capital in a tightly-knit society results in a reduction in demand for lawyers. On the other hand, conflicts generated by bankruptcies and debt cause people to seek legal resolutions, and thus they need to rely on lawyers. Further, an increase in the number of firms, reflecting vital economic activity, brings about a rise in lawyer demand. If a person risks ostracism within a community when a crime or fatality occurs (Posner and Rasmusen 1999), then community members are less likely to commit crimes and drive dangerously, because the cost of committing a crime stemming from social sanctions is very high (Funk, 2005). Such deterrents seem to be most effective in more closely-knit communities with abundant social capital (Lederman 2002)69. To empirically explore this effect of deterrents, some works have examined the question of how informal deterrents based on social capital within a community affect unfavorable incidents such as traffic accidents and crimes (Yamamura 2007b, 2008b); the key findings of these studies are as follows.

68

Ginsburg and Hoetker (2006) did not find supporting evidence for the hypothesis that cultural factors play a major role in Japan. Nevertheless, their regression estimation did not closely examine the social capital effect on litigation. 69 Costa and Kahn (2003 b) found that pro-war communities produced fewer deserters, implying that credible social sanctions help bring about social benefits. The social sanction for deserters was so severe that deserters were more likely to leave home, move to an anti-war community, and restart their lives by changing their names (Costa and Kahn 2007).

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Finding 2 Formal deterrents, such as police, cause drivers to drive attentively; however, such deterrents are not inversely related with dangerous driving. On the other hand, informal deterrents impede dangerous driving but do not induce drivers to drive more attentively. Finding 3 Police presence and social capital reduce crime rates, and their effects become larger when the endogeneity bias of the number of police is controlled for. The relationship between police presence and social capital is complementary with respect to their effect on the reduction of the crime rate. Taken as a whole, the findings presented above indicate that formal rules become important in conflict resolution and prevent people from committing crimes and driving dangerously. On the other hand, informal rules based on social capital continue to be effective, to some extent, in reducing the likelihood that conflict will occur and in deterring crime and fatalities. This implies that modern Japan is now gradually shifting from a community-based society that relies heavily on informal rules to an anonymous society based on formal rules. It seems that the changes in social systems have lagged behind the rapid economic growth experienced by Japan in the post-war period.

2.2. Demand Behavior (Cinema and Baseball Attendance) As argued by Putnam (2000), informal social networks can be regarded as a type of social capital that enhances the enjoyment of various entertainment and sports venues with colleagues and acquaintances. The formation of informal social networks is thus thought to increase demand for leisure industries, resulting in their further development. According to Becker and Murphy (2000), social capital is thought to capture the effect of the social milieu, and individual stocks of social capital depend not primarily on their own choices, but on the choices of their peers in the relevant network of interactions. Theoretically, Becker and Murphy (2000) incorporate social influences such as “social capital” into the conventional demand model. They also consider the utility function,

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U=(x;S), where x is simply goods of all kinds. S represents social influences on utility through a stock of “social capital”. Changes in S would have an effect upon demand behavior if the marginal utilities of different goods are raised or lowered by S. The fundamental assumption when considering the influence of S is that S and x are complementary, such that an increase in S raises the marginal utility from x. In this paper, S is interpreted as informal social networks. Based on this view, Yamamura (2008a) makes it evident that social networks have affected both cinema attendance and the location choices of cinema multiplexes in Japan, causing the revitalization of the film industry.

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Finding 4 The weaker informal social networks are, the more people are less likely to go to cinemas. Multiplex cinemas are less likely to be located in areas where social networks are weaker. If social capital is generated through interpersonal interaction in local communities, then social capital is strongly associated with the demands of the community members. For instance, people are likely to be fans of their home town teams. Further, they are more inclined to cheer for a team when the team includes players from their home town. That is, social capital has an influence on one’s preferences. In a case study of Japan’s Professional Baseball League, such a home town effect on game attendance was examined (Yamamura 2008g).

Finding 5 The salary of a home baseball team’s starting pitcher is positively associated with game attendance, while that of the visiting team is not. Further, the positive effect of salary on attendance is larger when the starting pitcher is from the same town represented by the team when a game is held in that town. The magnitude of salary is thought to reflect not only a player’s performance on the field but also the degree of a player’s popularity. It is interesting that the above finding can be interpreted to mean that social capital makes a great contribution to a player’s popularity. Put differently, a player’s popularity varies depending on the geographical region. It follows that informal personal ties play an important role in developing some industries.

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2.3. Collective Action (Voter Turnout, Census Data, Protection against Natural Disasters) In the real world, collective action is called for in various situations when there are problems that market mechanisms cannot solve. It is, however, also widely known that people confront difficulties in realizing collective action (Olson 1965). Collective action requires cooperative behavior, which seems to be enhanced by social capital (Putnam 1993, 2000). Taking some case studies in Japan as examples, I next assess the question of how social capital enhances collective action. Public benefits to society are considered to be realized through elections and voting. Public decisions are thus presumed to be reflected in the results of elections such that policy tends to mirror public opinion when collective action occurs. According to Knack (1992), social norms have a positive effect on voter turnout. In the case of Japan, the following finding by Yamamura (2007c) is in line with these presumptions.

Finding 6 Voter turnout is higher in close-knit communities, and therefore social capital enhances voting. Further, economic and generational fractionalization results in lower voter turnout.

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Collective action is called for to generate public benefits, such as in the case of the need to respond public census questionnaires (Vigdor 2004). In Japan, the collection rates of census data rapidly declined, causing debate as to whether the existing census system actually makes contributions to society. If the response rate to censuses are indeed related to community benefits, then it should be interesting to assess the causes of low collection rates70. Yamamura (2008d) explored the question of why collective action does not always end in success while examining the determinants of non-collection rates.

Finding 7 Decay in social capital increases non-collection rates. Moreover, income inequality is associated with lower response rates, while generational heterogeneity is associated with higher response rates.

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Although this finding is partly consistent with the existing literature on collective action and income inequality, it is not consistent with previous findings on the generational heterogeneity effect (Vigdor 2004). It is thus necessary to examine the question of why heterogeneities have a different effect on collective action. Further, the finding of a negative effect of income inequality raises the following questions to be explored in future research. Does income inequality have an influence on people’s perceptions about the benefits gained from responding to a census? Does income inequality have a detrimental effect on the allocation of tax grants through political decisions71? Recently, there has been increasing interest in investigating how and the extent to which institutions and social structures reduce the numbers of victims of natural disasters (e.g., Anbarci et al. 2005, Kahn 2005, Escaleras et al. 2007). Collective action might play a critical role in coping with risks related to natural disasters because markets cannot perfectly deal with such situations, even though markets are undoubtedly important72. About 20 % of all earthquakes of at least magnitude 6 have occurred in Japan, although the landmass of Japan comprises only 0.25 % of the Earth73. This implies that, compared with other countries, Japan more frequently experiences earthquake-related natural disasters, and therefore the resulting economic loss these should be noticeable. Therefore, protection against such damage is considered a central issue of economic policy. Yamamura (2008e) explored the role played by social capital in reducing the number of victims, founding the following.

70

Communities receive tax grants distributed from the central government to local governments. According to the Local Allocation Tax Law, census data is used when tax grants distributed to local governments are calculated. Accordingly, an individual’s failure to fill out census forms results in a decrease in the tax grants allocated to communities. 71 Generally, income inequality is expected to increase tax grants. 72 In Asian communities, it is argued that the patron-client relationship between landlords and tenants, which is solidified within communities, serves as a safety network to secure the minimum subsistence of clients (Scott 1976). More recently, it was found that social networks play a key role in the provision of mutual insurance (Fafchamps and Lund 2003). 73 Japan has incurred 13 % of the total amount of damage resulting from natural disasters worldwide during the past 30 years. See the Disaster Prevention White Paper (In Japanese): http://www.bousai.go.jp/hakusho /h19/index.htm.

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Finding 8 Because of the complementary relationship between social capital and learning from experiencing natural disasters, cooperative behavior is thought to be more easily organized in Japan, thereby reducing the damage resulting from such disasters.

2.4. Diffusion of Knowledge and Efficiency Improvement Unprecedented economic growth in Japan has triggered a huge amount of research about the underlying reasons. One suggested reason is that the long-term transactions between firms, which is reflected in manufacturer-supplier relationships, played an important role in Japan’s industrial development (Asanuma 1989). Such relationships seem to be based on particularized trust regarded as a part of social capital74. Subsequently, an investigation of the social capital effect on economic efficiency was called for. Yamamura (2007e) used aggregated prefecture-level data to decompose output growth into efficiency improvement, technological progress and capital accumulation. He then examined the determinants of these factors by simultaneously including the proxies of social capital and human capital, and reported the following finding.

Finding 9 The degree of social capital simultaneously promotes efficiency improvement and capital accumulation. Human capital, on the other hand, only enhances efficiency improvement. The elasticity of efficiency improvement with respect to human capital is about eight times larger than that with respect to social capital.

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Based on this finding, I argued that human capital has a larger impact on technological catch-up, although both trust and human capital make contributions. Even if this holds true, it is still unclear how the relative importance of human capital and social capital has changed over time. Based on purposefully constructed firm-level data through field research on the long-term development process of the garment cluster in Japan, Yamamura (2005, 2008f) explored the changes in the roles played by human capital and social capital,75.

Finding 10 In the developing stage, the manager of a firm makes decisions and learns from the outcomes of those decisions under conditions constrained by the social norms. In such situations, social capital improves the learning effect. That is, social trust and learning are complementary. In the developed stage, in which an ideal market emerges, a manager’s decision-making is not constrained by local rules. Due to environmental changes, human capital improves the learning effect, while social capital comes to have a detrimental effect on leaning. 74

Before the notion of social capital was discussed from the viewpoint of economics, the critical nature of trust was recognized in transactions by Arrow (1972). 75 Clusters might also enjoy benefits arising from agglomeration. Soubeyran and Weber (2002) developed a theoretical district formation model, taking into consideration social capital effects including local socioeconomic spillover.

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This finding that the dynamic process of economic development is accompanied by the changing roles of human capital and social capital is interesting. Although Putnam (1993, 2000) provides abundant evidence of how social capital has changed over time, he does not use regression estimation, and thus fails to precisely demonstrate how the role played by social capital changed. On the other hand, most of the existing literature examining the effect of social capital on economic growth did not examine such dynamic processes probably because of the scarcity of long-term data. Individuals learn how to use a machine from others also using the same machine, such that social learning is important after a new technology has been adopted (e.g., Foster and Rosenzweig 1995, Munshi 2004). Further, it seems worthwhile to investigate whether individual decisions to adopt a new technology are related to the adoption choices of members belonging to their social network. Bandiera and Rasul (2006) analyzed the influence of such social capital (social networks) on social learning in situations where a lack of information is a barrier to becoming a user and to potential users being able to communicate with each other. Similarly, Yamamura (2008c) shed light on the diffusion process of technology among people and explored how social capital promotes technology diffusion, and thereby increasing demand76.

Finding 11 Social capital, such as that represented in interpersonal networks, plays an important role in the diffusion of computers within a community, especially when a high proportion of one’s neighbors already own computers. Findings 9-11 led me to argue that social capital has a positive effect on technology diffusion, not only between firms but also between consumers, and that such an effect changes along with changing circumstance.

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2.5. Quality of Life in Terms of Health The roles played by social structures such as social capital and their effect on health have been discussed considerably by epidemiologists (e.g., Kawachi et al. 1997, 1999, 2007; Brown et al. 2006; Petrou and Krupek 2008). People seem be enjoying a high degree of social cohesion in postwar Japan. Recently, however, it has been observed that the number of suicides is rising. This might not only be because of economic stagnation since the early 1990s, but also because of the collapse of interpersonal relationships, which limits access to various forms of support, including emotional support (Durkheim 1951). Some studies have, however, argued that social environmental factors have little impact upon suicide (Kunce and Anderson, 2002; Kushner and Sterk, 2005). Accordingly, it is necessary to more closely explore socio-economic impacts. For example, after controlling for economic factors, how and to what extent do social factors influence suicide? Furthermore, is there a difference in such social capital effects between males and females? Yamamura (2007f) used Japan panel data to examine these questions and found the following. 76

In a case study of FIFA football rankings, Yamamura (2008i) provides evidence that technology transfer is impeded as a result of team member heterogeneity.

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Finding 12 Female labor participation rates are lower than those of males, and as a result females have more spare time to spend with neighbors than do males. Accordingly, social capital is more apt to decrease the likelihood of committing suicide in females than in males. This finding indicates that a social capital effect is profoundly connected with the conditions of the labor market. One who gains income by being employed is more likely to be segregated from the community. From the view point of economics, it is hence necessary to compare the benefits and costs when one participates in the labor market. The association between health and social capital can be considered from another standpoint. In modern society, negative externality caused by smoking can be taken as one of major health-related issues. In order to decrease negative externality, social pressure is considered to be effective in causing smokers to cease smoking. Social pressure appears to increase the psychological cost of annoying others, thereby increasing the function of social capital (Funk 2005). As a consequence, social capital seems to raise psychological costs, leading to increased smoking prevention. Yamamura (2007d) examined how social capital decreases smoking rates and reported the following finding.

Finding 13 The influence of others is stronger when social capital is larger. Thus, social capital helps to create a reduction in smoking through smoking-related interaction. In this way, various research findings indicate that social capital improves health. However, the channels through which social capital affects health are different, and thus this argument is at best ad hoc and unclear. It is thus necessary to provide more consistent interpretations based upon well-developed theoretical frameworks.

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2.6. Formation of Trust In addition to formal rules, informal rules are thought to provide a basis of interpersonal exchange through networks. Informal rules are sustained by a morality that can be categorized in two ways: ‘limited group morality’ and ‘generalized morality’. ‘Limited group morality’ is characterized by applicability to close acquaintances and relatives, whereas ‘generalized morality’ is characterized by applicability to the greater society (Platteau 1994). It seems appropriate that morality also generates trust among society members. More recently, and in line with the assertion of Platteau (1994), a number of researchers have argued that there is a difference between generalized trust and particularized trust (Uslaner 2002), pointing out that generalized trust is more important in generating large efficiency gains than particularized trust (Fafchamps 2006). This is why generalized trust has attracted special attention (e.g., Leigh 2006a, 2006b, Bjørnskov 2006 b, Berggren and Jordahl 2006, Chan 2007, Gustavsson and Jordahl 2008). On the other hand, there are arguments that particularized trust plays a

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more important role in economic development (Hayami 2001, Cassar et al. 2007)77. However, in actuality, trust cannot be categorized so simply78. As pointed out by Uslaner (2002), neighborhood trust is a mixture of generalized and particularized trust. Yamamura (2008h, 2008j) attempted to examine how neighborhood trust is generated in Japan and found the following79.

Finding 14 Income inequality is associated with low trust for both young and old generations. It is also interesting to observe that strangers hardly affect neighborhood trust. Age homogeneity and education are associated with low trust; this tendency is, however, not observed when the sample includes only old generation respondents.

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In line with the evidence previously presented by the existing literature (Bjørnskov 2006b, Gustavsson and Jordahl 2008), income inequality effects on neighborhood trust are equivalent to those on generalized trust. The characteristics of generalized trust are also mirrored in the fact that strangers do not influence trust. In contrast, the influences of age homogeneity and human capital on neighborhood trust are not consistent with those on generalized trust. Further, these influences are partly affected by the characteristics of the generations involved. From what is presented here, it is plausible to argue that the features of neighborhood trust are influenced by changes in circumstances and thus evolve over time. This is in line with the assertion of Bloch et al. (2007) that communities may survive small external shocks, but may break down under more stressful circumstance because communities include conflicting features that increase not only the value of abiding by mutual aid norms but also the value of coordinated deviation. Even if, as generally believed, a community is closed to strangers, it is induced to open up and adjust to modern socio-economic environments under the pressure of nation-wide or global economic integration. In short, the characteristics of communities and the interpersonal trust within a community rely on the particular circumstance of the community, especially during a transition period80. Moreover, in addition to the factors discussed above, cultural, historical, and other socioeconomic factors seem to be important in eliciting trust81. To clarify how such factors affect trust, an increasing body of field and experimental research has been conducted in various geographical areas such as Russia (Gächter et al. 2004), Southeast Asia (Carpenter et al.,

77

Social capital is more important and effective in enhancing the complementarities among markets, states and communities rather than realizing an efficient market if social capital is regarded as particularized trust (Hayami 2001, Bowles and Gintis 2002). 78 It was found that trust and positive reciprocity are only weakly correlated, whereas trust and negative reciprocity exhibit a negative correlation(Dohman et al. 2008). 79 According to Yamagishi (1988), Japanese society provides a system of mutual monitoring that raises the degree of trusting behavior. It was found, however, that Americans have a higher level of generalized trust than Japanese in situations where mutual monitoring and sanctions do not exist (Yamagishi and Yamagishi 1994, Yamagishi et al. 1998), which is contrary to the seemingly general view of trust among Japanese (Fukuyama 1995). 80 Carpenter et al. (2006) argued that space and location are important to comprehend trust. 81 What should also be emphasized is that the level of trust varies by gender (Croson and Buchan 1999, Yamamura 2008j).

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2004a, 2004b, 2006) and Africa (Danielson and Holm 2007). Further, there are comparative studies of areas of different cultural backgrounds82.

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CONCLUSION Japan appears to be characterized by a racially and economically homogeneous society and long-term interpersonal relationships, resulting in an accumulating abundance of social capital. As I have outlined thus far, various recent empirical findings reveal that social capital reduces transaction costs and facilitates collective action, leading to beneficial outcomes in Japan. However, the miraculous economic growth experienced by Japan in the post-war period is thought to have been followed by a collapse of tightly-knit interpersonal relationships83. Put another way, in the process of economic development, community is integrated in a wider economic and political system so that the relationships among community members gradually change. Inevitably, the role of social capital and its importance in Japanese society changes over time. Social capital regarded as local public goods that can provide a system of sanctions plays a critical role in leading to efficient outcomes when formal institutions fail to be established (Yamagishi 1986, Hayami 2001). Nevertheless, this feature of social capital limits individual business opportunities within a closed network, thereby decreasing the likelihood that individuals can maximize gains from exchange with outsiders. This implies that social capital is effective in realizing small business opportunities where exchange is limited within a community, but it is ineffective in the case of large to small businesses in anonymous markets. Accordingly, community mechanisms that rely on large amounts of social capital, and include particularized trust, make large contributions to the improvement of socioeconomic outcomes in the developing stage of society, whereas human capital, formal institutions and generalized trust are more effective in increasing the benefits to society through anonymous market exchange in the developed stage. Although the role played by social capital does not completely disappear, the dynamic aspect of the way it changes must be taken into account when interpreting the findings presented in this paper. On the other hand, it is also worth noting the possibility that social capital has a detrimental effect on socio-economic outcomes (e.g., Olson 1965, 1982; Putnam 2000 Chapter 22, Lederman et al. 2002). Hence, what should be borne in mind is the question of how and to what extent social capital creates not only benefits, but also costs. Here, it is necessary to scrutinize the effect of social capital on socio-economic outcomes and to weigh the benefits stemming from social capital against the costs84.

82

Holm and Danielson (2005) compared Nordic and African trust using an experimental approach. Buchan and Croson (2004) employed an investment game to compare the effect of social distance on trust between the United States and China. There are also existing comparative works between Japan and the United States (e.g., Yamagishi and Yamagishi 1994, Yamagishi et al. 1998), and Japan and Switzerland (Frietag 2004). 83 It has been observed in the United States that social capital has declined over the long term (Costa and Kahn 2003a, Putnam 2000). 84 Using a trading model to investigate the connection between growth labor mobility and social capital, Routledge and von Amsberg (2003) indicated that social capital increased at the expense of an efficient mobile labor force.

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In terms of methodology and approach, special attention should be paid to the method used to measure social capital for the purpose of providing useful information on which policy-makers can depend (Karlan 2005, Beugelsdijk and van Schaik 2005b, Western et al. 2005, Bjørnskov 2006b, Callois and Aubert 2007). Most of the empirical findings presented in this paper, with the exception of the garment cluster and professional baseball case studies, were obtained through statistical analyses based on aggregated data at the prefectural level. Inevitably, basic individual demographic information, such as sex, education level, age, and income, could not be captured. Furthermore, the proxies for social capital were ad-hoc. Consequently, as a whole these findings covering various facets of Japanese society are likely suffer from estimation biases, and as such they cannot sufficiently clarify whether social capital has a significant influence on socio-economic outcomes. In contrast to such studies, research on other countries has begun to assess how individual features are associated with social capital (e.g., Charles and Kline 2006, Fidrmuc and Gërxhani 2008), using disaggregated individual data. Therefore, in order to compare the effect of social capital between Japan and other countries, more precise investigations of Japan are needed. Future directions for social capital research in Japan will include the examination of the costs and benefits resulting from social capital in modern Japan, which is regarded as a ‘transition economy,’ using appropriate proxies for social capital at the individual level.

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Yamamura, E. (2007 a). The market for lawyers and social capital: Are informal enforcing ‘rules’ a substitute for formal ones? mimeo. Yamamura, E. (2007 b). The impact of formal and informal deterrents on crime. Mimeo. Yamamura, E. (2007 c). Effects of social norms and fractionalization on voting behavior in Japan. Mimeo. Yamamura, E. (2007 d). The effects of the social norm on cigarette consumption: evidence from Japan using panel data. mimeo. Yamamura, E. (2007 e). Heterogeneity, trust, human capital and productivity growth: Decomposition analysis. mimeo. Yamamura, E. (2007 f). The different impacts of socio-economic factors on suicide between males and females. mimeo. Yamamura, E. (2008 a). Effect of informal social networks on the recent revival of Japan's film industry. forthcoming in Journal of Socio-economics.. Yamamura, E. (2008 b). The impact of formal and informal deterrents on driving behavior. forthcoming in Journal of Socio-economics. Yamamura, E. (2008 c). Diffusion of home computers and social networks: A study using Japanese panel data. forthcoming in Applied Economics Letters. Yamamura, E. (2008 d). The effects of inequality, fragmentation, and social capital on collective action in a homogeneous society: Analyzing responses to the 2005 Japan Census. forthcoming in Journal of Socio-economics. Yamamura, E. (2008 e). Interaction effects of social capital and learning from victim experiences of natural disasters: A case study from Japan. mimeo. Yamamura, E. (2008 f). Dynamics of social trust and human capital in the learning process: The case of the Japan garment cluster in the period 1968-2005. mimeo. Yamamura, E. (2008 g).Game information, local heroes, and their effect on attendance: the case of the Japanese Baseball League. mimeo. Yamamura, E. (2008 h). Comparison of neighborhood trust between generations in a racially homogeneous society. A case study from Japan. mimeo. Yamamura, E. (2008 i). Effect of linguistic heterogeneity on technology transfer: an economic study of FIFA football rankings. Mimeo. Yamamura, E. (2008 j). Who trusts others in a racially homogeneous society? A case study from Japan. Economics Bulletin, 26, 1-9. Zak, P.J. and Knack, S. (2001). Trust and growth. Economic Journal, 111, 295-321.

In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 14

SOCIAL INTERACTION EFFECT ON INTERLEAGUE PLAY ATTENDANCE: THE CASE OF THE JAPAN PROFESSIONAL BASEBALL LEAGUE Eiji Yamamura Department of Economics, Seinan Gakuin University, Fukuoka, Japan

ABSTRACT

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The Japan Professional Baseball League recently began interleague play, in which the Central league teams play a game with the Pacific league teams, in order to attract fan interest. The Central League is far more popular than the Pacific League. This paper explores whether the different features of the two leagues eventually result in affecting the demand behavior of fans for interleague games. The main findings are that when compared with the PL fans, the attendance of the CL fans tends to be more inelastic with respect to team performance and competitive balance but more elastic with respect to ticket prices and the existence of substitutes. Social interaction and addictive behavior appear to account for the evidence, as stated above.

JEL classification: L83, Z13. Keywords: interleague play, social interaction, demand, game attendance.

1. INTRODUCTION Since the establishment of the Japanese Professional Baseball League (hereafter JPBL) in the mid-1930s, baseball has been the most popular professional sport in Japan for a long time. Nonetheless, an unprecedented decline in attendance and program ratings for games has been observed recently. This tendency has induced both structural and institutional changes in the

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JPBL. The controversy between the players’ labor union and team owners concerning the restructuring of the JPBL triggered the first ever player strike in the history of the JPBL. In the end, the player’s labor union and owners reached a compromise on the condition that the labor union would cease the strike in return for deciding not to restructure the JPBL and agree to hold interleague play to attract fan interest and increase attendance85. As a result, in the spring of 2005, the first interleague game was held in the history of the JPBL, and it was counted as a regular season game. The JPBL consists of the Central League (hereafter CL) and the Pacific League (hereafter PL). As stated in the following section, it is widely known that, historically, the CL, including the Giants as the “leader” of the JPBL, has been far more popular with fans than the PL (La Croix and Kawaura 1999, Nomura 2006). Accordingly the games of the CL, and in particular those of the Giants, have drawn greater attendance than those of the PL. Therefore, the teams belonging to the PL have a more positive view of interleague play since they can expect that by playing against the CL teams, an in particular the Giants, will attract many fans to watch their games. The CL and PL have distinctly different features that have formed historically and persisted long after their establishment. The attendance for the interleague play games where the CL team plays against the PL team naturally consists of both CL fans and PL fans. This study takes the view that the characteristics of each league mold the behavior of the fans attending the games. According to social interaction theory (Becker and Murphy 2000), a person’s demand behavior partly depends upon attitude and the conduct of other persons with whom the person often comes into contact with86. The pattern of conduct of baseball fans seems to be shaped by the environment in which they become fans of baseball. Hence, the different feature of the environments of the CL and PL within a historical institution such as the JPBL seems to have a crucial impact on the progress of forming the character of fans. Consequently, the determinants of attendance to the JPBL game are likely different between the CL and PL87. That is, the features of the institution, i.e., the league, should have an important effect on attendance88. It is therefore crucial in the present inquiry to explore the economic phenomenon from this institutional point of view. Although the abovementioned social interaction effects seem to be applicable to sports economics, little is known about such social interaction effects upon the demand for professional sports. Some studies have provided evidence concerning the determinants of attendance separately for the American and National Leagues in Major League Baseball (Schmidt and Berri 2001; 2003). However, they did not focus on their different characteristics or examine whether such characteristics would have an effect on the result. The empirical objective of 85

The conditions under which the interleague games were held are similar to the case of the Major League (Butler, 2002). Schmidt and Berri (2004 a) and Coats and Harrison (2005) examined the influence of Major League strikes on consumer demand. 86 The social interaction mechanism is useful for analyzing various human behaviors. See, for instance, Glaeser et al. (1996), Glaeser et al. (2002), and Topa (2001). 87 Economists have been interested in attendance for Major League Baseball (Butler 2002, Schmidt and Berri 2001; 2002; 2004a; 2004b, Coats and Harrison 2005). Some students pay attention to and explore the JPBL (Ohtake and Ohkusa 1994; Ohkusa and Ohtake 1996, Ohkusa1999; 2001, La Croix and Kawaura 1999). Nevertheless, to the author’s best knowledge, there is no study which focuses upon the attendance of the JPBL. 88 Yamamura and Shin (2007a; 2007b) provide the evidence that the difference between PL and CL in characteristics leads to different outcomes in the competitive balance and the development process between them.

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this paper is to ascertain the determinants of game attendance in interleague play and examine the extent to which league characteristics affect the attendance of interleague play games. The differences in behavior between the fans of the CL and PL are interpreted mainly from the standpoint of social interaction. Following Butler (2002), the factors affecting game by game attendance are identified empirically through regression analysis using data from the interleague game of the 2005 JPBL season. The organization of this paper is as follows. In the next section, the features of the JPBL and the results of interleague play in 2004 are surveyed. Then, the regression functions are specified and the results of the estimation are discussed. Finally a conclusion is provided.

2. REVIEW OF PROFESSIONAL BASEBALL IN JAPAN

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2.1. Overview The JPBL, inaugurated in 1936, initially comprised seven teams forming one league. Later, in 1950, the JPBL was divided into two leagues, the CL and the PL, and the two league system has continued ever since (Baseball Magazine 2004). The team achieving the highest winning percentage in each pennant race is the winning team for that respective league, become the “finalists” for the championship. At the end of the season, the “Japan Series,” in which the two winning league teams play games on behalf of their league, is held to determine the overall champion. Since the inauguration of the JPBL, the Giants have become champion 29 times. The Giants’ 29 victories are one and a half times more than the next-placed Lions’ 19 victories, indicating that Giants have dominated the JPBL teams in terms of team performance. The Giants are the most popular team due not only to team performance during games but also to the effects of superstar, i.e., the presence of “super stars,” such as Shigeo Nagashima, who has been called “Mr. JPBL,” Sadaharu Oh, who hit a total of 868 and is known as the “Home Run King,” and more recently Hideki Matsui, who later became a regular player for the New York Yankees (Rosen 1981)89. Historically, the CL, including the Giants, has been viewed as the leader of the JPBL and has been far more popular with fans than the PL (La Croix and Kawaura 1999). As for average game attendance during the whole regular season in 2005, the CL recorded 26.6 thousand fans. Three of the six teams belonging to the CL, i.e., the Giants, Tigers, and Dragons, saw over 30 thousand in average attendance. On the other hand, 20.2 thousand fans attended the PL games on average, and only one of the six teams in the PL, the Hawks, saw over 30 thousand fans (Baseball Magazine 2006)90. This is the one of the reasons why the PL committee was much more eager to hold interleague play games, allowing PL teams to play games against the Giants.

89

The Giants were the first team to learn the strategy of the Major League from the Los Angeles Dodgers through the training camp in the Dodgers town in 1961 (Nomura 2006). The borrowing of advanced technology learned from the Major League by the Giants resulted in improved playing levels of the JPBL. Therefore the Giants are considered the entrepreneur, or the leader, of the JPBL. Yamamura (2006) argues that such a borrowing of technology caused the levels of the national football teams to converge. 90 Prior to 2005, accurate data of attendance of the JPBL was not published, and thus an examination of attendance has not correctly been conducted due to measurement errors.

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2.2. Result of Interleague Play In interleague play, the CL team plays a game against the PL team. Interleague games are recorded as part of the regular season. Thus the results of interleague play are added to that of the whole regular season, thereby affecting the pennant race in each league. The results of interleague play in 2005 are reported in Table 1. All 216 interleague games were played during the months of May and June, with Pacific teams winning 105 times, losing 104 times, and ending in a draw 7 times. These numbers indicate that the performance of the PL is competitive with that of the CL. The Giants, who, as stated above, are considered the most popular team and have the most prominent historical record in the JPBL, did not dominate in game performance in interleague play. In 2005, the average payroll of the CL was 82.1 million yen, constituting about one and half times that of the PL, which was 57.1 million yen (Japan Professional Baseball Players Association Home Page)91. Assuming that the average payroll represents a team’s potential performance, there is distinct gap between the CL and the PL. The difference in potential league performance measured by average payroll, however, did not reflect the results of interleague play. Thus, there seems to be a difference regarding the incentive to win interleague games since the marginal effect of winning on attendance and popularity can be expected to be higher for the less popular PL league teams than for the CL teams. Turning now to the average attendance per game, which is taken as a measure of popularity, the data for interleague play are shown in Table 2. In Panel A it can be seen that only the attendance numbers of the Giants and Tigers games are over 30 thousand, indicating that these two central teams are able to realize concentrated attendance for their games. Despite the undistinguished performance of the Giants during interleague play, as shown in Table 1, the Giants predominately attract fans to their games. This seems to be due to the influence from past popularity, namely the intertemporal linkage in demand for game attendance.

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Table 1. Results of Interleague Play Pacific Team Marines Hawks Lions Buffaloes Fighters Golden Eagles Total

Win 24 23 18 17 12 11 105

Loss 11 12 18 16 22 25 104

Draw 1 1 0 3 2 0 7

Central Team Tigers Dragons Swallows Bay Stars Giants Carp Total

Win 21 15 20 19 18 11 104

Loss 13 21 16 17 14 25 105

Draw 2 0 0 0 4 1 7

Note: Numbers of wins, losses, and draws in the interleague play. Source: Baseball Magazine (2006).

Becker and Murphy (1988) have developed an addictive behavior model in which past consumption stimulates current consumption by affecting the marginal utility of current and 91

Majority of Japanese players in major league are from PL (Nomo, Ichiro, Jojima, Iguchi, Taguchi, Matsuzaka). This is partly and presumably due to the low level of payroll in PL. Put it differently, the underestimation of player’s performance in PL leads to a flow of them from JPBL to US major league.

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future consumption. Therefore, addictive behavior may as well reasonably account for fan demand for JPBL games. Table 2. Statistics of Attendance Per Game During Interleague Play Panel A (in thousands) Pacific Team Hawks Fighters Eagles Marines Lions Buffaloes

29.8 24.4 20.9 22.8 21.5 21.0

Central Team Swallows Carp Dragons Giants Tigers Bay Stars

16.6 16.6 24.7 34.2 33.6 14.6

Panel B (in thousands) Day Monday Tuesday Wednesday Thursday Friday Saturday Sunday

14.6 20.5 22.2 22.5 21.5 26.8 27.1

Source: Baseball Magazine (2006).

Panel B of Table 2 shows the attendance by day of the week, which is one of the factors expected to influence attendance (Butler 2002). Attendance numbers for Saturday and Sunday are obviously larger than for rest of the week, which is consistent with our intuition that on holidays fans are more easily able to find spare time to enjoy the JPBL.

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2.3. Feature of the CL and PL Showing a comparison of the characteristics of each team’s host prefecture and stadium between the CL and PL leagues, Table 3 provides descriptive statistics separately for the CL and PL. The average per capita incomes of the team host prefectures are 5.23 million yen for the CL home and 4.24 million yen for the PL home. Moreover, the populations of the CL home are roughly four times larger than those of the PL suggesting, that the CL home areas are located in more urbanized areas. Consumer demand for JPBL game tickets is likely to be diverse, presumably since consumer behavior depends upon various factors, such as income, age, gender, status, and family size. Given that this is true, the more diverse kinds of tickets are made available for purchase, then the greater numbers of tickets will be sold.

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Eiji Yamamura Table 3. Descriptive Statistics

Per capita income of prefecture where teams host prefecture (in million yen) Population of team’s prefecture (in millions) Average price of the ticket in team’s host stadium (in yen) Number of kinds of tickets in team’s host stadium Coefficient of variation of the ticket price among kinds of tickets in team’s host stadium Seating capacity of the team’s host stadium Number of professional football teams located in team’s host prefecture

Central home 5.23

Pacific home 4.24

All 4.73

5.56 2,168

1.24 2,140

3.35 2,150

7.67 0.69

8.75 0.76

8.22 0.73

42,568 2.04

38,562 1.42

40,517 1.72

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Note: Average price of the ticket is the simple average of the various ticket prices. Source: http://www.j-league.or.jp/, Takarajima (2005).

Actually, most stadiums currently offer various kinds of seats. For example, the outfield bleacher and infield bleacher seats are further divided into various ranks, such as free, reserved, and special seats. Table 3 shows that the simple average ticket prices are 2168 in the CL and 2140 in the 92 PL . The average numbers of kinds of tickets in each team’s host stadium are 7.67 in the CL and 8.75 in the PL. Next, concerning their coefficients of variation, the PL has a larger value. This implies that managers of the PL teams make more efforts to lower ticket prices and diversify the seating options. As described earlier, the CL is more popular with fans than the PL because the CL teams play games with the Giants, who are considered the “leader” of the JPBL. It seems inevitable that the CL teams depend upon the Giants to generate attendance and that the existence of the Giants reduces the incentive to improve services for fans. For example, the more popular a team is,, then the larger the seating capacity of the team’s host stadium must be. The average seating capacity of each team’s host stadium in the CL is larger than that of the PL, and this supports the argument of the CL’s superiority over the PL concerning popularity. The Japanese Professional Football League (hereafter JPFL), which is regarded as a substitute for the JPBL, was inaugurated in 1993 and provided competitive pressure to the JPBL in the professional sports market. In Table 3 it can be seen that the average numbers of JPFL teams located in the prefectures of host stadiums are 2.04 for the CL and 1.42 for the PL, indicating that the JPFL teams are more likely to be located in more urbanized areas where the CL teams tend to be located, as stated above. As a result, the CL teams must compete with the JPFL for attracting attendance.

92

Ticket prices were calculated by weighted average for various seats (Schmidt and Berri 2001). Due to the lack of data for calculating the weighted average, the simple averages of the various kinds of seats are used in this paper.

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3. MODEL AND ESTIMATION

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3.1. Regression Function This section specifies the regression function used to ascertain the determinants of the attendance of individual games during interleague play in 2005. Following Schmidt and Berri (2001) and Coates and Harrison (2005), determinants of a demand function for baseball game attendance would generally be current team performance taken as team quality, income, and size of market, in addition to competitive balance. Additionally, the day of the week on which games are played, as described in Butler (2002), and available substitute spectator sports would be also expected to influence attendance. Some fans are interested in the pennant race of the regular season as a whole. Other fans, on the other hand, are fascinated partly by interleague play, which can be considered an even greater milestone in the history of the JPBL than the pennant race. Accordingly, as a proxy for current team performance, this study used not only current team winning ratios during interleague play but also current team winning ratios during the regular season in order to better capture fan interest in team quality. Moreover, for each game of interleague play the CL team was matched up against the PL team, and thus the attendance was comprised of both PL and CL team fans. Attendance by the CL fans was thus affected by the current the CL team performance, whereas that by the PL fans was affected by the current the PL fans93. As a consequence, each current winning ratio stated above for the CL and the PL teams was included in the regression function. It was expected that high team quality would increase the attendance and that therefore the signs of its coefficients would be positive. A common proxy for the size of a game’s market is the size of the area where the team host stadium is located in addition to the size of the stadium itslef. In this study, per capita income and the population of the prefecture where the game was played were used to capture the size of the game’s market. These data were obtained from Minryoku (Asahi Shinbunsha, various years). A large market size would result in increasing attendance. Consequently, the signs of the market size coefficients were expected to be positive. The ticket price, numbers of tickets, and coefficients of variation of ticket price, as earlier described, were included. If the diversification of tickets extends the market by luring various consumers consisting of not only enthusiastic fans but also latent ones, then the coefficients on the numbers of ticket and the coefficients of variations of ticket price would be positive. In addition to these variables related to the tickets, the average ticket price was included as a variable for interaction with the CL home game dummy, which took a value of 1 if the CL team played at home and a value of 0 otherwise, in order to account for differences of the effect of ticket price on attendance between the CL and PL. With the objective of capturing the popularity of the CL, the CL team home game dummy was used. Following the previous discussion, coefficients on these variables were expected to be positive. The regressions were also controlled for weekends effects by including a Sunday dummy and Saturday dummy, which are equal to 1 for each day of the week. They were expected to be positive since fans have more time to enjoy games on holidays than on weekdays. 93

Although fans are also interested in opponent performance, of which the players belong to the other league, they are likely to pay much more attention to that of their favorite team.

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As described previously, the inauguration of the JPFL was regarded as a substitute for baseball, and therefore it seems to have played a critical role in the decline in popularity of the JPBL94. Indeed, a portion of the JPBL fans seems to have switched over to attending more games of the JPFL. The Japan-Korea World Cup accelerated the shift in popularity from the JPBL to the JPFL. This factor has therefore been taken into account with respect to the effect of the emergence of the JPFL. Accordingly data of the professional football teams in the respective prefectures were incorporated into the regression function in order to capture such substitute effects. The predicted signs of its coefficients were convincingly negative. Economists have been interested in whether the competitive balance has an effect upon league outcomes (e.g., El-Hodiri and Quirk 1971; Schmidt and Berri 2001). If the fans of a league were competitively imbalanced, one might expect a decline in attendance. In other words, the uncertainty of outcomes in the pennant race would lead to an increase in fans interest, thereby increasing attendance. Following previous research (Knowles, Sherony, and Houpert 1992, Schmidt and Berri 2001), it can be predicted that an increase in a league’s competitive balance would have a positive influence on game attendance. With the objective of accounting for competitive balance being the distribution of wins within each league, the regression therefore includes its proxy, which in this inquiry was measured by the standard deviation of the current number of regular season wins. The large value of this regression can be interpreted as competitive imbalance. Its coefficient, therefore, can be expected to be negative.

3.2. Estimation Results

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Turning now the estimation results of the regression function as introduced above95, Table 4 shows the regression results regarding the determinants of attendance during interleague play using a simple OLS model96. The values of the coefficients of all variables represent the elasticity calculated by the delta method. First, with respect to the the team performances, the signs of the coefficients for the regular season winning ratio and interleague winning ratio for the PL team are generally positive and statistically significant, being as a whole consistent with the study’s expectations. The signs of the corresponding coefficients for the CL are also positive, but they are statistically insignificant. These results indicated that team performance has a positive influence upon only the attendance of the PL fans.

94

Lee (2006) suggests that the emergence of Major League Baseball as a rival league to the Korean Professional Baseball League in Korea accounted for more than half of the decline in attendance that occurred between 1995 and 2000. The superstars of the JPBL, for instance Nomo, Ichiro, Matsui, and Jojima, left the JPBL and became Major Leaguers, and as a result fans became more interested in their play in the Major League. Therefore, Major League Baseball is also considered as a substitute for the JPBL. One future direction of this research is to take such major league effects into account. 95 If the game is held in a stadium which is not part of the franchise of professional baseball teams, we excluded it from the sample. In other words, some games played at a neutral site so that these samples are not included. This is because the CL home game dummy variable could not be included when the stadium was not a franchise of the CL and PL teams. Therefore, 209 samples were used for our regression analysis though the total played games were 216 during interleague play. However, the estimation results are unchanged when all samples are used omitting the CL home game dummy variable.

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Social Interaction Effect on Interleague Play Attendance Table 4. Attendance Regression Results (1) Regular season winning ratio for Pacific team Interleague winning ratio for Pacific team Regular season winning ratio for Central team Interleague winning ratio for Central team Per capita income of prefecture where game was held Population of prefecture where game was held Seating capacity of the stadium Average price of the ticket Average price of ticket *Central team home game dummy Number of kinds of tickets in stadium where game was held Coefficient of variation of the ticket price among kinds of tickets Central team home game dummy Saturday dummy

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Sunday dummy Numbers of professional football team in prefecture where game is held Competitive balance of Pacific League Competitive balance of Pacific League Adjusted R2 Sample

(2) 0.32** (4.21)

0.009 (0.16) -0.38** (-7.54) -0.02 (-1.02) 0.83** (7.45) 0.13 (1.18)

-0.38** (-7.56) -0.009 (-0.42) 0.78** (6.88) -0.01 (-0.11)

(3) 0.28** (3.23) 0.03 (0.62) 0.14 (0.83) -0.02 (-0.45) -0.38** (-7.37) -0.01 (-0.56) 0.82** (7.05) 0.01 (0.09)

0.11 (1.39) 0.88** (6.78) 0.21** (10.4) 0.03** (5.25) 0.03** (4.40) -0.15** (-6.00)

0.02 (0.24) 0.97** (6.84) 0.20** (10.8) 0.03** (5.69) 0.03** (4.70) -0.16** (-6.33)

-0.41* (-1.91) -0.10 (-1.16) 0.84 209

-0.36* (-1.66) -0.08 (-0.99) 0.85 209

0.13** (2.64) 0.15 (0.97)

(4)

(5) 0.32** (4.72)

0.05 (0.61) 0.93** (5.84) 0.20** (9.80) 0.03** (5.64) 0.03** (4.66) -0.15** (-5.73)

0.01 (0.30) -0.54** (-8.32) 0.23** (4.36) 0.58** (4.57) 0.10 (1.00) -1.21** (-5.35) 0.03 (0.47) 1.42** (7.68) 1.33** (6.31) 0.03** (5.35) 0.03** (4.51) -0.02 (-0.74)

-0.55** (-9.27) 0.26** (5.19) 0.55** (4.55) -0.05 (-0.52) -1.31** (-5.99) -0.03 (-0.37) 1.52** (8.99) 1.42** (6.90) 0.03** (5.94) 0.03** (4.92) -0.004 (-0.15)

(6) 0.34** (4.10) -0.03 (-0.54) 0.22 (1.42) -0.03 (-0.61) -0.55** (-9.23) 0.26** (5.10) 0.54** (4.09) -0.03 (-0.29) -1.32** (-5.86) 0.05 (0.61) 1.50** (8.12) 1.43** (6.70) 0.03** (5.97) 0.03** (4.92) -0.004 (-0.15)

-0.37* (-1.72) -0.09 (-1.13) 0.85 209

-0.42* (-2.10) -0.09 (-1.07) 0.86 209

-0.36* (-1.89) -0.08 (-1.01) 0.87 209

-0.36* (-1.96) -0.07 (-0.99) 0.87 209

0.09* (1.82) 0.19 (132)

Note: Numbers in parentheses are t-statistics. * and ** indicate significance at the 5 and 1 percent levels, respectively (one-sided tests). Although not reported, constant, popular team dummies (Giants, Tigers, and Hawks) are included in the regressions in order to save space. If the game is held in the stadium which does not belong to the franchise of one of the professional baseball teams, we exclude it from the sample. This is why although interleague play games total 216, we use only 209 samples in the estimations above.

According to social interaction theory (Becker and Murphy 2000), the conduct of individuals depends upon not only their own preferences but also other persons with whom 96

To control for the heteroscedasticity, white robust estimators are used as standard errors to calculate t-values.

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they are often in contact, such as friends, colleagues, and neighbors. Thus, what others consume can stimulate a person’s demand for the same things. That is to say, the more popular the goods, the more people will want them. The estimations for the CL home game dummy strongly support the presumption that the CL is more popular than the PL, implying that people are more likely to make contact with the CL fans than the PL fans. Another explanation for this result comes from the perspective of addictive behavior (Becker and Murphy 1988). If past attendance for the CL is distinctly larger than the PL, then that attendance will stimulate the demand of the CL fans for the current interleague game more than that of the PL fans through addictive behavior, regardless of the current performance97. Therefore an interactive as well as addictive mechanism is more likely to be seen in the CL than in the PL. If the conduct of fans depends mainly upon other fans regardless of team performance, then the above result can be explained. As for the market size, with respect to per capita income of the respective team prefectures, its coefficients are negative and statistically significant at the 1 % level. This implies that baseball games constitute inferior goods. When the JPBL was the most popular professional sports league, it might have been normal goods, but it is the current study’s view that during the process of rapid economic development in Japan, the positive features of baseball changed to inferior features. The coefficients of prefecture population, shown in columns (4), (5), and (6), and the estimated seating capacities of the stadiums were positive and statistically significant at the 1 % level. These results were in accord with this study’s expectations. Regarding the variables related to tickets, the signs of the coefficients for the average ticket price were unstable and statistically insignificant. As stated earlier, the differences in the features that fans are faced with between the CL and the PL resulted in differences in fan conduct. From this, it can be predicted that the majority of fans are interested in the CL team when the game is held in the CL team’s host stadium. In columns (4) to (6), the differences of the price effect on attendance between the CL and the PL is examined by incorporating the price interaction with the CL home game dummy. Its coefficients are negative while being statistically significant at the 1 % level, suggesting that the price effect for the CL fans is stronger than for the PL fans. As mentioned earlier, it is presumed that the behavior of the surrounding people has a greater impact on CL fans than on PL ones. The CL fans are less interested in the JPBL games themselves. On the other hand, the social interaction effect on the PL attendance is fainter since there is lower probability for latent fans to interact with the PL fans. Hence, motivation for attending games is likely to be stronger for the PL fans. Moreover, if seeing a JPBL game is a necessity for PL fans, then the demand is not elastic with regard to price98. In the case of the CL, however, the effect of price outweighs that of social interaction, causing demand to become elastic with regard to price for the CL fans. Another possible explanation for these results comes from the perspective of addictive behavior, given that the past attendance of the CL is larger than that of the PL. Besides, assuming that the price difference among stadiums persists over time, and that the long-run responses exceed short-run responses to price changes via addictive behavior, as suggested in Becker et al. (1994), then the price effect on the CL fan attendance is larger than that on the 97

The dynamic panel analysis, as conducted in Becker et al. (1994), is required to examine the effect of addictive behavior more precisely. 98 Coates and Harrison (2005) also reported that demand for baseball attendance is price inelastic.

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attendance of PL fans. This conclusion is consistent with the results above. Although the results of estimating the numbers of the kinds of available tickets were almost positive but not statistically significant, in the results of the coefficient of variation all estimations produced a positive sign and were statistically significant at the 1 % level. These results are in line with our prediction concerning the impact of diversification on demand99. As expected, the coefficients on the Saturday and Sunday dummies were positive and statistically significant100. With respect to the existence of the JPFL teams considered as substitute spectator sports, it can be seen in columns (1), (2), and (3) that the coefficient is negative and statistically significant at the 1 % level. However in (4), (5), and (6) the coefficient is negative despite being insignificant. The prominent decrease in t values arises when the price of tickets interacting with the CL home dummy is included. This evidence suggests that demand shifted from the JPBL to the JPFL is also equivalent to a decline in demand by the CL fans due to a rise in price. As shown in Table 3, the home stadiums of central teams tend to be located in urban areas where a larger number of JPFL home teams are also located. Hence, the CL teams are more likely to compete with the JPFL teams to lure more fans for greater attendance. Looking finally at competitive balance, in all estimations the coefficients take the predicted signs, though the absolute values of the PL are roughly four times larger than those of the CL. Furthermore, those of the PL are statistically significant, while those of the CL are insignificant. These results provide evidence that PL fans prefer parity much more than CL fans. To sum up the evidence shown above, compared to PL fans, demand as measured by attendance of CL fans tends to be more inelastic with respect to team performance and competitive balance while being, on the other hand, more elastic with price and the existence of a substitute spectator sport. The difference of propensities between the CL and the PL might be induced by the environmental differences fans face via the social interaction among fans or the addictive behavior dependent upon past popularity. It is important to take the specific features of each institution, i.e., the CL and the PL, into consideration when attempting to ascertain the determinants of attendance101. In addition, as described in the previous section, although the payroll of the PL is lower than that of the CL, the results suggest that the number of PL team wins is almost equal to that of the CL, indicating that the incentive of the PL teams to win is higher than that of the CL. The ticket prices of the PL are more varied than those of the CL, suggesting that the PL owners make more efforts to entertain their fans. The reason why the efforts of the players as well as the owners of the PL are stronger than those of the CL is that the PL fans are more elastic with respect to the quality of the game and the service due to the lack of social interaction and addiction. 99

As shown in Table 3, the average number of the kinds of tickets is about 8 among the JPBL. The Golden Eagles, a new comer to the JPBL in 2005, differentiates seating and provides 14 different types, which is a remarkably larger number than other teams. The owner of the Golden Eagles created such diversification of tickets in order to attract greater attendance. 100 Although not reported in Table 4, dummies of some popular teams such as the Giants and Tigers of the CL, and the Hawks of the PL, are included in the estimations in order to save space. As predicted, the coefficients of these variables take positive signs and are statistically significant. 101 Schmidt and Berri (2001) examined the determinants of attendance separately for the American League and the National League using both time series and panel analysis. Nevertheless, with the exception of the population’s impact in the panel analysis, a distinctive difference of estimation results was not observed between the American League and National League.

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CONCLUSION The purpose of this inquiry was to investigate the determinants of attendance during interleague play, which is considered a milestone in the history of the JPBL. To put it more precisely, this study attempted to examine whether the different features of the CL and the PL eventually result in affecting the demand behavior for games via social interaction. Compared with the existing literature, our innovation lies in finding out the remarkable differences in fan behavior between the two leagues. The main findings of this study are as follows. Compared with the PL fans, demand as measured by attendance of the CL fans tends to be more inelastic with respect to team performance and competitive balance. On the other hand, it tends to be more elastic with respect to price and the existence of a substitute spectator sport. To put it differently, the behavior of fans is affected by the institutional differences of the league which have historically evolved. The different features of each league have a crucial impact on the outcomes of their respective economic activities. It is critical to take the institutional view into account when analyzing the issues of sports economics102. In addition to the findings described above, fans responded positively to the differentiation of tickets, thereby increasing attendance. Accordingly, strategies to diversify seating can be considered useful in restoring flagging interest in the game. Social interaction and addictive behavior appear to account for the evidence, as stated above. However, a theoretical model is not proposed in the present paper as the explanations of the evidence are intuitive rather than logical. Thus, it will be necessary in future studies to investigate precisely the reason why demand for PL attendance was found to be more price inelastic than that for the CL. For instance, if the preferences of the fan are different between two leagues, the compensation systems for the players should be different. The wage elasticity to competitiveness for Players in PL should be larger than that for players in CL. Hence, what should be needed is to examine is examine the difference of the compensation systems. What is more, the regression approach used in this study is very preliminary. Further directions of this inquiry should include the laying out of a simple theoretical model and a closer look at the effect of social interaction on attendance.

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REFERENCES Asahi Shinbunsha., various years. Minryoku: Todofuken-Betsu Minryoku Sokutei Shiryoshu. Asahi-Shinbunsha, Tokyo. Baseball Magazine.,2006. 2006 Baseball record book, [in Japanese]. Tokyo: Baseball Magazine-sha Becker, G., Murphy, K., 1988. A theory of Rational Addiction. Journal of Political Economy 96, 675-700. Becker, G., Murphy, K., 2000. Social Economics: Market Behavior in a Social Environment, The Belknap Press of Harvard University Press. 102

Schmidt and Berri (2004 b), La croix and Kawaura (1997), and Lee and Fort (2003) analyzed the impact of institutional change on competitive balance.

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Becker, G., Grossman, M., Murphy, K., 1994. An Empirical Analysis of Cigarette Addiction. American Economic Review 84, 396-418. Butler, M. R., 2002. Interleague play and baseball attendance. Journal of Sports Economics 3, 320-334. Coates, D., Harrison, T., 2005. Baseball strikes and the demand for attendance. Journal of Sports Economics 6, 282-302. El-Hodiri, M., Quirk, J., 1971. The economic theory of a professional sports league, Journal of Political Economy 79, 1302-1319. Glaeser, E. L, Sacerdote.B.I., Scheinkman. J. A., 1996. Crime and Social Interaction. Quarterly Journal of Economics 111, 505-548. Glaeser, E. L, Sacerdote, B.I., Scheinkman, J. A., 2003. Social Multiplier. Journal of the European Economic Association 1, 345-353. Japan Professional Baseball Players Association Home Page. Research and Report, http://jpbpa.net/jpbpa_f.htm?report/index.htm. Knowles, G., Sherony, K., Haupert, M., 1992. The demand for major league baseball: A test of the uncertainty of outcome hypothesis. American Economist 36, 72-80. La Croex, S, J., Kawaura, A., 1999. Rule changes and competitive balance in Japanese professional baseball. Economic Inquiry 37, 353-368. Lee, Y, H., 2006. The Decline of Attendance in the Korean Professional Baseball League: The Major League Effects. Journal of Sports Economics 7, 187-200. Lee, Y, H., Fort, R., 2003. Structural change in MLB competitive balance: the depression, team location, and integration. Economic Inquiry 43, 158-169. Nomura, K., 2006., Kyojin-gun Ron: Soshiki Towa, Ningen Towa, Dentoh Towa. [in Japanese](The Giants: the organization, a human, the tradition), Tokyo: Kadokawashoten. Ohkusa, Y., 1999. Additional evidence for the career concern hypothesis with uncertainty of the retirement period: The case of professional baseball players in Japan. Applied Economics 31, 1481-1487. Ohkusa, Y., 2001. An empirical examination of the quit behavior of professional baseball players in Japan. Journal of Sports Economics 2, 80-88. Ohkusa, Y., Ohtake, F., 1996. The relationship between supervisor and workers: The case of professional baseball in Japan. Japan and the World Economy, 8, 475-488. Ohtake, F., Ohkusa, Y., 1994. Testing the matching hypothesis: The case of professional baseball in Japan with comparisons to the United States. Journal of the Japanese and International Economies, 8, 204-219. Rosen, S., 1981. The economics of superstars. American Economic Review 71, 845-858. Schmidt, M. B., Berri, D.J., 2001. Competitive balance and attendance: The case of major league baseball. Journal of Spots Economics 2, 145-167. Schmidt, M. B., Berri, D.J., 2002. The impact of the 1981 and 1994-1995 strikes on major league baseball attendance: a time series analysis. Applied Economics 34, 471-478. Schmidet, M. B., Berri, D.J., 2004 a. The impact of strikes on consumer demand: An application to professional sports. American Economic Review 94, 344-455. Schmidet, M. B., Berri, D.J., 2004 b. Convergence and clustering in Major league baseball: the have and have nots?. Applied Economics 36, 2007-2014. Takarajima., 2005. 2006 Professional Baseball Perfect Data: The Directory of Baseball Players 2005, [in Japanese]. Tokyo: Takarajima-sha

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Topa,G., 2001. Social Interactions, Local Spillovers and Unemployment. Review of Economic Studies 68, 261-295. Winfree, J.A, McCluskey, J.J, Mittelhammer, R.C, Fort, R., 2004. Location and Attendance in Major League Baseball. Applied Economics 36, 2117-2124. Yamamura, E., 2007. Technology Transfer and Convergence of Performance: an economic study of FIFA football ranking. Forthcoming in Applied Economics Letters. Yamamura, E. and Shin, I., 2007 a. The Influence of a Leader and the Social Interaction on Attendance: The Case of the Japanese Professional Baseball League, 1952-2003. Forthcoming in Journal of Socio-Economics. Yamamura, E. and Shin, I., 2007 b. Convergence, clustering and their effects on attendance in the Japan Professional Baseball League. Forthcoming in Applied Economics.

In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Chapter 15

STATUS, FORMATION AND FUNCTION OF SOCIAL CAPITAL IN PARTICIPATORY FOREST MANAGEMENT SETTINGS: EXAMPLES FROM BANGLADESHI ETHNIC COMMUNITIES Tapan Kumar Nath1∗ and Makoto Inoue2 1

Institute of Forestry and Environmental Sciences, The University of Chittagong, Chittagong, Bangladesh 2 Department of Global Agricultural Sciences, Graduate School of Agricultural and Life Sciences, The University of Tokyo, 1-1-1- Yayoi, Bunkyo-ku, 113-8657, Tokyo, Japan

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ABSTRACT In recent years, there have been remarkable changes of the state policies regarding forest and other natural resource management through collective approaches. This leads to the formation of social capital at the community level for the management of natural resources. This chapter examines the status and formation of social capital, and its contribution to forest resource management and the livelihoods of the Bangladeshi ethnic people, drawing empirical data from three ethnic villages associated with two participatory forestry projects. Features of social capital—social connections, groups and networks, level of trust, social cohesion and inclusion, collective activities and participation—were associated with enhanced livelihoods of villagers and improved forest conditions. Where project authority failed, NGOs played a great role in creating social capital among villagers that facilitated to form other forms of capital including human, physical, natural and financial capital of the sustainable livelihood framework. Suggestions are made to involve NGOs along with other stakeholders for greater success of the participatory forest management. ∗

Present address: Department of Global Agricultural Sciences, Graduate School of Agricultural and Life Sciences, The University of Tokyo, 1-1-1- Yayoi, Bunkyo-ku, 113-8657, Tokyo, Japan E-mail: [email protected]

304

Tapan Kumar Nath and Makoto Inoue

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INTRODUCTION The concept of social capital has emerged as a framework for understanding and analyzing the relationships among stakeholders involved in community development, and has come to the forefront as a crucial ingredient in achieving equitable and sustainable development (Abom, 2004). It can be viewed as the features (e.g., networks, reciprocity, trusts) of social organizations that facilitate co-ordination and co-operation for mutual benefit of the members and society as a whole (Putnam, 2001; Bowles and Gintis, 2002). These features encourage collective actions to achieve the sustainable livelihoods (Carney, 1998; Pretty and Ward, 2001; Woolcock, 2001). People, for a long time, engaged in collective actions for the conservation and exploitation of forest resources based on their traditional rules, norms and sanctions of either family or society, which, in most cases, ensure the sustainability of production systems. Although constructive resource management rules and norms have been embedded in many cultures and societies, it is very rare to have recognized these collective actions in recent agricultural and rural development (Pretty and Ward, 2001). Moreover, policy and practice encourage the changing of individual behavior rather than that of groups or communities. This trend resulted in the loss of local institutions which provoked natural resource degradation (Pretty and Ward, 2001). Drawing on a number of studies (e.g. Ostrom, 1990; Leach and Mearns, 1996; Cernea, 1991; Uphoff et al., 1998; Krishna, 2002) Pretty (2003a) and Pretty and Ward (2001) synthesized that government take the responsibility in managing natural resources at the time of fading of local institutions. The reason, as the state authority perceived, was that local people could not manage natural resources effectively (Arnold, 2001). However, scholars believed and documented that project activities will be sustainable when people are well organized, their knowledge is recognized and integrated into planning and implementation. The knowledge and values of local communities are now being acknowledged as valuable for resource conservation (Pretty and Smith, 2004). We now strongly need to develop suitable social organizations, a form of social capital, for natural resource management and protection at the local level (Pretty, 2003a). Social organizations through their appropriate approaches, such as the landcare approach in Australia and in the Philippines which follows information sessions, training, cross-farm visits, farmer-to-farmer information exchange, etc., help to adopt technology for better conservation and production (Cramb and Culasero, 2003; Cramb, 2004; Murali et al., 2006; Adhikari et al., 2007). Organizational capacity leads to better land use and natural resource management, and leads to higher overall incomes (McCarthy et al., 2004). However, for longterm improvement of natural resources, along with social capital, human capital (skills, knowledge embodied in individuals) is also a prerequisite (Pretty and Ward, 2001). It is possible to improve protected areas in the short-term through controlled regulations and direct incentives to the local community, but farmers commonly reverted to old practices when the incentives or regulations are no longer enforced (Pretty et al., 2000; Dobbs and Pretty, 2001; Pretty, 2003b). This is because these types of incentives do not help people to change their attitudes. The social and human capital necessary for effective and sustainable natural resource management require externally driven endowments (Pretty and Ward, 2001) as farmers lack resources or assets. External agencies help to increase knowledge and skills, leadership

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capacity, and create conditions for the emergence of locally acceptable organizations with appropriate rules and norms fitted for the management of resources. However, most importantly, both farmers and external agencies should be aware that the benefits derived from the collective actions must exceed the costs involved in facilitating social and human capital formation (Grootaert, 1998). Group formation, social capital and collective action have been the focus of much attention recently amongst donors and policy makers (Upton, 2008). The ideas of social capital and governance of the commons, combined with the recent success of local groups, offer routes for constructive and sustainable outcomes for natural resources in many of the world’s ecosystems (Pretty, 2003b). Community arrangements in common resources management regulate the ways in which products are to be shared among members. Through these practices, mutual respect, reciprocity and collectiveness are affirmed, leading to cohesive community clusters and sustainability of common resources (Conway et al., 2000). In recent years, there is a remarkable change of state policy across the world regarding forest and other resource management through collective approaches. This leads to the formation of social capital at the community level for the management of natural resources. Collective forest management systems, for instance, include social forestry in Bangladesh, joint forest management in India, community forestry in Nepal, community-based forest management in the Philippines, etc. In Bangladesh, most of the works related to social capital (for example, Mondal, 2000; Dowla, 2006) focus on the role of non-government organizations (NGOs) in creating social capital among the rural poor. Purvez (2005) explained the importance of social networks for the livelihoods of the poor drawing some case studies in plain areas of Bangladesh. No remarkable studies have so far been carried out in Bangladesh ethnic communities exclusively on social capital and its importance to their lives. This chapter will examine the state of social capital, how it has been formed and what roles this capital plays in forest resource management and livelihood enhancement of the Bangladeshi ethnic people, drawing data and information from two participatory forestry projects.

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OBJECTIVES OF THE STUDY Twenty-seven ethnic communities103 are distributed sparsely in different districts of the country, however, mostly in hill districts (Rangamati, Bandarban, Khagrachari, Sylhet, and Cox’s Bazar). Traditionally, they have been concentrated in the north and northeastern borders, the forested areas of the north-central region and the entire areas of the Chittagong Hill Tracts (CHT). As per the census of 1991, the ethnic population of Bangladesh is 1.2 million, which constitutes 1.13 percent of the country’s total population. Among the ethnic groups, there are Christians, Hindus and Buddhists. For centuries, the livelihood of the ethnic people was oriented around forest-based activities as the region was fully covered with forests. The topography and climate make it imperative that the people fall back upon agriculture—plough cultivation and shifting 103

Ethnic communities, sometimes called tribal or adivasi refer to those people whose linguistic and /or cultural background is different from the linguistic and cultural background of the mainstream population of Bangladesh (Khaleque, 1998).

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cultivation (jhum)—for their living (Ahmed, 2002: 23). In remote rural areas where government-driven livelihood supports are very limited, people’s daily lives mostly depend on social connectedness (Wu and Pretty, 2004). Collective activities in the farming systems among Bangladeshi ethnic communities help to boost agricultural productions through which they maintain their livelihood and, at the same time, conserve their resources. In this study we will examine: • •

Status and formation of social capital among ethnic people, and How this capital contributes to their livelihood enhancement and forest conservation

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Data and information for the study were gathered from three case study sites in two participatory forestry projects located in the Bandarban and Sylhet district (Figure 1).

Figure 1. Map of Bangladesh showing study areas.

METHODOLOGY Variables for Measuring Social Capital Though social capital is considered as a development tool at the policy level, obtaining a single measure of social capital is not always possible for several reasons (Woolcock and Narayan, 2000). These reasons include the multidimensional definition of social capital,

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nature, and forms that change over time. Social capital is a general concept and it cannot be captured with just one variable. Many different measures can be and have been posited as indicators of social capital (Paxton, 1999). There is no consensus on the appropriate measurement of social capital (Kramer, 2007). Selection of proxy variables is inspired by the specific manifestations of social capital. We considered social connections, groups and networks, level of trust, social cohesion and inclusion, collective activities and participation as proxies for measuring the state of social capital. These variables are interconnected, that can be evident from the following narrations. Social connectedness in different networks and groups and their nature of relations is a crucial facet of social capital (Pretty and Ward, 2001; Woolcock, 1998). Connectedness in society has great effects on the rural livelihoods and can be improved by a growing frequency of communication and mutual support between households, or created by forming groups or cooperatives (DFID, 1999; Putnam, 2001; Wu and Pretty, 2004), which enhance the stock of social capital. Human networks and connectedness increase people’s trust and ability to work together and expand their access to wider institutions such as political and civic bodies (Inoue, 2003) which help to achieve political and civil advantages for the welfare of the societies. Trust facilitates greater cooperation for services benefiting a group, society or association (Fafchamps and Minten, 1999). Moreover, if a society is predominated by distrust, cooperative development is implausible (Baland and Platteau, 1998). It creates social obligations, builds reciprocal relationships and exchanges among neighbors. Reciprocity increases trust which can be useful to acquire optimistic environmental consequences (Coleman, 1990; Platteau, 1997). Social capital is self-reinforcing when reciprocity increases connectedness between people which leads to the building of trust, confidence and the capacity to innovate technologies (Pretty and Ward, 2001). Social connections and reciprocal trusts encourage people to act jointly for the development of the society and improvement of the natural environment. Participation affects the collective action of organizations (Kramer, 2007).

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Data Collection and Analysis The study was conducted in the Upland Settlement project (project period 1993-2007) in CHT and in the Khasia forest village in the Sylhet forest division. Khasia people had been settled as forest villagers in the 1950s. Two USP project villages, Kebuk para and Thukhyong para and Lawachara forest village (hereafter Khasia punji), were selected as three case study sites. Household interviews and informal group discussions are made to collect necessary data and information. Fifty percent of the households in two USP villages and 21 households out of 23 from Khasia punji were surveyed. An open-ended questionnaire was used for each household and the questions were related to the above-mentioned variables of social capital including the number of household members associated with different organizations, number of people who can help them in an emergency, trust in village people, feelings of social togetherness and communication with relatives. Averages of ordinal scales (for examples, 1 = agree strongly through 5 = disagree strongly) were used for assessing the level of trust.

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Three group discussions were held in three villages and some staff members were also interviewed in two project sites. Five to six villagers attended in group discussion in each village and they were asked to comment on relationships among villagers, neighbors and with project officers, asked about formation and roles of social organizations for social development. They were also asked about collective activities that contribute to resource conservation and their livelihood improvement. Project officers said about their linkages with villagers that help the continuation and achievements of project functions. Separate openended questions were used to facilitate the discussions. Findings of the study are presented qualitatively drawing on narrations of the respondent villagers. The reason is that qualitative analysis portrays the real phenomenon of social life rather than quantitative proving of any hypothesis. Crook and Decker (2006) also report that narrative interpretation focuses on naturally occurring events in natural settings for better understanding of the situations.

STUDY FINDINGS AND INTERPRETATIONS Status and Contribution of Social Capital In rural societies, people are connected with each other for their daily life. Some people have personal relationships while others have organizational links. In analyzing the status of social capital, first we look at groups and networks followed by trust and solidarity, social cohesion and inclusion, and collective activities.

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Groups and Networks Formal and informal organizations relevant to social development intervention may exist in a village. In each studied village, apart from traditional social associations, there were some formal organizations including project village committees and non-government organizations (NGOs) that carry out several social development works. All sampled households in three villages were engaged with more than two organizations and at least one person was actively involved with these organizations. We will discuss the importance of organizations in later sections. Household communication network (HCN), which can be defined as the number of households’ relatives, neighbors or kin with whom they can share feelings, request for help or seek loan in emergency), is an important indicator of social connection. Across three villages the average values of HCN were 10 (Khasia punji), 8 (Kebuk para), and 4 (Thukhyoung para), respectively. Higher values of HCN express that villagers have more connection with people than other villagers. Due to this connectivity, villagers achieved some livelihood benefits. In Khasia punji, villagers reported that in emergency situations (e.g., sickness) they get financial support from neighbors. One respondent of Kebuk para said: “I was a lease-farmer cultivating on other’s agricultural land and lived in Chandragona, around 40 km away from the project village. My elder daughter who lives with her family in Kebuk para informed me that government would be taking a settlement program (i.e., USP)

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and requested to contact with karbari (village leader) who is one of our relatives. After meeting and talking with him along with project staff, the USP authority had selected me as a project participant. Now I have project land, homestead and share in project revenue generated through rubber cultivation. Moreover, some of my household members get job in project functions”.

Another landless farmer who worked as wage labor in the field of a landlord in nearby areas told us: “One day my lord said me that a government settlement program was being implemented in Kebuk para where the settlers would get land, ready-made houses, settlement money and employment in project. Then I contacted karbari, applied for and got selection”.

Similar situations were happened in Thukhyong para where many landless farmers far from project village got selection through their connection with relatives or neighbors. These bonding (connection to relatives or friends) and bridging (patronage relations) social capitals did not only help them to get selection as project participants, but these relationships offered them many other benefits too. For example, Khasia people usually practice their traditional and organic betel leaf agroforestry system and do not apply any inorganic fertilizers. But one household, being inspired by relatives, applied chemical fertilizers and had better production in terms of greener and broad leaves and fetched higher market prices. Their networking also helps to get financial assistance during emergency. One person of Kebuk para reported:

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“I was working as a manager in a private rubber garden owned by a national politician. Accidentally I had a major surgical operation for which I could not work for five months. The owner of the garden paid all my medical costs and gave me salary of those five months. Now I have resumed the job again”.

It implies that good reputation and relationship had created the faith in garden owner and had confidence that the manager would operate the industry sincerely and smoothly. Among the villagers, they also believe that they would get help from neighbors in urgent situations. More than 30 percent households across three studied villages reported that they got financial help either from relatives, neighbors or friends. They also opined that many people were willing to help them if they wanted. Villagers also have vertical relations with business people, politicians and government officers through which they obtain livelihood benefits. A small village trader of Kebuk para noted: “When I established a rice grinder machine in the village that cost around Tk. 30,000 [1 US$ = Tk. 65 in 2005), I requested the whole seller from whom I purchase goods for my business, that I would buy goods for two months in credit. As we had good business relations, he agreed to sell produces in credit and finally I could install the rice grinder machine to expand my business”.

However, if any household does not get loan from relatives or from neighbors, then they take conditional loan from local trader or rich people. One household of Thukhyong para took loan Tk. 1100 from a timber trader on the condition that household members would supply

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labor for equivalent money in collecting wood from forests. Another household of the same village who look after two cows of a tea-stall trader and paid Tk. 50 per month for the job said that if he needed he could obtain a loan from the trader but a monthly salary (i.e., Tk. 50) would be deducted in order to adjust the loan. In Thukhyong para, there was an elected member of a local union council who had good relations with the union council chairman as well as with political leaders. Through these relationships, he had been able to conduct many development works (for instance, construction of road) in his village.

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TRUST AND SOLIDARITY, AND SOCIAL COHESION AND INCLUSION Due to homogeneity in ethnicity, longevity of living together and personal relationships, there were differential levels of trust in village people across three study villages. Being homogeneous in composition and living together for more than 50 years in the same village, the level of trust (1.5) among Khasia people were comparatively stronger than other two villagers (2 and 2.4 for Kebuk para and Thukhyoung para, respectively). Even though villagers of Kebuk para and Thukhyoung para had been settled at the same time, there were differences among the values of trust. The reasons for such variation were that most of the villagers in Kebuk para have family relationship and the majority Marma people has good understanding with Chakma and Tongchangya people though they have different culture. On the other hand, in Thukhyoung para dominant Marma villagers has conflicting culture with minority Chakma and Tongchangya people resulting low-level of trust in each other. In Thukhyoung para we noticed two types of villagers; settlers (Chakma and Tongchangya people) who joined the project from outside the nearest village and original villagers who joined the project from adjacent village. Settlers reported having low level trust even in their own ethnic people because they came there from different areas of the CHT. Level of trusts has differential impacts on their daily life. For example, the settlers in Thukhyoung para do not get any help (e.g., a loan) from Marma (original) villagers because of low-level of trust in each other. In contrast, one Chakma woman of Kebuk para reported when she need any help (such as monetary or material) she got from a Marma village trader. The trader commented that due to about 12 years of interactions he had faith in the woman that she would pay back the loan in due time. The level of trusts has effect on social cohesion and inclusion. Majority of the villagers (76 percent) in Khasia punji reported having very close feelings of togetherness among them while 96 and 32 percent villagers of Kebuk para and Thukhyoung para, respectively have somewhat close relationship among them. Most of the villagers (42 percent) of the Thukhyoung para have neither distant nor close relations. Settlers have even somewhat distant feeling of togetherness. They commented ‘ekhane jar jar tar tar. Keo karo sathe jugajug kore na. Keor sathe karu samporku nai’- means they all think of themselves, nobody communicates with others and there is no relation among them. We observed that social togetherness had influence on collective activities among the villagers.

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Collective Activities We found evidence of collective action in all three study villages except in settler’s hamlet of Thukhyoung para. On average, they worked collectively five or six days a year. Village development committee of Thukhyoung para employs four volunteers for two months for the care and protection of water supply infrastructure established by GROUS, a local NGO. After two months another four volunteers are employed. This way they keep the village water supply safe. In Kebuk para, villagers collectively repair the earth dam (gudha, 91 m long and 30 m wide) that holds water round the year. Villagers near the gudha use water for bathe, washing cloths and irrigation. They tried fish cultivation once, but due to lack of technical knowledge, they could not success, and then gave lease the gudha to outsider for five years for Tk. 20, 000. For drinking water, they collectively dig pits (kua, 1.8-2.4 m circumference and 0.91-1.2 m depth) in streams or at the base of hills from where they could collect seepage water, especially during dry seasons. We also observed collective farming practices there. Villagers with support from GROUS collectively cultivate ginger. The USP villagers collectively repair village road and maintain kheyang (Buddhist temple). Settlers are only involved in kheyang development and in annual religious festivals. Almost all households of the Khasia punji take part in social development activities including repairing access roads, maintaining wells and prayer halls. People are not criticized for inability to participate for good reason (e.g., sickness or emergency work). Households donate equal amounts to cover needed costs for maintaining wells, roads, and prayer halls. In addition to social work, we also observed collective action in farming activities. If any household needs weeding on its agroforestry plots, it sometimes invites some villagers to help, and for this, the household arranges a feast for the villagers who help. In addition, as an obligation to the forest department (FD) villagers collectively patrol the forest and take part in plantation development.

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Participation According to project proposal, USP villagers were supposed to participate in project implementation activities. Some villagers attended project meetings, held near the villages, five to six times during three to four years of project period. They just listened and could not provide any input at the meetings. These were just to motivate the villagers to live harmoniously together and plant trees at their homesteads. All villagers visited the project head office frequently, four to five times every month in early stage of project. The purposes of their visit were to sign papers for land tenure, collect their salary, and to get information on job opportunities at respective project villages. The leaders attended some project meetings that discussed policy and project works, but played no part in decision-making. The project manager took all decisions and his sub-ordinate staff carried out his instructions. In order to increase the sense of ownership among villagers, it is desirable to involve representatives of the project village committee in project meetings and decision-making processes. This ownership would encourage them to manage and protect the project resources for their own interests. This would also increase the level of transparency in project activities. Genuine participation of stakeholders afforded positive project outcomes (Bruges and Smith, 2008). Researchers (including Pollnac and Pomeroy 2005, Pomeroy et al., 2005 and Pini and

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McKenzie 2006) have argued that sustainability of natural resource management is dependent upon effective participation of community at local level that creates the feelings of ownership. Villagers of Khasia punji participate in forest management only as labor (unpaid). In accordance with need, local personnel (Beat officers) call the mantri to discuss the schedules of activities (e.g., nursery work, planting, and patrolling), and decide how many people they need for labor. The FD also invites him to attend meetings. Though he does not play a very active role in decisions made at meetings, the mantri feels fairly satisfied with their deliberative quality, decisions, and convenience. Mantri then convenes meetings at the punji to inform the villagers about the decisions taken at FD’s meetings.

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Formation of Social Capital Rural areas, especially in remote marginal areas, people are seen to be more dependent on each other for their livelihoods. This interconnected society, however, could not assist them to escape from poverty due to many reasons like scarcity of resources (natural, physical, human and financial capitals), lack of appropriate leadership and presence of local elites. Human development report of the United Nations emphasized to build up social capital in the form of local organizations where state policies, as well as market forces, civil activism and community mobilization, contribute to the fullest possible extent to the eradication of poverty (UNDP, 1997). Support to community and grassroots organizations within disadvantaged communities is an essential part to social capital building process (Abom, 2004). Organizations that act as an intermediary between community and national organizations connect people with little power to those who have power (Mary J De Silva et al., 2007:22). Third parties act as catalysts in social capital formation (Upton, 2008). In every USP villages, the project authority in collaboration with beneficiaries formed a nine-member project village committee at the beginning of the project as an initiative to build social capital among villagers and authority. The main task of the project village committee is to motivate villagers to protect raised rubber plantation and to involve in day-to-day project functions104. We observed that virtually the committee does not have any activities at villagelevel and have no active involvement with project authority and project planning processes. Hence, the formation of the village committee could not build a good relationship between villagers and project staff members, and hence failed to create a culture of working together for the success of the project (Nath and Inoue, 2008). Mary J De Silva et al., (2007:28) also mentioned that due to lack of working together, development status of some villages remain worse. However, due to development of infrastructure (e.g., road networks) by the project, several NGOs had come forward to initiate their social development works in project villages. As their strategy, the NGOs first motivated the villagers to form village organizations, the entry point for the formation of social capital. In Bangladesh, rural development by NGOs has had better success in social capital formation through horizontal alliances among the less privileged groups and women (Mondal, 2000:461). In Kebuk para, there is a social organization with 7-member executive committee. All project participants as well as nearby villagers are also members of this committee that maintain liaison with different organizations 104

(Source: USP meeting minutes in Bengali dated 17 February 1998, USP office in Bandarban)

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such as NGOs and conduct social development works such as kheyang development, maintenance of road, and collective farming. Members of the committee are selected by selection considering their character, education and sincerity. The committee organizes 1-2 times meetings every month at the village, and call emergency meeting whenever needed. In Thukhyoung para there is a village development committee formed in 2001-2002 with participants of several USP villages. Previously there was a Kheyang- based social organization that was related mostly with religious festivals. Old people of the village were involved. The present organization (popularly known as committee) consists of members mostly of adult groups (20-40 years old), has 13-members functional committee and all villagers are general member. One woman is vice-president and two other women also member of the functional committee. All villagers in an annual general meeting select the members of the functional committee by judging their quality based on education, character, responsiveness and sincerity. The committee call monthly meeting on every 29th, and inform the villagers about the agendas before meeting. The president (who is also leader of the Thukhyoung para USP village) presided the meeting. On any agenda, all villagers have equal access for discussion, and then reach decision after consensus among them. However, if any cases, by anyway, fair decisions are not taken, then villagers request the committee to call meeting again, apart from monthly usual one, to discuss the matter and then take decisions after discussion and consensus building. General agenda in meetings include social development works in collaboration with NGOs, maintenance of village infrastructures such as road, Kheyang, water supply and child education. During the study we observed that besides credit operations by several NGOs, three NGOs have been implementing some social development works in collaboration with villagers in the studied USP villages. A brief of these activities are shown in the following box 1. In Khasia punji, there is a darbar105 committee. All household heads are members of this committee, which is chaired by the mantri (village head). The mantri is selected hereditarily, but he/she should be literate, acceptable to the majority, be of sound health, and be able to liaison with the FD and other agencies. When he feels, for example, a need for road construction, or the FD wants plantation labor, then the mantri convenes a darbar meeting at his house. Every year four or five general meetings are called, and in most cases, all members attend. They do not generally criticize if some members cannot participate occasionally, but warn if it happens repeatedly. Every member can participate in making decisions. First, the mantri states the agenda, and then all attendees participate in the discussion, reach a consensus, and finally make decisions based on majority support. Women also participate in local meetings. Villagers said that women attend at darbar meetings with their husbands, and play role in decision-making processes. In addition to darbar committee, there is a savings committee affiliated with Caritas. Household members (men and women over 12 years old) can be a member. At present, there are 40 members. Every member deposits Tk. 20 per month. They can get loans from this committee at a very nominal interest rate. However, the committee convenes meetings to decide the amounts and number of loans that can be given to members. 105

Darbar committee means a village committee in a Khasia community which looks after day-to-day affairs. All decisions related to social development, festivals, resolution of social conflicts, duties in forests, and other matters are made by the darbar committee.

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Box 1. Function of NGOs in study villages World Vision: A national NGO, carrying out activities such as education, livestock rearing, plantation, infrastructure development and sanitation since 2000 in Thukhyoung para’s original villagers hamlet. As long as it would have funds, this NGO would provide books, school fees, gifts and all other necessary utensils to students of primary to graduate level. Till 2005, it sponsored 12 school children and provided their health check up and treatment costs. For livestock rearing, it provided 80 percent of total money for purchasing livestock. However, the interested families gave rest of 20 percent money to the World Vision in advance. Villagers reported that nine families got money for buying goat and one family for layer hen. Since its operation, it raised around a two-kilometer road-side plantation, employed five watchers (pay Tk. 2000/month) and when the trees will be harvested 50 percent share will be given to these watchers. It provided Tk. 800,000 for the establishment of government primary school and Tk. 40,000 for the preparation of Kheyang yard. For proper sanitation, it provided five rings and one slab to 30 families free of cost to install hygienic latrine. GROUS (Gram Onnyaun Sanghta): A local NGO popularly known as UNDP (United Nation Development Program) in original villagers’ hamlet of Thukhyoung para because UNDP provided the fund. With a budget of Tk. 400,000, it started operation in the middle of 2005. The activities included rearing of cows, and supply of a power tiller and water pump for agriculture. Initially all 47 families of this hamlet joined with the NGO, but when the question of contribution came, 11 families dropped out. To be a member, all members should contribute five percent of total budget (i.e., Tk. 20,000), deposited in a joint bank account. The contribution was just to show that villagers were jointly contributing to the project, and that money would be payback to them when the project period terminated. There are two separate committees for this project, implementation and purchase committee, and each committee consists of five members. Members of village functional committee could not be a member of these committees. Recently they purchased 20 cows with Tk. 194,000 and distributed to 20 relatively poor families. Implementation committee did the distribution. On the other hand, in Kebuk para GROUS with financial support from UNDP performed two activities: zinger cultivation and, establishment of two new and repair of another two old ring wells. With a budget of Tk. 400,000, villagers raised two ha of zinger on moderately sloped land, established and repaired the wells. Villagers said that zinger cultivation is profitable—for one hectare, it cost around Tk. 130, 000 and they could earn at least Tk. 150, 000 per hectare after deducting all costs within six month rotation. However, we observed that it might cause huge soil erosion as land is completely cleared-off and top soil is disturbed during planting and harvesting. Green Hill: For the supply of safe water (for drinking, cooking and bath), Green Hill- a local NGO set up necessary physical structures in original villagers’ hamlet of Thukhyoung para. Before implementation of the project, all villagers (47 families) contributed Tk. 10 per month for two years since 2001 and deposited in a joint account. The engineer of the NGO selected suitable site from which water could be harvested round the year. It is located in upper slope, about four km from the village. The NGO constructed necessary infrastructure with the help of villagers; villagers supplied free labor. Finally, they completed the work at the end of year 2003, and the NGO handed over it to the village committee in early 2004. It cost around Tk. 300,000 of which villagers contributed Tk. 11,280 only. The NGO trained some selected villagers about the maintenance of water tank, supply pipe, cleaning of tanks, and gave all necessary instruments.

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Caritas: For the last three years Caritas, a national Christian NGO, has been operating in Lawachara Khasia punji. Its activities include a credit program, savings program, education, legal awareness, and a leadership development program. To get loans, every member (women only) must be a member of the savings program and deposit Tk. 20 per month. After depositing this monthly fee for six months, a member can get a loan. Caritas established a primary school in the punji. Each student pays Tk. 10 tuition monthly. In order to increase legal awareness, and for capacity building, Caritas arranges a monthly meeting in the punji. All elderly women participate at the meetings. They encourage women to enroll their children not only in primary schools, but also in higher education.

Moreover, villagers of this punji are strongly connected with other punji. All Khasia punji in Sylhet region form a Khasia welfare society that has a strong liaison with different national and international NGOs and several donor agencies. It deals with all problems and interests of the Khasia people and organizes a 36-hour seminar twice a year in different punji. This society has a very strong lobbying capacity to elicit decisions, which favor themselves. Therefore, it is apparent that the NGOs not only facilitated the formation of social capital among villagers through formation of local organizations, but they played important role in creating other capitals including human capital (e.g., education, capacity building), physical capital (e.g., livestock), natural capital (e.g., plantations) and financial capital (e.g., credit, savings) through which villagers’ livelihood has been improved. Villagers across three study villages commented that NGOs contributions make them to live up their living in the remote hilly areas.

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Social Capital and Forest Conservation In USP, the project authority raised 81 ha of rubber plantation in one block in every project village between 1995 and 1999. The authority supplied all planting materials, fertilizers, and other necessities; villagers only provided wage labor and protected the rubber plantation from cattle. Observations and discussions with project staff and planters revealed that the plantation in the Kebuk para project village was more than 90 percent tree-stocked and trees were growing satisfactorily. On the other hand, our observations, villagers’ opinions, and project staff reveal that now around 30–40 percent of rubber trees are in very poor condition in the Thukhyoung para’s plantation. We explored that besides economic incentives, social capital played a vital role in explaining the contrasting rubber conditions in the two villages. Some project staff members said that thanks to interaction with plain people, the villagers of Kebuk para become social, developed trust in the project staff, and cooperated effectively in project activities resulting good and satisfactory conditions of rubber plantation. Frequent staff motivation created awareness among villagers for the future benefits of rubber husbandry. Because villagers have good relationship among them and with project staff members, all of them always look after the rubber plantation so that cattle or any other means could not damage the plantation, albeit they were paid labor. In contrast, due to lack of motivation and infrequent visits, project staff members could not establish a good relationship with villagers of Thukhyoung para. They also could not make villagers aware about the benefits of the rubber plantation and could not create a sense

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of ownership among villagers. Due to this distant relation, villagers show little interest in protecting rubber plantation. Moreover, because of low-level bonding social capital among the villagers, they could not build bridging social capital with project staff members for the interest of project activities. Furthermore, taking the opportunity of staff infrequent visits, villagers encroached much of the vacant project’s rubber plantation areas and practice shifting cultivation on that land. Villagers of Khasia punji play a two-fold role in forest conservation: protection and plantation expansion. Forest protection involves patrolling the forests with FD guards. Nine people in three shifts (three persons in one shift, each shift for eight hours), working with FD guards, provide round-the-clock duty along forest boundaries every day. Although this is inadequate, it still goes a long way toward protecting forests from theft. Thanks to patrols, the forests still look like deep natural forest. In addition to these nine people, the FD calls more people if it needs an emergency force to tackle organized gangs. Due to good relations with FD staff, the villagers cooperate actively, even in the dead of night. The FD carried out plantation activities almost every year. Villagers participate in all phases of plantation work from nursery preparation, to site preparation, planting, weeding, and other tasks. Due to readily available labor, the FD can run plantation programs smoothly.

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CONCLUSION This study explored the status of social capital among some Bangladeshi ethnic people who are involved with participatory forestry programs. Having disparity in social capital, villagers have unequal access to livelihood opportunities. Lower level of social capital has been found to be related to poor outcomes of the project in terms of forest conditions as well as livelihoods of the villagers. Where the project (e.g., USP) authority failed to build up social capital, NGOs played a pivotal role in the formation of social capital among the villagers that facilitated the creation of other livelihood capitals of the sustainable livelihood framework. Even though NGOs created bonding social capital, villagers, however, further expanded their networks through the formation of bridging social capital that helped them to capture several local government social development services. Kramer (2007) mentioned that fostering greater cooperation between local groups and the local government would seem to further each group’s goals. Collaboration between agencies and villagers may significantly benefit natural resource management by increasing their social capital (Wagner and FernandezGimenez, 2008). The concept of forest villagers in Sylhet forest division is an exceptional case because Khasia people are well-organized among themselves and their traditional agroforestry provide a sustainable livelihood support (Nath et al., 2003). Because trees support their agroforestry, reciprocally, with mutual understanding between FD’s staffs, they provide free labor and collectively contribute to forest development and protection of forest resources. However, findings of the study signify that introduction of new land-use technology (e.g., rubber husbandry in the USP) requires investment in social capital formation along with other components for acquiring villagers’ collaboration in attaining the project’s goals. Since most of the government development project implementing agencies either lack social scientists or rarely include them in mobilizing local resources, it’s imperative to involve NGOs who have

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expertise in organizing local people as a stakeholder of the project. Participation of several stakeholders can also check good governance in project functions. This study considers only a few variables of social capital; there may be many other variables that contribute to the livelihood of villagers and to the conservation of forest resources. A comprehensive study with more variables and samples deserves further investigation.

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REFERENCES Abom, B. (2004). Social capital, NGOs and development: a Guatemalan case study. Development in Practice, 14 (3), 342-353. Adhikari, B., Willams, F., and Lovett, J.C. (2007). Local benefits from community forests in the middle hills of Nepal. Forest Policy and Economics, 9, 464-478. Ahmed, F. U. (2002). An ethnographic perspective on the CHT: The people and the resources. In: Khan, N. A., Alam, M. K., Khisa, S. K. and Millat-e-Mustafa, M. (Eds.) Farming practices and sustainable development in the Chittagong Hill Tracts. (pp. 1134). Bangladesh: CHTDB and VEFP-IC. Arnold, J.E.M. (2001). Forests and people: 25 years of community forestry. Rome: FAO. Baland, J. M. and Platteau, J. P. (1998). Divisions of the commons: A partial assessment of the new institutional economics of land rights. American Journal of Agricultural Economics, 80 (3), 644-650. Bowles, S. and Gintis, H. (2002). Social capital and community governance. The Economic Journal, 112 (November), F419-F436. Bruges, M. and Smith, W. (2008). Participatory approaches for sustainable agriculture: A contradiction in terms? Agriculture and Human Values, 25, 13-23. Carney, D. (1998). Sustainable rural livelihoods. London: Department for International Development. Cernea, M. M. (1991). Putting people first. Oxford: Oxford University Press. Coleman, J.S. (1990). Foundations of social theory. USA: The Belknap Press of Harvard University Press. Conway, D., Bhattarai, K. and Shrestha, N. R. (2000). Population-environment relations at the forested frontier of Nepal: Tharu and Pahari survival strategies in Bardiya. Applied Geography, 20, 221-242. Cramb, R. A. and Culasero, Z. (2003). Landcare and livelihoods: the promotion and adoption of conservation farming systems in the Philippine uplands. International Journal of Agricultural Sustainability, 1(2), 141-154. Cramb, R.A. (2004). Social capital and soil conservation: evidence from the Philippines. Contributed paper. 48th annual conference of the Australian Agricultural and resource Economics Society, Melbourne, 10-13 February 2004. [online: http:// http://eprint.uq.edu.au/archive/00001052/ accessed June 13, 2005] Crook, B.J. and Decker, E. (2006). Factors affecting community-based natural resource use programs in southern Africa. Journal of Sustainable Forestry, 22(3/4), 111-133. DFID (Department for International Development). (1999). Sustainable livelihoods guidance sheets: framework. London: DFID.

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Dobbs, T. L. and Pretty, J. (2001). The UK’s experience with agri-environmental stewardship schemes: Lessons and issues for the United States and Europe. University of Essex Centre for Environment and Society, Occasional Paper 2000-1. London. Dowla, A. (2006). In credit we trust: Building social capital by Grameen Bank in Bangladesh. The Journal of Socio-economics, 35,102-122. Fafchamps, M. and Minten, B. (1999). Social capital and the firm: evidence from agricultural trade. Social Capital Initiative Working Paper No. 21. The World Bank. Grootaert, C. (1998). Social capital: the missing Link? Social Capital Initiative Working Paper No. 3. The World Bank. Inoue, M. (2003). Conclusion: Sustainable forest management through local participationprocedures and priority perspectives. In: Inoue, M. and Isozaki, H. (Eds.) People and forest-policy and local reality in southeast Asia, the Russian far east and Japan. (pp. 337-356). Netherlands: Kluwer Academic Publishers. Khaleque K. (1998). Ethnic Communities of Bangladesh. In: Gain, P. (Ed.) Bangladesh Land Forest and Forest People. (pp. 1-26). Bangladesh: Society for Environment and Human Development (SEHD). Kramer, D.B. (2007). Determinants and efficacy of social capital in lake associations. Environmental Conservation, 34(3), 186-194. Krishna, A. (2002). Active social capital: Tracing the roots of development and democracy. Columbia University Press, New York. Leach, M. and Mearns, R. (1996). The life of the land. London: Rutledge. Lehtonen, M. (2004). The environmental-social interface of sustainable development: capabilities, social capital, institutions. Ecological Economics, 49, 199-214. Mary J De Silva, Harpham, T., Huttly, S.R., Bartolini, R. and Penny, M.E. (2007). Understanding sources and types of social capital in Peru. Community Development Journal, 42(1), 19-33. McCarthy, N., Dutilly-Diane, C. and Drabo, B. (2004). Cooperation, collective action and natural resources management in Burkina Faso. Agricultural Systems, 82, 233-255. Mondal, A.H. (2000). Social capital formation: The role of NGO rural development programs in Bangladesh. Policy Sciences, 33, 459-475. Murali, K.S., Murthy, I.K. and Ravindranath, N.H. (2006). Sustainable community forest management systems: a study on community management and joint forest management institutions from India. International Review for Environmental Strategies, 6(1), 23-40. Nath, T. K., Inoue, M., Islam, M.J., and Kabir, M.A. (2003). The Khasia tribe of northeastern Bangladesh: their socio-economic status, hill farming practices and impacts on forest conservation. Forests, Trees and Livelihoods, 13, 297-311 Nath, T.K. and Inoue, M. (2008). Why did the project fail to achieve its objectives in some villages? The Experience of the Upland Settlement Project (USP) of Bangladesh. International Journal of Sustainable Development and World Ecology, 15(2), 153-169. Ostrom, E. (1990). Governing the commons: The evolution of institutions for collective action. New York: Cambridge University Press. Paxton, P. (1999). Is social capital declining in the United States? A multiple indicator assessment. American Journal of Sociology, 105 (1), 88-127. Pini, B. and McKenzie, F.H. (2006). Challenging local government notions of community engagement as unnecessary, unwanted and unproductive: case studies from rural Australia. Journal of Environmental Policy and Planning, 8, 27-44.

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Platteau, J. P. (1997). Mutual insurance as an elusive concept in traditional communities. Journal of Development Studies, 33 (6), 764-796. Pollnac, R.B. and Pomeroy, R.S. (2005). Factors influencing the sustainability of integrated coastal management projects in the Philippines and Indonesia. Ocean and Coastal Management, 48, 233-251. Pomeroy, R.S., Oracion, E.O., Pollnac, R.B. and Caballes, D.A. (2005). Perceived economic factors influencing the sustainability of integrated coastal management projects in the Philippines. Ocean and Coastal Management, 48, 360-377. Pretty, J. (2003a). Social capital and connectedness: Issues and implications for agriculture, rural development and natural resource management in ACP countries. CTA Working Document Number 8032. London: The ACP-EU Technical Centre for Agricultural and Rural Cooperation (CTA). Pretty, J. (2003b). Social capital and the collective management of resources. Science, 302(12 December), 1912-1914. Pretty, J. and Smith, D. (2004). Social capital in biodiversity conservation and management. Conservation Biology, 18 (3), 631-638. Pretty, J. and Ward, H. (2001). Social capital and the environment. World Development, 29 (2), 209-227. Pretty, J., Brett, C., Gee, D., Hine, R., Mason, C. F., Morison, J. I. L., Raven, H., Rayment, M. and van der Bijl, G. (2000). An assessment of the total external costs of UK agriculture. Agricultural Systems, 65 (2), 113-136. Purvez, M. S. A. (2005). Building support for a living: the importance of social networks for the livelihoods of the poor. In: Khan, I. A. and Seeley, J. (Eds.) Making a living: the livelihoods of the rural poor in Bangladesh. (pp. 93-107). Bangladesh: The University Press Ltd. Putnam, D. (2001). Social capital measurement and consequences. Canadian Journal of Policy Research, 2 (1), 41-51. UNDP. (1997). Human development report. New York: Oxford University Press. Uphoff, N., Esman, M. and Krishna, A. (1998). Reasons for success: Learning from instructive experiences in rural development. West Hartford: Kumarian Press. Upton, C. (2008). Social capital, collective action and group formation: Developmental trajectories in post-socialist Mongolia. Human Ecology, 36, 175-188. Wagner, C.L. and Fernandez-Gimenez, M.E. (2008). Does community-based collaborative resource management increase social capital? Society and Natural Resources, 21, 324344. Woolcock, M. (2001). The place of social capital in understanding social and economic outcomes. Canadian Journal of Policy research, 2 (1), 11-17. Woolcock, M. and Narayan, D. (2000). Social capital: Implications for development theory, research and policy. The World Bank Research Observer, 15 (2), 225-249. Wu, B. and Pretty, J. (2004). Social connectedness in marginal rural China: The case of farmers innovation circles in Zhidan, north Shaanxi. Agriculture and Human Values, 21, 81-92.

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In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

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Chapter 16

CVC AS KNOWLEDGE BROKER MEDIATOR AND INTERVENTIONIST WITH A “BIRD’S EYE VIEW” – A DYNAMIC SOCIAL NETWORK PERSPECTIVE Christiana Weber*106 Helmut Schmidt University Hamburg 22043 Hamburg, Germany

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ABSTRACT From a dynamic social network perspective, I empirically analyse the formation and transformation of the CVC’s social network as well as social capital. I investigate the resulting structural and relational changes illuminating the process of inter-organisational knowledge transfer and innovation generation of CVC-programs. Using an explorative multi case analysis of 12 CVC-triads out of six CVC-programs in Germany, I base my research on 34 qualitative interviews. My findings support existing research that CVCnetworks and resulting social capital can ease knowledge transfer and innovation to occur but may over time also hinder it - turning social capital into liability. My study’s core theoretical contributions are the expansion of existing literature by investigating a so far unexplored intra-inter-organisational knowledge broker configuration. Particularly, I identify additional roles of the CVC-manager with his bird’s eye view as mediator and interventionist not yet described.

1. INTRODUCTION Organisations strive permanently for innovations. One means of strategic innovation management is for corporations to set up a corporate venture capital (CVC) program to acquire, transfer, exploit, and explore external knowledge from young technology-based firms (Keil (2000)). Following Maula (2001), corporate venture capital is defined in this paper as equity capital, or equity type capital, that is invested directly in young, generally *

Helmut Schmidt University Hamburg, Phone: +49-40-46070567, e-mail: [email protected]

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technologically innovative, legally independent companies with good growth potential, whereby the investor is an intermediary of an established industrial concern (not a finance institution) which pursues financial and strategic goals through the investment. CVC programs usually constitute of a small CVC unit, which on the one side interacts within the organization (intra-organisational) and understands the financial and strategic goals of most of the business units (BUs) of its own corporate. On the other side, it interacts between organizations (inter-organisational) and has an overview across the large amount of small venture companies in the market, which are looking for funding. We think of this constellation as a CVC-triad. Essentially, the CVC unit is in a match-maker or enabler position. It is the job of the investment manager in the CVC unit to find and invest in as well as support and monitor those venture companies (PC), which are likely to serve the achievement of the stated goals of one or many of the corporate’s BUs. By its very nature, the CVC-triad combines an intra- and inter-organisational network configuration. For this matter, the CVC triad is a particularly interesting and yet little explored unit of research. History as well as actual data shows that in Germany CVC is on a declining, consolidating path (EVCA (2008)). In many cases the development of the mostly young CVC programs stood behind the ambitious financial as well as strategic expectations in regard of technology and knowledge transfer as well as innovation generation. Some reasons for this development are (i) the closing of the “Neuer Markt” in 2003, which terminated the most attractive exit option for new ventures, (ii) changes in the corporation’s top management which sometimes lead to a loss of the relevant promoter at the top level, subsequently a different corporate strategy and a brake down of the CVC-program. (iii) Other reasons were that the CVC-programs were inappropriately set up regarding their structures and processes and subsequently unable to lead to knowledge and technology transfer, high competitive advantage and organisational success (Weber and Weber (2005); Birkinshaw et al. (2002)). In other words: The expected knowledge, contact and resource transfer /creation between business unit (BU) and portfolio company (PC) was not facilitated appropriately or did not occur sufficiently, innovation was not going to occur and CVC-programs seemed somewhat meaningless to their initiators. This led to several shut-downs of so far important CVCprograms like that of Infineon, Daimler Crysler or Deutsche Post. In this paper I investigate those reasons for less successful CVC-programs, which have their routes in social network considerations since networks are usually perceived and stated as creating and representing social capital (Burt (1992), Coleman (1990)) which in turn is said to support knowledge transfer, learning processes, both on an individual as well as on an organisational level, and innovation generation (Burt (2005), Moran (2005)). Most of this research on networks focuses on network structures at a certain point in time, which means they represent snapshots rather than processes (Parkhe, Wasserman and Ralston (2006)). Longitudinal studies exploring the emergence, development and changes of a network over time are seldom (Weber (2007), Maurer and Ebers (2006), Hite and Hesterly (2001), Gargiulo and Benassi (2000)), such studies applied to a CVC-network is, to our best knowledge, not existent. But only the analysis of alterations in network structures enables one to observe and study the dynamics of networks and subsequently the dynamics of social capital. Studying the dynamics of networks helps to understand why, when and how networks change and subsequently support or hinder innovation processes to occur. This is why Parkhe et al. (2006) call for a „concerted attention to process issues“ (p. 563) in network research. Additionally, selected empirical studies have in fact shown that networks don’t automatically

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constitute social capital (Labianca/Brass 2006). If one factors in the time dimension, it becomes clear that social capital can turn into social liability that actually hinders or even prevents knowledge transfer and subsequently innovation generation (Labianca and Brass (2006); Maurer and Ebers (2006); Gargiulo and Benassi (2000)). Social liability is understood as the “dark side” of social capital (Gargiulo and Benassi (2000)), as “negative relationship” (Labianca and Brass (2006)) or as social structures which are a source of constraint (Granovetter (1985)). In this paper, I describe (i) the formation of the CVC-triad and its network in the preinvestment phase, as well as the development of the CVC-triad and its network in the postinvestment phase. (ii) I discuss the influence of network transformation dynamics (in a structural as well as relational dimension) on social capital and subsequently on knowledge transfer and creation within the respective network over time. (iii) In particular I highlight the changing roles and functions of the CVC-unit or rather the CVC-investmentmanager in the intra-, inter-organisational network configuration. The paper takes the following approach: After presenting relevant literature in the respective fields of research, I present the explorative method and the longitudinal data analysed which is based on 12 CVC-triads of six seperate CVC programs. In each triad the CVC-unit constitutes the core or nodal unit, due to the fact that as a boundary spanner i.e. knowledge broker it is (i) the convenor (Dyer and Nobeoka (2000)) of the network and (ii) initially the only participant that maintains direct connections to all the other parties in the triad, i.e. the network. The result section is divided in two phases, a pre-investment phase and a post-investment phase. After a discussion of my results including theoretical as well as practical implications of the findings I conclude with further research opportunities.

2. STATE OF THE RESEARCH

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2.1. Social Networks and Social Capital Based on Granovetter’s (1992) differentiation in structural and relational embeddedness Nahapiet and Ghoshal (1998), Gabbay and Leenders (1999) and others differentiate roughly two perspectives: (1) The first one is a structural perspective (how is reached?) in which social capital derives from the social structure of the network (Baker (1990)). The form of the network as well as the design of the (network-) relations themselves are considered as resources, which allow the actors to generate value. (2) The second perspective is a resource oriented one (who is reached?) which focuses on the respective resources that an actor can potentially access/receive via the social network configuration (Bourdieu (1986); Burt (1992); Putnam (1995)). In other words: The value generating resource is no longer seen in the network itself but the network is rather the means via which the resources, controlled by other actors, can be obtained and exchanged. Most research on social networks – theoretical as well as empirical – focuses on network structures (Stam and Elfring (2008); Emirbayer and Goodwin (1994); Dubini and Aldrich (1991); Birley (1985)), and mostly on inter-organisational network ties (Burt (1992), Larson (1992), Dyer and Nobeoka (2000); Kogut (2000); Hansen (1995); Hite and Hesterly (2001)). Rarely, an intra-organisation perspective is taken (Martin and Eisenhardt (2001); Hansen

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(1999); Inkpen and Tsang (2005); Labianca and Brass (2006)). Networks are generally understood and predicated as creating and representing social capital. In this paper we follow Nahapiet und Ghoshal’s (1998) definition of social capital. They consider it „as the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit. Social capital thus comprises both the network and the assets that may be mobilized through that network“ (ibid.: 243). Of significance in this definition is the fact that the social network relationships described need not necessarily lead to social capital (Adler and Kwon (2002)), i.e., the context specificity of the social capital is decisive (Podolny and Baron (1997)). This means that the (inter)organizational relationships can, in the best case, lead to social capital, in the neutral case they have no effect, and in the worst case they lead to social liability, i.e. they can be detrimental, thwarting the achievement of other goals (Labianca and Brass (2006)). „Thus, social structure that is social capital for some purposes is social liability under other circumstances“ (Sandefur et al. (1999, 220). In the relevant literature, there exist predominantly two initially regarded as opposite views on how networks create social capital. Network closure (Coleman (1990, 1988)), on the one hand, stresses the role of cohesive ties in fostering a normative environment that facilitates cooperation and detects misbehaviour. Structural hole theory (Burt (1992)), on the other hand, sees cohesive ties as a source of rigidity that hinders the coordination of complex organizational tasks. He argues that the benefits from social capital stem from the brokerage opportunities created by dispersed ties – that is, by the lack of network closure. Podolny und Baron (1997) try to bridge these opposing views of how networks create social capital by acknowledging the benefits typically associated with networks rich in structural holes, but also vindicating the positive effect of cohesive relationships. They suggest that the benefits of network structure may be contingent on the content of the ties- that is on the nature of the exchange between the players. Hite and Hesterley (2001) also combine those two views in their conceptual paper, distinguishing between two phases (emergence and early growth) and two resulting network types (identity-based und calculative networks). For the authors, the transition from one type to the other over time is not just seen as an explanation of these different views, which until recently have been treated as contradictory within the literature. They also hypothesize that this process refers to more or less inevitable changes which a company passes through in the course of its growth and as a consequence of its strategic responses to changing background conditions (Hite Hesterly (2001))107. In their empirical study, Gargiulo and Benassi (2000) as well examine the two opposing views on how networks create social capital. On the basis of a case study they investigate the “opposite predictions on how the structure of an actor’s network may affect his ability to adapt that network to a significant change in task environment“ (p. 183). Their results suggest that “viewed over time, a cohesive network may eventually hurt a manager’s ability to enter and promote new cooperative relationships involving people outside that network” (p. 192). With the parenthesis „over time“ the process dimension is implicitly examined. This is worthy of comment as temporality, i.e. dynamics in networks has rarely been dealt with in network and social capital research to date (Parkhe et al. (2006)), and that despite the fact that

107

Burt (2005) also combines the two concepts of brokerage and closure in his most recent model of structural autonomy.

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Portes and Sensenbrenner (1993) as early as 1993 had implicitly explored the processual character in their description of the “dark side” of cohesive ties. Gargiulo and Benassi (2000) explain that the same strong bonds which create mutual understanding and trust serve equally as a filter for information, perspectives and perception, resulting in a “cognitive lock-in”. They continue that due to concerns about a loss of reputation and possible sanctions, the partner, for whom the added value from the concrete social relations no longer exists, now might lack the initiative to terminate the obsolete relationship, labelled as „relational inertia“ (p. 186). Maurer and Ebers (2006) examine the emergence and development as well as the general dynamics of social capital in the venture context. The explorative, comparative long term study of a total of six new ventures in the biotechnology sector, was conducted on an interorganisational basis and examined in a qualitative manner how the configuration, management and development of social capital in the young companies influenced their success. The authors argue that organizations can „realize performance benefits when their members [Hervorhebung durch Autor] repeatedly adapt the configuration of their social capital to changing resource needs” (p. 262). Conversely, former social capital can change into social liability when the organisation, i.e. its members, are no longer able to carry out the required adaptations and changes to their social networks. Following closely Gargiulo and Benassi (2000), the authors identify two inertial forces, relational lock-in and cognitive lockin, which can generate inertia in social capital. As this paper addresses specifically knowledge transfer and creation and subsequently innovation generation in intra-,inter-organizational networks, selected works which investigate knowledge and learning as well as social capital in networks will additionally be discussed here: Besides Dyer and Nobeoka (2000), who focus on the relational view, and use the example of Toyota to show the selective development of „high performance knowledgesharing networks“ for the management of existing and the generation of new knowledge, Inkpen and Tsang (2005) present a study of social capital, networks and knowledge transfer. They examine the extent to which the different dimensions of social capital (structural, relational, and cognitive) in different types of networks influence the knowledge transfer between the respective network members. In their results, they conclude: in order to facilitate knowledge transfer and creation i.e. to organize it efficiently, organizations should proactively generate and manage social capital, creating the appropriate conditions for each specific type of network. Particularly important to this study is Hargadon (1998; 2002) who refined the application of Burt’s concept of the knowledge broker to knowledge transfer and creation and subsequently innovation in networks, an approach which can be seen in outline in the work of Brown and Duguid (1998). As a result of their favourable position within the social network, knowledge brokers are able to bridge structural holes, i.e. join previously unconnected networks or parts of networks, thus eliminating the structural isolation of the parts, i.e. the different domains (Burt (1992); Hargadon (2002)). By connecting the domains, knowledge brokers are in a position to transfer what has been previously learned from one domain to the other and initiate, i.e. generate, innovations. Accordingly, Hargadon, with recourse to Nonaka and Takeuchi (1995), examines the knowledge broker’s capacity for analogic thinking as one

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of their core competences.108 „Analogies allow them [knowledge brokers] to move knowledge from one context to another“ (Hargadon (1998, 220)), so that new knowledge can emerge in the new context, the new domain. Hargadon based his understanding of the knowledge brokers on eight case studies of external consulting firms. A CVC unit, that neither operates exclusively between external firms or exclusively between internal business units, but instead builds a bridge between intra- and inter-organisational domains, acting as a broker, is a constellation that Hargadon did not describe.

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2.2. CVC Research In the CVC literature it is generally possible to identify different perspectives which have been adopted in the analysis of knowledge transfer and creation in the CVC business. However it is rare that attention is focused on the internal relationship between CVC unit and incumbent, i.e. the participating business units (Rauser (2002)). As a rule it is the incumbent themselves (for many see Kann (2000); Dushnitsky and Lenox (2005); (Keil 2000); Chesbrough (2002); Covin and Miles (1999)) or the CVC units in their relationship to the portfolio company that are considered. When this CVC-PC dyad is the unit of analysis, as a rule it is either the CVC (for many see Birkinshaw et al. (2002); Schween (1996); Weber and Dierkes (2002)) or the PC perspective (for many see Greene, Brush and Hart (1999); Miller, Spann and Lerner (1991)) that is adopted. An empirical dyadic analysis of the new venture and the corporation is very rare (Weber and Weber (2007)). This is astonishing, since this relationship is often characterized by mismatches of structures, systems, and processes (Keil (2000)) which can hinder interorganisational knowledge transfer and learning109. Research in the CVC field, with a focus on social capital, i.e. social network theory, providing both a theoretical description of the CVC unit’s social network, as well as an empirical survey of the network in all its complexity, are unknown. Research focusing on the process dimension and potential changes in CVC units are also extremely rare. The only article known to the authors is that from Thornhill and Amit (2001) on the dynamic perspective of internal fit in corporate venturing, where the authors focus on the effects of the internal strategic fit between corporate parent and its venture on venture performance, examining the question whether "the relationship between a corporate parent and its venture(s) evolve over time, and if so, how?” (p.25). They distinguish between an „economic fit“ and a „relational fit“. „A relational fit reflects organizational culture and structure, while an economic fit is a function of the needs of the venture and the resources of the parent” (p. 25). Thornhill and Amit (2001) state on the basis of an analysis of 97 corporate ventures that “the parent-venture relationship is dynamic in nature as ventures in our sample generally lessened their economic connections with their parents as they matured (or vice-versa). We 108

„Analogies highlight non-obvious similarities between two things that appear to be dissimilar, and analogic thinking occurs when an individual, facing a novel problem, sees non-obvious similarities in other problems he or she has faced in the past“ (Hargadon (1998, 219)). 109 These mismatches result, for example, from the different time horizons of the participants (Kanter (1985)), from different strategic conceptions (Kanter, Richardson, North and Morgan (1991)), from different cognitive and perceptual patterns (Weber and Göbel (2007)) as well as different power relations (Hardy and Doughtery (1997)). Futhermore, new ventures require a different strategic planning compared to the respective strategic business units of the industrial concern (McGrath and MacMillan (1995))

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did find, however, that the relational bonds remained more or less intact.” (p.25). Maula, Autio and Murray (2003) examine the preconditions for the creation of social capital and knowledge acquisition in the CVC sector. They test a model enabling them to demonstrate that complementarities between the partners in the CVC-PC dyad as well as financial incentives (equity ratio) represent important initial conditions for the creation of social capital as well as the resulting knowledge acquisition. Keil et al. (2004) apply organisational learning theories on a CVC program-level perspective and come to the not novel theoretical conclusion “that CVC investments can result in both explorative and exploitative learning” (p. 2). The aim of this paper is to fill in some of the gaps shown above, in particular in regard to the process dimension and changes of CVC networks by conducting a theoretical and empirical analysis of the dynamics of a CVC triad. Taking the CVC triad as the unit of analysis, we focus on a network that automatically combines both intra- and interorganizational perspectives.

3. RESEARCH DESIGN We conducted an exploratory study using a grounded-theory-building approach (Strauss and Corbin (1990)), which allows one to build on and broaden existing findings and to generate new theoretical insights in underexplored fields. Moreover, grounded theory is particularly useful for studying processes and therefore seems suitable for capturing the emergence and dynamics of social capital over time. Concentrating on a few cases and intensifying the investigation into them can achieve a holistic understanding of complex objects of inquiry and their embedment in a context of action (Eisenhardt and Graebner (2007)). Hence, the modest intention of this empirical analysis is to partially contribute to theory formation in the widest sense by exploring the existing theories as sketched here. Multi-case analysis has been chosen as the methodological approach. The limits of this qualitative approach, based on a limited number of cases, are well known: it is not possible to say with certainty whether the results can be generalized or whether they can be applied to a larger, more diverse population.

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3.1. Method and Data This explorative study draws on qualitative research methods and on interpretive analyses of qualitative data. Our six case studies are multi-methodologically designed. Our research design has three foundations: (a) knowledge relating to the aforementioned approaches of social network theory, and the literature on corporate venture capital; (b) participant observation conducted by both authors, and (c) proprietary quantitative, standardised questionnaires from 2000/2001. This method triangulation allows not only to eliminate methodological mistakes (Lamnek (1995)) but particularly to define interim research questions for the semi structured guided interviews and to develop an interim theoretical concept. The subsequent research design borrows heavily from Yin’s (1991) case-study method as well as Eisenhardt’s (1989) process of theory-building through case-study research

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whose final product “may be concepts, a conceptual framework, or propositions or possibly midrange theory” (p. 545)).

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3.2. Sample We conducted longitudinal case studies of six CVC-programs from six distinctive parent corporations which we selected out of 25 CVC programs in Germany. In each CVC-program we investigated two separate CVC-triads (altogether 12). Each triad – the unit of analysis – consisted of the CVC-unit, one BU as well as one PU. We selected the respective 12 CVCtriads on the basis of a theoretical sampling procedure according to Glaser and Strauss (1967) (see also Eisenhardt (1989) as well as Eisenhardt and Graebner (2007) who refer to the logic of replication110 already mentioned by Yin in 1981. To generate insights on the configuration and development of CVC triads’ social capital and how this social capital impacts the subsequent knowledge transfer and creation as well as intended innovation, we selected CVC triads that operated in particular aspects under similar conditions but differed considerably with regard to knowledge transferred and created within the triad. After consultation with industry experts, we selected two “triad-cases” of each CVC unit – one successful and one less successful in terms of knowledge transfer and creation within the CVC triad. For comparability purposes of the six cases and „to control environmental variation“ Eisenhardt (1989: 537) we controlled selected context factors, which could possibly have a moderating effect on knowledge transfer and creation within the CVC triad. These factors were the investment phase (we only selected CVC triads where the investment was made in the seed or start-up phase of the venture firm), the percentage share of the company purchased (we only selected CVC triads who bought minority positions) as well as the year of foundation (we selected CVC triads, which had been founded between 1998 and 2000). Finally, we controlled for industry by sampling explicitly CVC-triads from two different industries. This way, we could take into account differences in the ease with which new ventures could find corporate venture capital, the intensity of competition, and the risks and challenges posed by research, product development, and commercialisation of the product/service offered. In keeping with qualitative research methods, overlapping data collection and analysis were used (Glaser and Strauss (1979)). In other words, no advance hypotheses were formulated and later tested. Instead, the collection and simultaneous evaluation of the data served the purpose of building propositions which might be tested in a second study. Data collection and analysis were strictly separate, and their parallel treatment was a constitutive part of the research method (Glaser and Strauss (1979)). Data collection took place from March until October 2002. We followed Yin’s call for multiple sources of evidence and collected data trough interviews, site visits, and archival records. The primary sources were the 34 largely guided and sometimes highly narrative interviews, each lasting between an 110

This means, that „each case must be carefully selected so that it either (a) predicts similar results (a literal replication) or (b) predicts contrasting results but for predictable reasons (a theoretical replication)” (Yin (2003,47)). If the results of the case analysis are contradictory, the original assumptions must be changed and tested with new cases. The objective of the replication is to develop a comprehensive and theoretical framework that contains statements about when a particular phenomenon occurs and under what conditions it does not (Yin (1991)).

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hour and an hour and a half. The interviewees who were our informants were initially the investment professionals of the six CVC units. We asked the experts about technology driven PCs which they had joined from the very first contact so that they were able to report on the companies’ development. In a second step, additional interviews were conducted with either the founder(s)/founding entrepreneur(s) or the CEO of the respective PCs as well as with the relevant managers of selected BUs. The latter also had been part of the triad from the very beginning so that they were able to report on the CVC triads emergence and development. In our interviews we covered the formation and development of the respective CVCtriads as well as their emerging and changing social capital over time. More precisely, with our data collection we covered developments from each CVC triad’s founding until 2002. Basically, we asked all informants the same questions. We gathered information on the individual respondent, the respective organisation, the triad’s history, formation, and organisation, as well as the structure and quality of the triad’s additional relationships or network in each phase of the triad’s development and subsequently the knowledge transferred and/or created in that phase. We asked our interviewees such things as their initial motivation and intention to enter that particular partnership, changes of relevant actors in the network, additional critical incidents affecting the CVC triad, the way emerging conflicts were handled and whether the initial expectations regarding interorganisational knowledge and learning connected with this partnership were fulfilled or rather disappointed. As we gained new insights through analysis of the responses to the open-alternative questions in the interviews, the latter were adapted or expanded until the point of theoretical saturation. This procedure allowed the study to cover new aspects, clarify contradictions, and solidify emerging theoretical considerations. As new knowledge became available through analysis of the responses to the openalternative questions in the interviews, the questions were adapted or expanded until the point of theoretical saturation. This procedure allowed the study to cover new aspects, clarify contradictions, and solidify emerging theoretical considerations.

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3.3. Data Analysis For our data analysis, we followed procedures recommended by Miles and Huberman (1994), Strauss and Corbin (1990) and Yin (2003). As data sources, we primarily used our own interview data. In addition, observational data, survey data from previous years and industry information were used to help obtain reliable and justifiable results which comply with Miles and Huberman’s (1994) “five standards for the quality of conclusions” (p. 277). We followed the triangulation method111 outlined by Miles and Huberman (1994), which served to provide for the appropriate contextualization of the statements made by the interviewees, and ultimately for the trustworthiness and authenticity of our entire research. The twelve triads, emerging out of six CVCs, were first analyzed individually (Miles and Huberman (1994); Yin (2003)). In particular, we compiled an overview of time-ordered 111

“Triangulation is supposed to support a finding by showing that independent measures of it agree with it or, at least, do not contradict it […] the aim is to pick different triangulation sources that have different biases, different strengths, so they can complement each other” (Miles and Huberman (1994, 266)).

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critical incidents/events and corresponding triads as well as network configurations and changes. Our individual case descriptions resulted in an overview of each triad’s external relations, PC resource needs, CVC expectations as well as knowledge transferred and mutually created at each point in the triad’s development. In a second step, we then contrasted the separate cases and typified them in the context of a comparative case analysis (Miles and Huberman (1994); Yin (2003)). We noted similarities and differences, gradually expanding cross-case analyses. This continuous comparative method included internal validity checks of the data (Kirk and Miller, (1986)). During the overlapping collection, analysis, and coding of data, which was undertaken independently of each other, the interviewers developed conceptual categories. The latter were compared for possible overlaps, inconsistencies and contradictions, and – if necessary – all data were recoded. Tentative propositions were developed out of such categories (Strauss and Corbin (1990)). When newly brought in data lead to new or inconsistent information, the categories, the emerging theories, or both were modified to take account of the new information. The process continued until theoretical saturation was reached (Eisenhardt (1989)). The final categories guide the result section.

4. FINDINGS

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To gain a better comprehension in the structure of the results section, we are presenting ex ante one main finding of our longitudinal explorative study that we successively deduced from our data. Every single CVC triad as well as its respective social capital moved through two main phases: the pre-investment phase and the post-investment phase. In these two phases the structure of the network, the actors as well as the roles of the actors and therewith the characteristics of the network ties changed substantially. These results confirm the findings of Hite and Hesterly (2001) as well as those of Maurer and Ebers (2006). In contrast to Maurer and Ebers (2006), who identified an early start-up stage and a business development phase for the investigated start-ups, irrespective of their sources of finance, in our analysis a distinction into pre- and post-investment phases has proved to be a more significant criterion (Weber and Weber (2008)). Hence all further results will be presented and discussed in relation to this division. Our preliminary theoretical understanding drawn from the critical analysis of the previously cited literature is the determining factor driving the entire results section.

4.1.Pre-Investment-Phase The pre-investment phase of a new venture is defined as an enterprise’s search for one or several suitable professional investors. In this phase the new venture generally contacts classical VCs and selected CVC units from relevant large corporations. With the exception of serial entrepreneurs who have already built up a network of potential equity investors, company management will create an entirely new network in its search for professional investors. On the whole, establishing such a network is a proactive and targeted process. Only seldom is contact made to a large company’s CVC unit more or less accidentally via an in-

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house BU which the new venture happens to know already or gets to know through its “business-based” network. “At a fair, if we happen to encounter an interesting company we would like to get involved with, we ourselves will put them directly in touch with our CVC people.” (BU 2). The hopes the new venture has in making such contact with a CVC (rather than a VC), beyond the pure investment itself, is access to the know-how, resources and contacts of the respective industrial corporation and a corresponding knowledge transfer into its own enterprise. “We appreciate in the case of XXX Capital that they have XXX marketing machines, knowledge and contacts in financing issues, and that the business units have basically the XXX technology machine. We get access to all that.” (PC 1) For its part, the mother company also uses the CVC activities to forge entirely new networks within the industry with which it would not otherwise have come into contact, thereby accruing new knowledge. Thus the CVC unit enables the company to constantly keep its ear on the market, maintaining a so-called window on technology. “We don’t want to lose touch with the pulse of time, so we see the CVC as an opportunity to always sustain the window on technology, a sensor on the outside that ensures we’re never too late to channel new technologies into the company. So in this respect, CVC has been strategically placed as one of the pillars of innovation.” (CVC 5) Beyond this, the mother company is hoping for access to innovation or to building blocks on the path towards innovation. In the following, the description of the pre-investment phase will be divided into a structural and a relational dimension, following the differentiation above as suggested by Granovetter (1985) and other authors.

4.1.1. Structural Dimension What transpires from all the interviews is that in the pre-investment phase the relevant set of actors initially represents not so much the triad as the two dyads of CVC-BU and CVC-PC. Since before a private equity investment or a triad configuration can come about a link must first be established and stabilised between the two initially separated clusters in the form of (1) intra-organisational CVC-BU dyads and (2) inter-organisational CVC-PC dyads. As such, the CVC unit or specifically the CVC manager as a rule assumes the role of a pure broker in the sense of a person establishing contacts or a connection, who fills this structural hole, thereby paving the way for the emergence of a triad (see figure 1). “You first have to get people acquainted with one another” (CVC 3). “In the end it’s about making contact” (CVC 2). In this pre-investment stage, it is still too early to tell whether this contact will later spawn a cooperation or private equity investment. Quite clear, however, is that here “brokering a contact is, one might say, a crucial albeit not sufficient precondition” (CVC 4). Intra-Organizational and Inter-Organizational Network Our findings suggest that in order to successfully broker contacts between interested PCs and BUs there are two basic pre-requisites on the CVC side. CVC managers need (i) to have numerous contacts of the greatest possible diversity within their own company – “Within the company itself much of course depends on the network of the investment manager in charge. Things are difficult if the right contacts are not available at the right time” (CVC 2); and (ii) to enjoy a certain level of visibility and respect.

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Figure 1. Social network of the CVC-triad in the pre-investment phase.

“I believe a lot depends on how the investment manager asserts himself within his own organisation, the kind of lobby he has and the kinds of troops he can mobilise. So if this person is not perceived as important and competent his portfolio company will suffer accordingly.” (PC 4) Only once the intra-organisational relationship from the CVC unit and the BUs is properly set-up, bringing with it various forms of social capital, is it at all possible to start working effectively beyond these intra-organisational boundaries. This is the case because one precondition to successfully run a CVC-progam seems to be that “basically we have to know our own company like the back of our hands if we want to find out where they [the PCs] can be properly accommodated. That’s my job.” (CVC 9). Parallel to the creation of an internal network, CVC investment managers also have to extend and establish their networks to the outside via business plan competitions, fairs, congresses and independent VCs; in other words: “It is of course important to constantly maintain and foster contacts to relevant third parties also in order to possibly acquire deals through them.” (CVC 4) Ultimately, this dealflow acts as the basis for every kind of CVC activity. Hence, given the highly competitive field featuring other CVCs and classical VCs, one aspect of CVC work is to expose itself, to pursue external PR such that vis-à-vis new ventures the CVC unit can be positioned – or even “sold” – so persuasively and competently that promising start-ups will opt for it as their investor.

The Process of Forming Triads and Networks It is intrinsic to the subject of this study – the CVC triads – that the CVC unit represents a boundary spanner between and beyond the two worlds of intra- and inter-organisational clusters. The CVC bridges these two hitherto unconnected domains of industrial companies and new ventures. “You build a bridge between two companies where you expect it to be of strategic interest.” (CVC 5) Accordingly, in the pre-investment phase the CVC manager’s function is primarily one of acting as a broker between internal and external clusters and thus

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includes the task of establishing ties between the PC and BU. “I set up the contacts, that’s my job, because I know the people on both sides.” (CVC 9) Hence, seen positively, the CVC manager is a mediator; seen negatively, he’s a “gate-keeper”. „It’s really a sort of three-way relationship between them, us and the investment manager. Basically he plays the role of a mediator, which shouldn’t be underestimated because at the outset we are dependent on him after all. He’s a sort of gate-keeper. “. (PC 6).

Ideally, the CVC unit makes the provision of concrete services by the BUs to the PCs already in the run-up a pre-condition for an investment. These services enable the parties to form an idea of the respective surplus value of their counterpart prior to completion of the contract. In addition, this early interaction also gives everyone a feeling for the people they might be working with for many years to come which is sometimes the most critical part. “What I always consider difficult in the triangular relationship is […] how to set up this win-win situation, so that both will say, yes, good, that makes sense. That is quite some challenge at the outset.” (CVC 1) “Brokering doesn’t always work out, unfortunately. I mean, we’re talking about people here, who like each other or don’t, it’s the same all over.” (CVC 6).

Finally, the CVC unit is not in the authorised position to promise or assure concrete deliverables or services of the BU. At this point the broker has reached the limits of his possibilities and competencies and depends on the respective BU itself.

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„The biggest conflicts that used to occur, was always X Capital did not know what they can promise. So the biggest difficulty is that CVC does not have a say on this front of what gets offered other than the dollars. They are not in the position to go and promise we will give you a $ 50.000 development system or we will bring you into our solution centre that costs $ 10.000 a week. They do not have that authority. And that is what the biggest challenge is. They have to check with us at any time, because we don’t have unlimited resources.“ (BU 3)

In order to reduce the CVC’s dependency from the BU and the problem of uncertainty for the PU to a minimum as well as to build trust in the forefront most of the investigated CVCs made the respective BUs to commit certain deliverables in writing upfront already during the investment negotiations. These promised commitmentswere later not only enforceable but partially even linked to particular sanctions for the BUs. Given the purpose of this study, it became evident that the structural dimension cannot be considered independently of the relational dimension. The latter will be discussed in the following.

4.1.2. The Relational Dimension Intra-Organisational Network Inside the company the point in question seemed to be on which basis CVC and BU interact and support one another. The intra-organisational collaboration was fundamentally based on interlocking interests and the mutual provision of support, which to some extent was also regarded as mutual dependency between the CVC unit and the BUs.

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Christiana Weber “The business units only contribute if they have a sense of personal motivation, if they themselves are likely to be judged by it. And if they are evaluated in terms of revenue or output and they see a company that promises to be a multiplier, then they suddenly get very highly motivated. All they have eyes for at that point is the cash in their pockets, basta.” (CVC 1)

This mutual dependence usually abrogated the need for written in-house contracts between CVC and BU since all participants benefit from the cooperation and can continue to pursue their own interests. Hence, it had less to do with favours than maximising individual benefit. “Again, XXX Capital to me is a tool, so that in that sense it is not that I am helping them. They are helping me achieve my goals to get my foot in the door, so we want to work with them.” (BU 3) Accordingly, collaboration was based on the “endeavour to achieve a long-term partnership of mutuality” (BU 1), a mutuality that maintains a perfect balance of give and take. „As long as that stays balanced where it is not just one helping the other but it is both helping each other, it is o.k. If we are just constantly helping them but we are helping them with deals that we don’t care about, it is not going to go.“ (BU 3)

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Beyond the issue of in-house contracts, our explorative data confirmed existing research that knowledge transfer – which clearly takes place when the CVC and the BU constantly exchange information – requires mutual trust. This usually evolves in the course of time through repeated acts of communication, interaction and exchange and can be amplified or facilitated by shared norms and values, as well as by a minimum degree of cognitive connectivity (absorptive capacity (Cohen and Levinthal (1990)) or receptivity (Larsson et al. (1998)). Our findings showed that in most cases CVC managers could boast of a good level of communication and interaction with the BUs. “We get together quite regularly to compare requirement structures and clear up unresolved questions and issues. It’s a very open and easy-going relationship, also, of course, because I’ve known many of them for years.” (CVC 2). In certain cases the exchange inside the incumbant was characterized by lack of connectivity and big cultural differences. Communicative difficulties were the result. One CVC manager even reported open resistances of selected BUs inside the own organization. “They first of all say: ‚It’s not invented here’. This is a big frustration sometimes“ (CVC 10).

Inter-Organisational Network to the PCs In order to achieve the desired knowledge transfer with the various PCs, whose cultures generally differed quite strongly from that of an industrial corporation, and to build functioning and resilient strong ties (Hansen (1999)), here too a form of connectivity seemed to be required. This connectivity turned out to involve two dimensions, one professional, technical (cognitive), and one personal (emotional). According to the PCs the investment managers needed to possess a sound basis of professional knowledge (shared basic knowledge, Lane and Lubatkin (1998)) if they were at all to recognise a potentially meaningful and productive connection between BUs and PC and to make according use of their network function. “Professional expertise is important. Mr. S. was trained as a biochemist and has worked in pharmaceuticals. He was with XXX, with YYY and he did cooperations and licences with

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them. So he understands what we do. That, I believe, is a very important prerequisite that needs to be met.” (PC 4)

Such absorptive capacity or connectivity and mutual understanding for one another had a lot to do with the question as to how well the CVC unit, the BU and the assessed PC were suited in technical terms, whether there was a strategic fit between them. “Here only strategic investments are made, people generally talk about a strategic fit. The company has to do something that we can turn to some use. The advantage of this is that we understand what people are up to and how the innovations function.” (BU 7) If a CVC manager as first point of contact did not possess the prerequisite professional connectivity there was a danger that the above-mentioned reasoning in analogies and metaphors would not be inspired and that knowledge transfer didn’t take place. “The problem is that they [the CVC managers] often don’t understand an innovation because they don’t know a lot about the business. They run about with just superficial knowledge which is often worse than nothing because they think they can have an equal say.” (PC 1) But according to Hargadon (2002) it is precisely this analogic reasoning that helps to “reframe” a current situation in relation to past problems and thereby to recognise a “set of past solutions that can be adapted to fit the new situation” (p. 63) and thus identify the true innovation. It is worth mentioning that in contrast, mutual understanding between the BUs and the PCs on a purely professional level was generally described as unproblematic, thus providing a plane for knowledge transfer. This is hardly surprising since it is here where people from the same occupational communities (Schein (1996)) with comparable technical and professional expertise encounter one another.

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“They were really positive about that simply because we came in with our great wealth of expertise. We were able straightaway to discuss the technology, the market, complementary partners in industry, the trading advantages, and the competitors. They really appreciated that. So it didn’t take terribly long for us to also establish a good level of trust on a personal level.” (BU 6).

Our findings revealed that emotional connectivity played an important role in the external relationship between the relevant actors in the corporate and the PC. For PCs this was an important criterion – wherever choice was available – regarding the selection of potential investors. At the time of the CVC investment the PCs were mostly in the infant stage of constructing their own networks and evolving their strategic orientation. As such, the choice of a certain partner had a disproportionately stronger effect on the further development of the young company than it did on the investor. The founders knew that if they made a wrong strategic decision, in other words if they operated within a network which can’t offer them sufficient relevant social capital – and hence relevant knowledge – or if they didn’t have access to this social capital as a result of a personal mismatch or a lack of trust, the necessary transfer of knowledge and resources would not take place. “The chemistry can either be a killer criterion or have positive effects. In our case it started by having a positive effect, then later on, after a change in management, it killed us. Ergo: extremely relevant.” (PC 11) A “wrong” network was thus a hindrance for a portfolio company in a twin sense: (i) it not only inhibited and prohibited the learning process where there was no possibility of gaining the desired knowledge from within the company, but perhaps even more importantly, (ii) it also hindered the company from entering into business with another CVC, which might have

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offered a better personal and even professional fit and could have built or made available the necessary networks. Accordingly, the PCs reported that the relational level, this is the individual persons on the CVC side, constitute an important factor in the decision making process for or against a particular investor. „For the start it was important to us that we could establish a mutual understanding. […] During the discussions with potential investors we continuously tried ask ourselves: ‚Is this a relationship which I can imagine for the future? Yes or no?’ That was one of the main criteria“. (PU 9)

Inter-Organisational Networks with External Third Parties The interviews revealed that the CVC unit did indeed rely to a large degree on the BUs to undertake effective investments in the sense of strategic innovation management. But in addition to this it was imperative for the CVC unit to maintain complementary, profound networks to various third parties – and especially to independent VCs. Of crucial importance too were relevant clients and suppliers in one’s own business domain, as well as contacts to lawyers, government offices, associations, interest groups, media representatives and external research institutions. “We don’t actually sell Linux software but we do have access to that whole eco system, in other words we can visit Compac with them [the PC], go to HP, to IBM and so on, and say: this software has been optimised on our architecture, talk to them about it. So we are opening up our entire network to them.” (CVC 1).

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The network of the CVC unit into the industry of independent VCs is insofar of particular strategic importance as it does not only generate a high amount of dealflow, but can often also safeguard (absichern) the own investment decision and therewith improve the support of the PCs. Because these two types of investors represent potential co-investors who have very complementary competencies and resources (Maula and Murray (2002); Weber and Dierkes (2002)), the nurturing of such contacts and potential collaborations resulting from it can be promising for all parties involved. „The CVC simply has more knowledge in the respective segment and knows his core business inside out. His decisions are based on facts and knowledge. The VC can of course undergo a due diligence and he does so, with all kinds of consultants, professors, industry experts, but generally speaking, it is the CVC who has its strengths here because it is sector and industry oriented. The VC in turn is much stronger in all the operative areas, structural issues, organizational issues, completion of management teams or cost structures. This is why we like co-investing, because we see the advantages, it is complementary” (CVC 11)

It became obvious that in the end, it was this network and the ensuing social capital which the PC did not yet possess itself, but for which it specifically opted when choosing its corporate investor or taking a closer look at particular investment managers. “The PCs of course place great value on our personal networks. Which is why we spend so much time building them?” (CVC 4).

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“I reckon that he [the CVC manager] is highly regarded by his colleagues among the VC companies and by others as a competent discussion or conversation partner. He goes to all those biotech forums, he sits on panels, he gives lectures, so he’s well-known in the scene, has an amazing network and is renowned for being competent, which is important for us.” (PC 7).

4.2. Post-Investment Phase The post-investment-phase ultimately has one purpose: value increase via innovation generation. Innovation occurs through the transfer of knowledge and resources, as well as, to some extent, the collective creation of new knowledge and – as defined by Lavie (2006) – new network resources together with the ensuing relational rents.112 This is a period – for the PC mostly more than for the incumbent – of establishing and extending an independent network unattached to the CVC-manager and, concomitantly, of building and consolidating social capital (see figure 2). For the mother company, it is at the latest in this phase – when starting the concrete collaboration with the PC – that the PC’s real potential for its own innovation purposes becomes apparent. In the following, I again divide the analysis into a structural and a relational dimension. Incumbant

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Research center

Figure 2. Social network of the CVC-triad in the post-investment phase.

4.2.1. Structural Dimension CVC as Intra- and Inter-Organisational Broker Once the investment was made, the CVC unit had largely fulfilled its role as an interorganisational broker between BU and PC. This is, he had reduced his “competitive 112

The resulting field of contact brokering (cooperation partners, patent attorney, suppliers, clients, trade fairs etc.), of CVC or BU involvement and of the respective PC’s knowledge transfer is highly versatile in some triads, but will not be examined in a further depth here (for more detail see Weber and Weber (2007)).

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advantage” over the PC, passing on relevant contacts. As a result, the triad got officially configured. The CVC role was then enlarged by the crucial task of acting as an intraorganisational broker into the extended network inside of the industrial company and again as inter-organisational broker to external third parties. At the outset of the relationship, it was not entirely foreseeable which various contacts and assistance the PC will need from the industrial company. Needs and wishes arised from day-to-day collaboration, from further developments and firm establishment of the product idea, of the cooperation etc. For the PC this initially meant a high degree of dependency on the CVC unit since it was on the whole only through them that the promised and agreed relevant contacts to knowledge and resources were (could be) established within the mother company. Hence, the CVC manager again served as a door opener or gate keeper. This is, he keept functioning as connecting bridge over additional internal structural holes allowing the PC to be linked up with the “right” contacts and people in authority in the BUs. “They need me because I am the umbilical cord.” (CVC 3).

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“At that juncture we in the CVC unit are the mouthpiece for them in the company and depending on how well our unit is connected internally, and perhaps also which incentives the business units have to offer support, that works or it doesn’t. In this respect we are a kind of interface.” (CVC 9)

Our findings showed that besides the internal network and the contacts to its already existing PCs and potential PCs, the CVC unit also had to foster and cultivate intensive contacts with numerous additional external groups so as to secure the dealflow, while at the same time also providing its PCs with the largest possible network of contacts and thereby maintaining its attractiveness. By arranging contacts between the PCs and other external third parties, the CVC unit continued to operate as an irreplaceable broker. In turn, the portfolio companies confirmed the usefulness of this direct, and occasionally indirect, broker function assumed by the CVC unit. “The name as such already carries a certain weight and opens doors that would probably stay shut to you. […] So one can clearly benefit from them. It’s just like having a certificate.” (PC 3) Besides this, assuming the role of the broker to external third parties meant installing the PC at major fairs, introducing the PC to relevant partners such as suppliers, clients, independent VCs and so on – in brief to act as multiplier, whilst always “bringing one’s own importance to bear” (CVC 8). “And what is very good is that he has a network inside the scene. […] He will for instance talk to colleagues in other VC companies and then point us out to them, acting like a multiplier for us in this scene.” (PC 4) It became apparent how the process of creating and extending a network and of generating social capital slowly unfurled and progressed in small steps. In the best case, with each problem, each question and each request the PC found one suitable internal and/or external contact, the desired knowledge or the requisite resource.

Enabling PC-PC-Networking A further aspect in the generation of networks, social capital and the attendant acquisition of knowledge was connecting the PCs among each other within a network. This networking took place, for instance, at standardised meetings where all PCs discuss similar themes of interest, ensuring that a qualified exchange is held on similar problems. This means, these

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events had not only a networking character but were also designed as “knowledge fair”, where “new insights can be acquired collectively”. (CVC 9) “They’ve got a series of portfolio companies, small firms which, taken together, represent an amazing amount of technology. All young and flexible and willing to work together at some point and to mutually benefit from one another. And XXX can make this connection. For instance, they organise events where all the CEOs can meet and where certain topics are discussed, which facilitates the creation of an internal network within the portfolio, something which is useful.” (PC 12)

In other instances PCs were connected in a highly targeted manner, in other words “wherever suitable, individual portfolio companies are specifically linked up together” (CVC 9). This happened in small groups from the same field – “We were all companies from the optical industry we had been introduced by XXX Capital.” (PC 10) – with the aim of enhancing potential synergies, furthering joint business, promoting a concrete exchange of knowledge, strengthening the PCs’ positions, considering new forms of cooperation etc. “Sometimes really productive things can also come about by working together or cooperating”, things which have variously been defined as relational resources (Dyer and Singh (1998)) or network resources (Lavie (2006)) with a potential for relational rents.

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4.2.2. Relational Dimension Our findings showed that with these structural network transformation processes parallely relational changes came along. Since this period was predominantly characterised by familiarization and trust building on the one hand, but on the other hand also new, sometimes diverging interest constellations, various conflicts impaction social capital development did occur. Strategic Misfit, Strategic Reorientation and Structural Lock-in A major problem arose when a strategic misfit between BU and PC came about, i.e. ex ante a false investment decision or ex post a strategic reorientation of one of the two parties. Such ex ante strategic misfits did occur, for instance, due to assurances and promises already made in the poker for shares during the pre-investment phase concerning the facilitation of knowledge, contacts and resources. The promised resources sometimes either did not exist in that form or were not adhered to or proved – on closer examination – to have little or no value for the PC. „When one compares what was planned at the beginning via the cooperation, and what has come out of it at the end is well below my expectations. It just didn’t fit“(PC 5). Another cause for strategic misfit did result ex post from a new or reorientation of either party – mostly initiated by the BU. It exposed the fragility of the network, i.e. the triad, and meant for the PC that in the course of the reorientation of the BU, the valuable, often hard won access to the network of the corporation was withdrawn from the respective PC in favour of other or new network ties which then became more important or useful for the corporation. This usually implied the end of the cooperation. „When a BU changes its strategy, then this here [the PC] is completely chopped off, it no longer exists. And then they [the CVC unit] have the only contact to the company, this has happened. (…) We didn’t make any effort after this. To an extent we didn’t even take on the

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This risk predominantely seemed to affect (short term) the PC – unveiling the potential imbalance in this relationship – since the PC was the party most severely affected by the nonfunctioning of the triad, the network and the missing knowledge transfer. Because such networks and knowledge often proved critical for the survival of the PC, failure to deliver did, besides the ultimate cessation of business, lead to a significant loss of trust and a mostly the breakdown in relations. „Our relationship has now deteriorated to the extent that we say: ‘We don’t want anything else to do with you’. There is simply no basis left for continuing our cooperation”. (PC 9) Via a strategic misfit or reorientation the PC could get caught in a lock-in, here referred to as “structural lock-in”. This is, investment (i.e. network) contracts from the past (could) lead to social liability instead of social capital since they hindered not only the learning process but they also hindered the PC to hook up with a new strategic partner due to the fact that a change in the partner could not be carried through in the short term and under unfortunate circumstances could not be effectively carried through at all. “Well, in retrospect we were saddled with the wrong partner. The reason why they could not open any doors for us was that a CVC that doesn’t have a strong presence in a particular target group is not going to be able to open doors for you. It simply didn’t match. I should have recognised that earlier on“ (PC 5) Nothing of this nature in such a pronounced form and, above all, without alternative could be observed or was reported on the corporation’s side. It became evident that brokering in cases of a strategic misfit between BUs and PC or a BU’s reorientation was almost impossible despite the best intentions. Therewith our data did not only confirm previous research in this field (Thornhill and Amit (2001)) but showed where the CVC-manager reached his/her limits of facilitating knowledge and resource transfer in the CVC triad revealing the processes whereby supposed social capital is transformed into social liability. „The problem was that they weren’t that closely aligned with our operative business, such that I would say it was a clear case of synergy or strategic fit. […] That is why today we can say that one of the reasons for this unsuccessful enterprise was their inability to utilise the value we had to offer them as strategic investor. They couldn’t build on any networks or suchlike, which the others desperately needed“. (CVC 7) “The biggest hurdle is the human being. Simply because the BUs are all very busy and new cooperations mean more work initially. This is a human problem. It can also be seen when our reminders to the BUs, to deliver the promised commitments, are carried out very slowly or not at all”. (BU 7)

Changes of Relevant Actors With a view to the relationships of trust to be established within the CVC triads as well as the communication and interaction practices developed over time, a change in the relevant groups of people was described by all participants as decisive and problematic, due to the fact that, “at the end of the day it is a very personal activity” (CVC 8). „I have seen examples where portfolio companies have suffered as a result of such changes. As an investment professional one hasn’t personally made the investment, so the

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motivation to really push things along is lower than with the other portfolio companies where one has personally invested the money, where one’s own head is on the line“ (CVC 4).

The loss of the trusted partner generally also meant the loss of the mentor or promoter for the PC, that individual who closely accompanied and pushed the respective company, out of both a sense of personal commitment and potential economic gain. As a result knowledge transfer and innovation generation was less likely to occur. “One surely focuses more ones own babies, simply emotionally, than on firms, which somehow end up on ones desk. Simply because one grew fond of the own babies over time. One found them, worked with them to get them through the investment board and this entire history unfortunately does not exist in such a deal”. (CVC 5)

Non-Fulfilment of the Broker-Function Beside all strategic changes, a significant problem occured when the CVC manager – due to personal or individual reasons – did not or was not able to fulfil his key roles as intra- or inter-organisational broker. Then the success of the PC and ultimately that of the CVC unit was in jeopardy. This non-fulfilment of the broker function did often result not only from a lack of competence, but also an inadequate mutual understanding (cognitive fit), a lack of mutual trust or sometimes a lack of mutual sympathy (affective fit) or even different interests (conative fit) (see Scholl (2004)).

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„There was never a basic sense of trust with the Managing Director. […] At the end of the day this is a question of chemistry. There are people to whom you simply can’t find a bridge. And the Managing Director happened to be one of those people where it was virtually impossible.” (CVC 2) „I mean, normally the expectation is that all parties are pulling together in the same direction and that is naturally great, but with us things clearly took another course. Completely different assessments of the situation, completely different interests and a completely incompetent CVC manager.” (PU 9)

In short: due to an inadequate relational fit (Weber and Weber (2007)) little or no social capital was built, hence, little or no knowledge transfer and subsequently no innovation generation did take place. Notable in our findings was that while some investors had many difficulties within their triads in the above described manners others had none or very little. It could be seen that CVC manager of “successful triads” usually minimised the risk of such conflicts ahead of time. Especially two kinds of strategies seemed to be helpful: (i) first, to specifiy in writing already in the pre-investment phase the commitments of the BUs regarding their future involvement in the PC. In Dyer and Singh’s (1998, 663) terminology, these are so called “formal thirdparty enforcement governance mechanisms”. „The investment contracts are signed with us [the CVC], separately from this there are business agreements between the PC and our business units. The give and take is specificied in these agreements, what they [the BUs] are prepared to do for the PC, who are the points of contacts, with which resources, etc. Later on, we can always refer back to them. This is important.” (CVC 1)

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(ii) second, informal „self-enforcement governance mechanisms“ (Dyer and Singh 1998, 663) are helpful, in which on the basis of trust and reputation as well as norms of reciprocity, promises are related to specific individuals. „You always have a point of contact. Always individuals. You always need a specific person, who is responsible and feels responsible to take care.” (BU 1) „The collaboration is only based on networks, on personal contacts and is very, very cooperative. One could of course also try to support this in writing but I tell you honestly, “paper is patient”. If the people change and all of a sudden they no longer get along with each other, then it will be difficult to continue working closely together, because the basis is always the specific individuals.” (BU 5)

The CVC-Manager’s Changing Roles and Additional Functions Given the risks outlined above, and the ultimate goal to ensure the functioning and meaningful order of the triad on a long-term basis, our findings revealed that a realignment of the CVC-manager’s tasks within the triad over time did occur: in addition to the pure broker function he took on the role of a moderator, facilitator and mediator. He not only integrated, but rather lead the PC, and spotted problems at an early stage, while still keeping the interests of the mother company in his sights at all times. “So, we would actually tend to be the intermediator for the strategic side” (CVC 4). „In the post-investment phase, I see the investment manager as a kind of a sponsor, a kind of godfather of that account, a kind of chief watching over the whole thing, looking for ways that we as the business unit can help them because we might not know everything that they need.“ (BU 3)

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This is, beside the structural dimension of enabling the networking and building of social capital for the PC, an important new task of CVC managers seemed to be the mediating between the partners to steer and facilitate the transformation processes of the postinvestment phase as well as the interventioning in critical instances (see figure 3). The CVC manager turned out to be predetermined since due to his “bird’s eye view” he could easier and faster understand and recognise the risks, and could act to lessen the impact of strategical misfits or relational conflicts of interest.

The CVC Manager’s “Bird’s Eye View” Therewith, our findings confirmed the meaning of analogic thinking as described by Hargadon (2002) and as derived from Nonaka and Takeuchi (1995), which claims to help knowledge transfer and innovation in networks to occur. In as far as the CVC manager „acquires knowledge with an eye towards its usefulness in often very different (but as yet unknown) situations” (Hargadon (2002, 58), he had the possibility, as opposed to the BU manager – caught up in his own business – to discover something new by virtue of his “bird’s eye view”. This position enabled him for instance to recognise new application possibilities for existing resources in new environments, in other words, to discover innovative potential. „By working in many different domains, knowledge brokers are able to learn many different ways to see situations that inhabitants of a single domain take as given” (S. 59).

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„You see so many different things. Over the last year I have examined almost 200 business plans. You learn a lot, you see a lot, you know how markets and technologies function. You simply have an overview and a different perspective on things. I believe that you can provide better input at most points. You can apply things that you have learned in one situation to another situation.“ (CVC 4) „Of course, he has more of a bird’s eye perspective. While we, the management, do not have the frog perspective, but our perspective is clearly limited. And he sees what is going on in other portfolio companies, which in turn he can forward to us and apply to our case in a similar way, and that helps me as well, of course. It is really a significant support.” (PU 6) Inter-organisational broker to PCs

Pre-investment phase

Intra-organisational broker to BUs Inter-organisational broker to externals Intra-organisational broker

Post-investment phase

Access to network Mediator is not provided Moderator

Bridge structural holes

Bridge structural holes

knowledge

social transfer & capital creation

Recognize & realize necessary adaptions of soc. network configuration

Interventionist

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Figure 3. Changing roles and additional functions of CVC manager.

Knowledge Transfer and Creation In most CVC-triads it was reported that in the post-investment phase - thanks to the newly built social capital - a lot of knowledge transfer as well as new and mutual knowledge creation took place. Our interviewees also mentioned that learning curve effects could be realized in the long lasting partnership. Therewith, the findings corroborate previous research in this field (Yli-Renko et al. (2001)) by demonstrating the positive connection between social capital and knowledge transfer on the not yet explored example of an intra-interorganisational network configuration. The reported mutual, cooperative, and complementary knowledge creation can be interpreted with Dyer and Singh (1998) as creation of relational rents. It became evident, that the output in terms of knowledge transfer was experienced by all three partners of the triad. The BUs reported not only the already mentioned permanent window on technology which allowed them to discover new processes and technologies but also a better understanding of specialized niche markets as well as access to new networks into the entrepreneurship scene, and to research institutions.

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“We [the corporation] gained an enormous competitive advantage through the collaboration with this PC. For our business unit it was extremely interesting to collaborate with this young company because the intention was to discover and enter a completely new market. Their technological development seemed extremely suitable.” The CVC units explained that with every deal they did not only get a deeper understanding of their own organisation but were also able to ameliorate their own processes, particularly those of analogical reasoning and therewith matching the best triad partners. The PCs reported that they gained an enormous amount of technical as well as practical industry know-how like finance, production, sales, legals, human resources etc.. Additionally, some of the entrepreneurs stated that they learned a lot about management skills and strategic thinking, in particular: how to run an own business. „The events which focus on specific themes are really great. Just recently, there was a workshop, only for CFOs at INSEAD, in order to better be able to manage our growth, to make better use of our capital, etc. that was very helpful.” (PC 9) And lastly, they received access to the aspired large variety of networks and services. When CVC managers fulfilled their roles as broker and mediator satisfactorily, i.e. did it justice, the chances of success for the PC, and ultimately that of the BU, appeared to increase, i.e. innovation potential did occur. „This partnership has proofed to be useful. When the question of a new spin-off was raised, for instance, we were the first ones they called. I think we have established a name for ourselves as trustworthy partner and thanks to this, we now have a nice pipeline so that also their next innovation will first land on our desks.” (CVC 5)

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5. DISCUSSION With this explorative analysis I shed light on the processes involved in the formation and development of CVC-triads, their social networks and the resulting dynamics of social capital, issues which have received little attention in the literature to date. Focus was placed on interorganisational knowledge transfer and creation as a means of innovation as well as the changing roles of the CVC manager as intra- inter-organisational knowledge broker, boundary spanner and mediator. I could show how CVC networks form and change over time, both confirming Hite and Hesterly’s (2001) theoretical findings as well as answering Parkhe et al.’s (2006) call for process oriented network research. On the basis of this research object I identified, a pre- and a post-investment phase, two, from the network perspective, distinct, enduring phases which are commonly applied in the relevant venture capital literature as well as in business practice. Hence, Maurer und Ebers’ (2006) classification could not be confirmed even though in the light of our interviews, their phases are of some relevance. The findings showed that from the pre- to the post-investment phase the social network of the CVC-triad changed continually and significantly. The network dynamics during the cooperation, as a rule lasting several years, lead for the most part to new network constellations for the three parties, especially for the PC. While the pre-investment phase of

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the CVC-triads included two rather unrelated dyadic clusters solely connectable by the CVC unit, the post-investment network was characterised not only by the configuration of the triad but also by the extension of the network in some areas –containing new social capital. In other areas, relationships were dissolved because they became obsolete. In some cases, relationships were deepened and fulfilled partially altered tasks. In the majority of cases, for instance, the initial relational weak tie between the CVC unit and the PC developed into a strong tie over time, giving rise to a large quantity of social capital. Hence, our results point in the same direction as those of Thornhill and Amit (2001) who found that the parent-venture relationship is dynamic in nature and that over time this relational bond generally remains strong while the economic bond (e.g. financial investment, key clients, etc.), becomes less important the more the PC’s business develops. Based on our data, it became evident that a specific CVC-network structure which had been intentionally initiated/created or maybe unintentionally emerged and which initially had a positive impact on social capital building as well as on interorganisational knowledge transfer,over time was partially less suitable or even represented a hindrance. With these findings the research from Portes and Sensenbrenner (1993) regarding the “dark” side of social capital as well as from Gargiulo and Benassi (2000) and Maurer and Ebers (2006) was supported. My findings showed not only that subsequent permanent changes or adaptions were neccessary which is also suggested by Maurer and Ebers (2006), but also that these adaptions sometimes were either not realised by the responsible actors or could not be implemented for various reasons. However, in order to sustain or change the network configuration such that it remained a system which promotes knowledge transfer and innovation, the actors had (i) to realize and anticipate the changes as well as potential limits of the network and (ii) act accordingly. This is in line with the findings from Inkpen and Tsang (2005). Hence, the necessity or helpfulness of a broker and interventionist – in our case the CVC manager – became evident. On the basis of the data I demonstrated empirically that, in addition to the two types of knowledge broker described by Hargadon (2002), there is at least a third type of knowledge broker: Since the CVC unit or CVC manager neither operates exclusively interorganisationally between external firms nor exclusively between intra-organisationally between internal business units (Hargadon’s two types), but instead builds a bridge between intra- and inter-organisational domains, this is a constellation that Hargadon did not describe yet. I showed that the CVC investment manager as knowledge broker and mediator played, or could play, a critical and dominant role in supporting the recognition and implementation of the above mentioned necessary changes in network configurations to facilitate social capital building and knowledge transfer and creation. The findings revealed that the capacity for analogic thinking, which Hargadon considers to be a core competence characteristic of successful knowledge brokers, could be confirmed as a central success factor in the interorganisational knowledge transfer in the CVC triad. Our study hence demonstrates that the extent to which knowledge transfer and innovation actually take place depends on the contextuality/suitability of the structures for the respective set-ups, and the awareness as well as ability of the various network actors to act. In the course of this explorative study I identified a structural lock-in, based on the “wrong” contractual partner, a form of lock-in neither mentioned by Gargiulo and Benassi (2000) nor by Maurer und Ebers (2006). In effect, this lock-in describes a situation in which

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the new venture gets caught in a network configuration via the investment agreement with the corporate that turns out to represent a social liability. Once integrated into the social network structures of the incumbant, a cooperation, for example with the direct competitor, which in retrospect might appear to have been the “right” partner, is virtually impossible or extremely hard to rectify on a short or medium-term basis. For the incumbant such a wrong decision is often “merely” a financial loss and can eventually be considered part of a learning process and thus prove of use in the future. Furthermore, the findings suggested that in CVC financed new ventures it is possible, with the help of suitable CVC managers, to partially avoid not only the structural lock-in mentioned above, but also the lock-ins described by Maurer and Ebers (2006). As the CVC manager has the advantage of a “bird’s eye view” and the benefit of experience with other PCs, he is in a position to recognize either (i) the strategic, i.e. structural misfit in advance and therefore he can avoid making the investment or entering into the relationship with the new venture; or (ii) he can recognize the necessity of a target oriented organization of the relationship management, i.e. the timely assessment and adjustment of the PC’s social capital, initiating the necessary changes or adjustments. This is, he can guide and advise the young company appropriately or proactively initiate relevant new contacts. Hence, on the basis of my findings I could show that, in distinction to Maurer und Ebers (2006), it is not just the “members” (p. 262) alone who are able and responsible regarding the repeated assessment and change of the young company’s social capital to changing resource needs. A good advisor, coach and mentor, simultaneously operating as a boundary spanner, can also recognize “lock-ins” in advance and assist in resolving them. However the following also applies: trust, shared norms, comparable socialisation backgrounds, as well as the mentioned cognitive and emotional connectivity between PC and CVC manager, i.e. a possible third person, are not just of advantage, they are virtually essential in ensuring that the necessary changes regarding the social networks are not just recognized but also implemented by virtue of the farsightedness of the CVC manager (Weber and Weber (2007)). Only on this basis can the targeted knowledge transfer as well as its joint creation and subsequently innovation be realized.

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CONCLUSION The aim of this paper was to empirically analyse from a dynamic network perspective why CVC programs fail – a yet neglected subject. I focused on the formation and transformation of the CVC triad and its respective social networks. I investigated and discussed the resulting structural and relational changes in the network over time, illuminating the permanently changing process of social capital building as well as interorganisational knowledge transfer and innovation generation. In particular, I highlighted the changing roles and additional functions of the CVC-unit or the CVC investmentmanager in the intra-, inter-organisational network configuration. My contribution to the literature is to have shown that such intra-, inter-organisational network configuration usually seem to ease knowledge transfer and innovation to occur. However, over time it may also hinder it depending on the context specificity – turning actual social capital into liability. In detail: firstly, following Parkhe et al. (2006), I contributed to

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the empirical research of process issues, this is longitudinal studies in social network research, therewith enlarging current literature by an additional example. With the CVC triad I selected a research object, which by its very nature combines both intra- and interorganizational perspectives and which – according to the best of my knowledge – has not previously been analysed on the basis of social network approaches. Secondly, I corroborated previous research in this field by demonstrating the connection between social capital and knowledge transfer and creation on the example of the CVC triad. Thirdly, I extended Hargadon’s model of knowledge broker with the addition of a previously unexplored constellation of an intra-inter-organisational knowledge broker. Given the opportunity of analogical reasoning due to his bird’s eye view, I investigated additional functions of the CVC manager beyond the pure broker function which seem to be relevant for the adaption of the permanently changing social network configuration: mediator, moderator, and interventionist. Lastly and based on these additional roles/functions, I could expand actual findings in this field by showing that the lock-ins described above and in the previous literature are not an inevitable consequence of network transformations, but instead seem to be at least partially avoidable and controllable. The limitations of this study are to be found in its explorative character which precludes any statements as to the legitimacy of generalizing the results or applying them to different populations. Further studies, possibly on the basis of standardized research methods as well as investigations of other populations and branches would be welcomed. Additionally, the identification of other research objects, that, like the CVC-triad, operate at this intra-, interorganizational interface, would be desirable.

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Maula, M. and G. Murray (2002), Complementary Value-adding Roles of Corporate Venture Capital and Independent Venture Capital Investors, Journal of Bio-Law, 6–12. Maurer, I. and M. Ebers (2006), Dynamics of Social Capital and Their Performance Implications: Lessons form Biotechnology Start-ups, Administrative Science Quaterly 51, 262–292. McGrath, R.G. and I.C. MacMillan (1995), Discovery-driven Planning, Harvard Business Review 73, 44–54. Miles, M.B. and A.M. Huberman (1994), Qualitative Data Analysis – An Expanded Sourcebook, 2nd ed., Thousand Oaks, CA: Sage. Miller, A., M.S. Spann and L. Lerner (1991), Competitive Advantages in New Corporate Ventures: The Impact of Resource Sharing and Reporting Level, Journal of Business Venturing 6, 335–350. Moran, P. (2005) Structural vs. Relational Embededdness: Social Capital and Managerial Performance, Strategic Management Journal 26, 1129-1151. Nahapiet, J. and S. Ghoshal (1998), Social Capital, Intellectual Capital, and the Organizational Advantage, Academy of Management Review 23, 242–266. Nonaka, I. and H. Takeuchi (1995), The Knowledge-creating Company: How Japanese Companies Create the Dynamics of Innovation, New York: Oxford University Press. Parkhe, A., S. Wasserman and D. Ralston (2006), New Frontiers in network theory development. Introduction to special topic forum. Academy of Management Review 31, 560-568. Podolny, J.M. and J.N. Baron (1997), Resources and relationships: Social networks and mobility in the workplace, American Sociological Review 62, 673-693. Portes, A. and J. Sensenbrenner (1993), Embeddedness and immigration: Notes on the social determinants of economic action, American Journal of Sociology 98, 1320-1350. Putnam, R.D. (1995), Bowling Alone: America’s Declining Social Capital, Journal of Democracy 6, 65–78. Rauser, I. (2002), Value Added of CVC: How Do CVC Units Benefit from Their Organizational Core? Dissertation, University Bamberg. Sandefur, R., E.O. Laumann and J.P. Heinz (1999), The Changing Value of Social Capital in an Expanding Social System: Lawyers in the Chicago Bar, 1975 and 1995, in: Leenders, R.Th. and S.M. Gabbay (eds.), Corporate Social Capital and Liability, Boston: Kluwer, 217–233. Schein, E.H. (1996), Three Cultures of Management: The Key to Organizational Learning, Sloan Management Review (Fall), 9–20. Scholl, W. (2004), Innovation und Information. Wie in Unternehmen neues Wissen produziert wird, Göttingen: Hogrefe. Schween, K. (1996), Corporate Venture Capital: Risikokapitalfinanzierung deutscher Industrieunternehmen, Wiesbaden: Gabler. Stam, W. and T. Elfring (2008), Entrepreneurial Orientation and New Venture Performance: The Moderating Role of Intra- and Extraindustry Social Capital, Academy of Management Journal 51, 97-112. Strauss, A. and J. Corbin (1990), Basics of Qualitative Research: Grounded Theory Procedures and Techniques, Newbury Park, CA: Sage. Thornhill, S. and R. Amit (2001), A Dynamic Perspective of Internal Fit in Corporate Venturing, Journal of Business Venturing 16, 25–50.

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Weber, C. (2007), Organisation, Innovation und Wissen – eine multiperspektivische interorganisationale Analyse am Beispiel von Corporate Venture Capital. Habilitationsschrift, Helmuth Schmidt University Hamburg. Weber, C. and M. Dierkes (2002), Risikokapitalgeber in Deutschland – Strukturmerkmale, Entscheidungskriterien, Selbstverständnis, Berlin: edition sigma. Weber, C. and M. Göbel (2007), When Knowledge Isn’t Just Knowledge: An Empirical Analysis of Knowledge Transfer in Triads of German Corporate Venture Capital from the Perspective of Social Constructivism, Paper presented at AOM Conference, 3.-8. August 2007 in Philadelphia Weber, C. and B. Weber (2008), Exploring the Antecedents of Social Liabilities in CVCTriads – A Dynamic Social Network Perspective, Working Paper, Helmuth Schmidt University Hamburg Weber, B. and C. Weber (2007), Corporate Venture Capital as a Mean for Radical Innovation – A Social Capital and Knowledge-based Perspective, Journal of Engineering and Technology Management 24, 11-35. Weber, C. and B. Weber (2005) Corporate Venture Capital Organizations in Germany, Venture Capital 7, 51–74. Yin, R.K. (2003), Case Study Research: Design and Methods, third ed., Thousand Oaks et al.: Sage Publications. Yin, R.K. (1991), Applications of Case Study Research, Washington D.C. Yli-Renko, H., E. Autio and H.J. Sapienza (2001) Social Capital, Knowledge Acquisition, and Knowledge Exploitation in Technology-based Young Firms, Strategic Management Journal (Special Issue), 587–613.

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In: Social Capital Editors: Gregory Tripp, Michael Payene et al.

ISBN 978-1-60692-973-5 © 2009 Nova Science Publishers, Inc.

Short Communication

SOCIALIZE THE INNOVATION IN YOUR BUSINESS MODEL THROUGH SOCIAL CAPITAL CREATION Joan Enric Ricart1 and David Pastoriza2 1 2

IESE Business School HEC Montreal, Canada

ABSTRACT

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The idea of a socialized form of innovation, where all the constituents of the firm participate in the process of knowledge creation, provides an alternative way of developing the innovative capacity that organization structures are intended to create. Nevertheless, the process through which management creates this socialized innovation cannot be easily explained with the existing economic theories that dominate the business model literature. This paper argues that social capital helps to explain the creation of a socialrized form of innovation and increases the value embedded in the business model of a firm. Extending the literature of business models with social capital theory will help advance this field of research, particularly those elements of the business model that current economic theories are not fully capable to explain.

1. INTRODUCTION The business model of a firm describes how the pieces of the business fit together (Magretta, 2002) and offers a framework to understand how the firm can create value (Amit and Zott, 2001). Casadesus-Masanell and Ricart (forthcoming) have recently refined the definition of business model, by stating that the business model of a firm results from the set of management choices, the consequences of those choices in the firm, and the causal relationships between choices and consequences. By decomposing the business model in its different elements and internal dynamics, these authors provide an inclusive framework that permits a better comprehension of several organization concerns, such as the capacity of some firms to generate a socialized form of innovation. It has long been argued that management may enhance innovation in the firm by designing structural solutions, such as a specific

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RandD department (Duncan, 1976). However, innovation literature has recently suggested that the design of this formal architecture may prevent the firm to benefit from a more socialized form of innovation, where all the constituents of the organization freely participate in the process of knowledge creation. The aim of this paper is, precisely, to shed light on how this socialized form of innovation occurs. We do so by analyzing, with the help of CasadesusMasanell and Ricart’s framework, the business model of two firms with an outstanding capacity to socialize their innovation. As it will be described throughout the paper, business model literature is mainly dominated by economic theories that explain the relationships between a set of management choices and its consequences –e.g., higher investment in the RandD department leads to higher capacity of innovation-. However, the socialized form of innovation that interests us cannot be easily explained with the logic of economic theories. Prevailing economic theories that feed business model literature are not capable to explain how management can embed the employees with a commitment –beyond economic rewards- that makes them eager to freely share their knowledge and ideas. It is important therefore to broaden the spectrum of theories that feed the business model literature. We propose that, in order to understand the creation of a socialized form of innovation, social capital theory should be incorporated into the analysis. Social capital theory provides a sound basis for explaining the creation and transferring of knowledge in the firm; it explains why individuals within the firm would be willing to contribute -beyond economic rewards- with their knowledge and ideas to the overall goal of the firm. The argument lies in the idea that individuals, to create intellectual capital, need to involve in the combination and exchange of knowledge and experiences (Tsai and Ghoshal, 1998). This exchange is more likely to occur when the interacting parties trust each other, maintain frequent interactions, and are committed to the same corporate goals (Nahapiet and Ghoshal, 1998). Social capital existence depends to a great extent on the ability of firms to implement supportive employment practices. This means that it is important to understand not only how social capital generates socialized innovation, but also how management can create social capital in the firm. After this brief introduction, the second section of this paper revises the main definitions and prospects of business model, and underlines the limitations of economic theories to explain the rationale of business models based on socialized innovation. The third section describes social capital, its dimensions, and the relationship between each of those dimensions and intellectual capital creation. It also revises the important role that supportive employment practices play in the creation of social capital. The fourth section illustrates the logic of our arguments with the examples of Irizar and Metalquimia, two multinationals with outstanding rates of socialized innovation. It will be evidenced throughout our description that the underlying driver of socialized innovation in both firms is their stock of social capital, as well as the set of employment practices that support this social capital. The fifth section discusses the main ideas of the paper and opens avenues for future research.

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2. WIDENING BUSINESS MODEL LITERATURE: BEYOND ECONOMIC THEORIES Despite the growing recognition to the concept of business model, there is still some degree of ambiguity and misconception about what business models are (Shafer et al., 2005). According to Venkatram and Henderson (1998), a business model is a plan to design strategy that revolves around the dimensions of customer interaction, asset configuration, and knowledge leverage. Timmers (1998) defines business model as architecture for the product, service and information flows, as well as a description of the business actors, their roles, and a description of the sources of revenues. Magretta (2002) defines it as the way in which the pieces of the business fit together, including the activities associated with making and selling something. According to Amit and Zott (2001) a business model depicts the design of transaction content, structure, and governance so as to create value through the exploitation of business opportunities. Amit and Zott (2001) represent indeed the first attempt to ground the theoretical foundations of the concept. More concretely, they anchor the foundations of the concept in the transaction perspective, resource-based view of the firm, strategic network theory, value chain framework and Shumpeter’s theory of innovation. Although definitions of business models are different in several respects, they all refer to the management choices for creating and capturing value, as well as the consequences of those choices in the organization. Consistent with this idea of management choices and organization consequences, it is of particular interest the conceptualization of Casadesus-Masanell and Ricart (forthcoming), who argue that the elements that compose a business model are both the set of choices made by management –e.g., assets employed, extent of vertical integration, etc- and the consequences of those choices in the organization –e.g., greater pace of product innovation-. These authors argue that there are three possible choices: policies, physical assets, or the governance structure for these policies and assets. Management choices have consequences in the organization; for instance, the decision to invest in higher production facilities may influence the economies of scale and result in an increase bargaining power with suppliers. Consequences can be either rigid or flexible depending of their underlying nature. Rigid consequences are like stocks and they accumulate period by period, like intangible assets such as brand equity or reputation. A rigid consequence does not change rapidly with the choices that generate it. In contrast, flexible consequences may vary from one period to the next, as is the case with the level of revenues or costs. The process of making strategic choices and adjusting the consequences is iterative, so the design of the business model is an ongoing process. According to these authors, understanding business models requires considering not only management choices and consequences, but also the causal relationship between those two elements. This causal relationship makes the concept of business model intrinsically dynamic, and reflects that choices and consequences occur over time –e.g., the more that a firm invests in innovation over time, the higher the stock of that innovative capacity of the firm-. Like this, a business model representation should indicate not only the management choices and consequences, but also the causal relationships or theories that link choices with consequences. Quite often, the relationship between choices and consequences is not unidirectional, but bidirectional; this is, choices and consequences often reinforce each other. This occurs when choices lead to consequences, but consequences lead to choices as well –

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e.g., in a low-cost airline, a choice of low fares generates a loop of consequences that ends up enabling low fares again: low fares → large sales → high aircraft utilization → low fix costs → low fares-. To this mutual reinforcement between choices and consequences, CasadesusMasanell and Ricart call it “virtuous cycle”. The virtuous cycles are particularly important when they help to create consequences that are aligned with the firm’s goals, especially when the consequences are rigid. Sometimes the consequences of those virtuous cycles, as well as the virtuous cycles themselves, are hardly imitable in the short run, conferring robustness to the model. In the business model literature, the causal relationships or theories that explain how choices lead to consequences - and the potential virtuous cycles- are commonly accepted and permit little discussion –e.g., given certain demand elasticity, a low price policy will lead to high volume sales and greater bargaining power with suppliers-. There is indeed a large body of respected economic literature devoted to understand how management choices lead to organizational and market consequences. However, sometimes the relationship between choices and consequences -or backwards- cannot be easily explained with the logic of economic theories. This is the case, for instance, of certain dynamics of innovation. The design of organizational structure has long represented a good solution to the problem of how to foster innovation in the firm. It has long been argued that management may enhance innovation in the firm by designing specific structural solutions, such as a specific RandD department (Duncan, 1976). The return on investment of that innovation can be perfectly explained by economic theories that currently feed the business model literature. Nevertheless, innovation literature has recently suggested that the design of this formal architecture may prevent the firm to benefit from a more “socialized form of innovation”, in which all the constituents of the organization freely participate in the process of knowledge creation. This socialized process of innovation provides a different way of developing the innovative capacity that structures are intended to create (Brown and Eisenhardt, 1997; Gibson and Birkinshaw, 2004). However, economic theories are not enough to explain how management can embed the employees with a commitment –beyond economic rewards- that makes them eager to freely share their knowledge and ideas. The limitations of economic theories to explain how a socialized form of innovation occurs, illustrates the need of feeding business model literature with theories that complement it. This paper stresses the importance that social capital plays in the business models that base the innovation capacity on a socialized form of knowledge creation. Organizations with a high stock of social capital benefit from individuals who interact and exchange information on a regular basis, committed with the overall purpose of the firm, and sharing a mutual trusting relationship. In some sort of business models, social capital may not be important at all because incentive mechanisms and hierarchies are designed in such a way that employee must conform to the established norms and incentive systems. Nevertheless, there are some other organizations whose business models rely heavily on the willingness of its members to share information and spread their knowledge. As we will see in two illustrative examples of section four, social capital allows a better understanding of the functioning of those business models. Next section describes the concept of social capital and its dimensions, as well as the relationship of social capital with intellectual capital creation.

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3. SOCIAL CAPITAL Nahapiet and Ghoshal (1998) define social capital as the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by a social organization. The social capital of the firm is not located in the actors themselves, but in their relations with other actors (Lesser, 2000). Social capital constitutes a form of accumulated history, time is important for the development of social capital, since it depends on the stability and continuity of the social structure. These features make of social capital a potential source of firm competitive advantage and can help explain the differential success of firms in competitive rivalry (Nahapiet and Ghoshal, 1998; Pennings and Lee, 1999). Social capital theory provides a sound basis for explaining the creation and transferring of knowledge in the firm; it explains why individuals within the firm would be motivated beyond economic rewards to contribute with their knowledge and ideas to the overall goal of the firm. The existence of organizational social capital proved to reduce the amount of time and investment required to gather information (Kanter, 1988), to increase the pace of product innovations (Tsai and Ghoshal, 1998), to foster interunit interactions and common interests (Ghoshal, Korine, and Szulanski, 1993), and to increase information and resources transfers (Krackhardt and Hanson, 1993). Social capital is composed by three dimensions (Nahapiet and Ghoshal’s, 1998). The structural dimension of social capital reflects the extent to which people in an organization is connected and access to the intellectual capital of others (Nahapiet and Ghoshal, 1998). This aspect of social capital refers to the role of networks among organizational members; this is, with whom and with what frequency people shares information and resources (Moran, 2005). The relational dimension of social capital refers to the nature and quality of the connections among employees (Nahapiet and Ghoshal, 1998). This dimension reflects how relationships, understood as a history of interactions (Granovetter, 1992), can be characterized by trust, reciprocity and emotional intensity (Moran, 2005). Third, the cognitive dimension of social capital concerns the extent to which employees share a common perspective or understanding (Moran, 2005). This dimension relies on organization attributes that facilitate common understanding of collective goals and subordination of parochial interests to those goals (Tsai and Ghoshal, 1998). Tsai and Ghoshal (1998) found empirical evidence of the positive influence that each dimensions of social capital exerts on resource exchange and combination, and thereby, on innovation. The logic of that underlies in this empirical finding is that individuals, in order to create intellectual capital, need to involve in the combination and exchange of knowledge and resources. This exchange is more likely to occur when the interacting parties trust each other –relational dimension-, maintain frequent interactions –structural dimension-, and are committed to the same corporate goals –cognitive dimension-. Literature has already stressed the positive influence of each dimension of social capital on intellectual capital creation. With respect to the structural dimension, it has long been stressed the importance of interactions for the creation and diffusion of innovation within organizations (Ghoshal, Korine and Szulanski, 1993). As suggested by Kanter (1988), social interaction allows individuals to cross formal hierarchies to access the knowledge they need and they stimulate the formation of common interests. Regarding the relational dimension, trusting relationships fosters willingness of individuals to share their resources without worrying that another party will

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take advantage (Ring and Van de Ven, 1994). Like this, the amount of resource exchange and combination among individual members of an organization will increase when a party perceives that his counterpart is trustworthy (Tsai and Ghoshal, 1998). Finally, in reference to the cognitive dimension, individuals have more opportunities to exchange their ideas when they have the same perception about how to interact with one another, and when they agree on the overall purpose of the firm. This implies that organization members who share a vision will likely become partners sharing and exchanging resources (Tsai and Ghoshal, 1998). Literature suggests therefore that social capital facilitates the process of knowledge creation in a way that incentive systems and hierarchies don’t. Nevertheless, it is important to note that social capital is a resource that cannot be obtained overnight, but through the deliberate and consistent investment in management policies that foster it. Going back to the business model lexicon, we would say that social capital is not a management choice, but a consequence. The management choices that create social capital are the policies through which management governs the human resources of the firm (Leana and Van Buren, 1999). In other words, depending on the nature of employment practices, management may create a supportive or discouraging work environment for social capital. On this respect, it is especially noteworthy the work of Pastoriza et al., (2008), who found empirical evidence on how supportive management practices help to create social capital. According to these authors, firms that invest in supportive employment practices obtain relatively higher stocks of social capital; and those firms that obtain higher stocks of social capital perform better and are more willing to invest again on supportive management practices. To sum up, we firstly suggest that the stocks of social capital will influence the level of socialized innovation in the firm; and secondly, that the ability of firms to implement supportive employment practices will influence the creation of social capital. This logic is illustrated in the virtuous cycle we describe next. Choices are underlined (supportive employment practices and high prices) while consequences are not. Rigid consequences are squared (social capital). This same notation will be used in the business model diagrams. To reiterate, supportive employment practices create social capital that grows as time passes. Thanks to this social capital, workers are motivated to share information, exchange and combine knowledge and generate new products. These products are innovative and can be priced high to produce benefits that eventually enable the supportive employment practices, so closing the virtuous cycle. Supportive employment practices → social capital → workers motivated to share information → exchange and combination of knowledge → new product generation → high market price of products → higher benefits → Supportive employment practices. Diagram 1: Virtuous cycle of social capital / socialized innovation.

4. THE VIRTUOUS CYCLE OF SOCIALIZED INNOVATION AT METALQUIMIA AND IRIZAR Up to now, we have been constructing on the idea of a virtuous cycle that permits the creation of a socialized form of innovation. We argued extensively that this virtuous cycle revolves around the idea of social capital. In order to illustrate the arguments that have been put so far, this section describes in details the examples of Metalquimia and Irizar. These two

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multinationals are recognized for having achieved outstanding rates of socialized innovation. As it is evidence in the descriptions, social capital –as well as the management practices that promote it- plays a decisive role in the creation of socialized innovation of both firms.

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Metalquimia Co Metalquimia is a global leader in the meat processing equipment business, focused on cured and marinated products. They offer tailored technological solutions to the meat manufacturing companies. In an industry where the standards of innovation success positions around the 20%, Metalquimia enjoys a rate of successful commercialized innovations of 84%. In the last three years the firm has tripled its number of patents. Their prices are higher than those of competitors, but their products last more, are better tailored to the necessities of the customer, and they provide a personalized service with the customer that competitors don’t. Innovation is a central element in their mission statement, the main driver of their strategy from the initial stages of the firm, and the motor that sustains their growth. With only 100 employees, the firm grows organically, avoiding acquisitions that may put the corporate culture at risk. Metalquimia obtains this outstanding innovation rates from both structural and management choices oriented to socialize innovation. Some of the structural choices are the physical separation of RandD centre from the production centre (that outsources locally most of the components); there is an intelligence department in the firm that explores continuously the world meet industry in search of new market opportunities; there is a formal objective process to audit whether the ideas can become a marketable innovation –i.e., somebody would pay for the idea?, why would they pay for that idea?, how many people would buy that product?, etc-; 20% of the annual profit is distributed among employees to reward and recognize their contributions to the innovative capacity of the firm; there is a regulatory department in the firm that manages objectivises the quality of the products–i.e., technical risk, market value, etc- in order to avoid the subjectivity of projects; or a continuous collaboration with state of the art engineering and software companies, among others. These structural choices help to create to some degree the business model of Metalquimia, depicted in Figure 1 below. The innovative capacity of this business model depends partially on the mentioned structural choices –i.e., invested economic resources, etc-, but to a greater extent on their stocks of social capital. The knowledge base of Metalquimia is mainly enabled a consequence of the social capital accumulated in the organization. This accumulation of social capital (rigid consequence) cannot be fully explained by sharing profits with employees; next paragraph deeps in the nature of the policies that allow this social capital to flourish. At Metalquimia, socialized innovation refers to the fact that all the constituents of the organization participate in the process of knowledge creation and help to develop the innovative capacity of the firm, no matter the department or hierarchical level they belong to. They manage this socialized innovation by putting in place management practices that facilitate social capital to arise. Owners are personally committed with the recruitment of personnel to make sure that new employees have the potential to live the mission of the firm with passion and commitment; promotions are always covered by internal employees to keep alive the corporate culture; managers are evaluated not only according to technical standards, but also to their capacity to manage employees, transmit corporate values, and take advantage

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of their talent; the management committee maintains periodical meetings with each of the persons of the company, to make a follow up of the contributions they have done, and to explain to them the evolution of the firm; the general manager evaluates personally the personal contribution of each of the employees of Metalquimia.

Innovative Product Portfolio

High WtP

Volume

High Price

Systematic Management of Innovation

KOWLEDGE

High Profits Idea generation

International clients

International Development 10-15% Investment In R+D+i

20% profit sharing

Culture of’Innovation

Social Capital/ motivated people

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Figure 1. Metalquimia’s simplified business model.

As a result of these management practices, Metalquimia benefits from the lowest employee turnover in the industry and is capable to retain their most talented employees. An indicator of the high stocks of social capital in the firm is employees’ spirit of hard work and willingness to share knowledge and information. Workers of Metalquimia identify with the values and mission of the firm, what is manifested in a commitment that goes well beyond their contractual agreement. In sum, there is a large set of consistent supportive employment practices that are behind the creation of social capital that, at the same time, is the main enabler of the culture of innovation. Without this addition to the business model it is not possible to understand the underlying reality of Metalquimia and its true source of competitive advantage.

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Irizar Co Irizar is a Spanish manufacturer of coaches that belongs to the cooperative of the Mondragon (MCC) Group113. Irizar was saved from near bankruptcy in 1991 and has become a highly profitable industry leader, with 24% compound annual growth up to day. Irizar is characterized by a narrow product focus, strict quality adherence, truly customer orientation, and an empowered workforce. Irizar success resides in its ability to create high willingness to pay products and deliver them at a reasonable cost. One key ingredient is therefore innovation. It offers a standard product for all markets and then customizes the product based on working with the customer. This choice allows Irizar to take advantage of economies of scale on several components that make up the coach. Their spectacular economic growth was built entirely upon a business model based on a socialized form of innovation, where all the constituents of the firm contribute with their knowledge to the overall purpose of the firm. The innovation at Irizar relies on the democratization of the knowledge in the firm. Despite the fact that Irizar has no formal research department, it showed records of innovation due to the pro-innovation commitment of their 700 employees. The creation of this highly innovative environment rest unexplained just with the “strategic” and “structural” choices in their business model –see Figure 2 for a simplified representation of the business model-. One needs to get deeper into the managerial choices that create a supportive employment practices. True sense of ownership

Quality

Peer -pressure

Service Innovation Low-powered (extrinsic ) incentives

No firing

High prices

High willingness to pay for the product

Less performance risk imposed on workers

Employment growth More willingness to take risks

Learning economies

Large volume

Economies of scale

Profit sharing

Large profit

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Relatively low cost

Figure 2. Irizar’s simplified business model.

All the management choices at Irizar are oriented to foster a socialized form of innovation. One of the key management mechanisms to socialize innovation revolves around the concept of self-managed teams. The self-managed teams are like semi-independent companies with autonomy and freedom to set its own direction and objectives. The selfmanaged teams, which are composed by interdisciplinary professionals, are the backbone of the company. They are somehow similar to cell manufacturing, but as opposed to cells -where 113

At the time of writing this paper Irizar has decided to separate from the Mondragon Group and it is now an independent cooperative Group.

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workers are not truly empowered-, self-managed teams’ members are given much more responsibility and freedom. The self-managed teams manage their own objectives; the idea of self-imposed objectives is essential to the Irizar model since it provides the employees with a sense of ownership. The self-managed teams also select their own leaders within the group, so that the authority of the coordinating member is not imposed from the outside, but freely chosen by all team members. The central control mechanism at play in the self-managed teams is peer-pressure, as there is no superior moral authority or leader within the firm. Like this, teams develop norms of appropriate behaviour, and deviations from those norms result in feelings of guilt. In this scenario, the function of the top management team of the firm is to coordinate teams, rather than supervise them. Another important mechanism to socialize innovation is that of co-ownership. Every employee in the firm is an owner-operator, so there are no temporary workers. Wages are flat, but there is a profit sharing. Cooperativists are not motivated by the expectation of a better salary, as they are already owner-operators. Their biggest portion of variable pay is profit sharing. When an employee joins Irizar, he will have to go through a process of 3 years probation period. During that time, he will have to show that there is a fit in terms of his willingness to work in teams, ethical standards, communication skills and willingness to assume risks when making decisions. Employees are not given written procedures or detailed strategic plans; they are empowered with freedom to decide the most appropriate way to do their jobs. Workers are also assigned to challenges outside their area of expertise to maintain a continuous challenge. All these set of management practices foment the social capital in the firm, and employees exhibit a high degree of commitment towards common goals, frequent interactions among them, and the establishment of generalized rules of reciprocity and trust that facilitate the exchange of knowledge in the firm.

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5. DISCUSSION The idea of a socialized form of innovation, where all the constituents of the firm participate in the process of knowledge creation, provides an alternative way of developing the innovative capacity that organization structures and systems are intended to create. The logic that underlines a social form of innovation is reflected in the fact that innovation rates increase with the greater base of users employing and contributing to that innovation. The higher the number of people interacting and contributing to the innovation development, the greater it is going to be the pace of innovation. This logic applies, for instance, in the case of an “open innovation” like the free software Linux. There is an increasing base of users disposed to contribute to the common goal of creating a good operative system. Users become interested in contributing to the common good; social capital is generated and, with it, a greater pace of socialized innovation –i.e., individuals willing to freely exchange their knowledge and improvements about the operating system-. Taking the organization as a unit of analysis, it has been argued that the process through which management creates this socialized innovation cannot be easily explained with the logic of economic theories that dominate the business model literature. This paper argues for the necessity of broadening the spectrum of theories that feed the business model literature. Concretely, it has been argued that social capital, understood as a resource reflecting the character of social relations within

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the organization, helps to create socialized innovation by easing the process through which the employees combine and exchange knowledge. The cases of Irizar and Metalquimia illustrated the importance of social capital as a main driver of socialized innovation. Their high stock of social capital resulted from the effort of management to investment in supportive employment practices. Both Metalquimia and Iririzar, with very different employment practices, are able to create high stocks of social capital and socialize their innovation. These management practices can be easily imitated; however, the implementation of these practices won’t bring social capital overnight. It is only through the deliberate and purposeful investment in those practices what results in social capital creation. This is precisely the reason why the high stocks of social capital and socialized innovation at Irizar and Metalquimia cannot be easily imitated. Their business models are sustainable because they are difficult to imitate. Those firms not only benefit from the highest number of mechanisms to foster social capital, but they are continuously reinventing themselves. Other competitors may be willing to do the punctual investment in RandD departments, but innovation flows everywhere at Irizar and Metalquimia; it may come from any corner of the company. The different elements of their business model influence and reinforce each other, as illustrated in the figure 3 below.

Figure 3. Virtuous Cycle of Irizar and Metalquimia.

The value embedded in the business model increases as the social capital of the firm is developed, as it is likely that the virtuous cycle of social capital helps to create other positive consequences in the business model. As depicted in the figure, firms’ emphasis on innovation permits them to higher the most talented individuals and to invest in supportive management practices. Management practices result in high stocks of social capital, which, at the same time, results in employees’ willingness to exchange knowledge and information. Greater exchange of information among all the firms’ constituents ends up socializing innovation. More innovative products are translated into higher returns in the market. Higher returns can be invested in costly

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supportive management practices that feed again the cycle. While established economic theory allows us to connect most of these relationships in this virtuous cycle, they are not capable to explain the thick arrow that relates the choice “supportive employment practices” with the consequence “social capital”. Existing theories about this connection are still emerging, despite the great importance of this socialized form of innovation for the creation of competitive advantage in the knowledge economy. Extending the literature of business models with social capital theory will help advance this field of research precisely in those virtuous cycles that current economic theories are not able to fully explain.

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REFERENCES Amit, R. and Zott, C., 2001. “Value Creation in e-Business”. Strategic Management Journal, 22: 493-520. Bolino, M. C., Turnley, W. H., and Bloodgood, J. M. 2002. Citizenship behavior and the creation of social capital in organizations. Academy of Management Review, 27: 505-522. Brown, S. L., and Eisenhardt, K. 1997. The art of continuous change: Linking complexity theory and timepaced evolution in relentlessly shifting organizations. Administrative Science Quarterly, 42: 1–34. Casadesus-Masanell, Ramon and Joan E. Ricart (Forthcoming). Competing through Business Models. In Dagnino, G.B. (Ed). Elgar Handbook of Research on Competitive Strategy. Cheltenham, UK: Edward Elgar. Duncan, R. B. 1976. The ambidextrous organization: Designing dual structures for innovation. In R. H. Kilmann, L. R. Pondy, and D. Slevin (Eds.), The management of organization, vol. 1: 167–188. New York: North-Holland. Ghoshal, S., Korine, H., and Szulanski, G. 1994. Interunit Communication in Multinational Corporations. Management Science, 40(1): 96-110. Ghoshal, S., Korine, H., and Szulanski, G. 1995. Interunit communication in multinational corporations. Management Science, 40: 96-110. Gibson, C., and Birkinshaw, J. 2004. The antecedents, consequences, and mediating role of organizational ambidexterity. Academy of Management Journal, 47: 209-227. Granovetter, M. 1992. Economic Institutions as Social constructions: A Framework for Analysis. Acta Sociologica, 35: 3-11. Kanter, R.M. 1988. When a thousand flowers bloom: Structural, collective, and social conditions for innovation in organizations. In B. M. Staw and L.L. Cummings (Eds), Research in organizational behaviour, 10: 169-211. Greenwich, CT: JAI Press. Krackhardt, D. 1993. Informal networks: The company behind the chart. Harvard Business Review, 71(4): 104-111. Leana, C. R., and Buren, V. 1999. Organizational social capital and employment practices. Academy of Management Review, 24: 538-555. Lesser, E. L. 2000. Leveraging Social Capital in Organizations. In E. L. Lesser (Ed.), Knowledge and Social Capital: Foundations and Applications. Boston: ButterworthHeinemann. Magretta, J., 2002. Why Business Models Matter. Harvard Business Review, May.

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Moran, P. 2005. Structural vs. relational embeddedness: Social capital and managerial performance. Strategic Management Journal, 26: 1129-1151. Nahapiet, J., and Ghoshal, S. 1998. Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23: 242-266. Pastoriza, D., Ariño, M., and Ricart, J.E. 2008. Antecedents and Consequences of Organizational Social Capital: An Empirical Study. Academy of Management Proceedings. Pennings, J. M., and Lee, K. 1999. Social capital of organizations: Conceptualization, level of analysis, and performance implications. In R. A. J. Leenders, and S. M. Gabbay (Eds.), Corporate social capital and liability: 43-67. Norwell, MA: Cambridge University Press. Ring, P. S., and Van de Ven, A.H. 1994. Developmental processes of cooperative interorganizational relationships. Academy of Management Review, 19: 90-118. Shafer, S.M., Smith, H.J., and Linder, J.C. 2005. The Power of Business Models. Business Horizons, 28: 199-207. Timmers, P. 1998. Business Models for electronic markets. Electronic Markets, 8: 3-8. Tsai, W., and Ghoshal, S. 1998. Social Capital and Value Creation: The Role of Intrafirm Networks. Academy of Management Journal, 41: 464-476. Venkatraman, N., and Henderson, J.C. 1998. Real strategies for virtual organizing. Sloan Management Review, 40: 33-48.

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INDEX

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A absorption, 75 academic, 6, 7, 8, 10, 11, 38, 39, 40, 125, 128, 129 accidents, 274 accommodation, 247, 253 accountability, 144, 205 accounting, 76, 88, 138, 139, 298 acculturation, 128, 134 achievement, 93, 125, 128, 129, 202, 205, 259, 324, 326 acquisition of knowledge, 36, 340 action research, 65, 149 activism, 314 adaptation, 17, 42, 87, 172 addiction, 301 adjudication, 235 adjustment, 348 administration, ix, 17, 21, 24, 43, 50, 76, 233, 236, 237, 261, 264 administrative, 17, 233, 264, 267 adolescence, 184, 185, 186, 187 adult, 4, 13, 14, 174, 185, 187, 219, 315 adult learning, 13 adulthood, 187 adults, 105, 112, 126, 132, 141, 178 aerobics, 64, 110, 112, 192 Afghanistan, 165 Africa, vi, xii, 69, 70, 71, 229, 230, 231, 232, 233, 234, 240, 262, 263, 266, 267, 268, 269, 282, 319 African American, 157, 185 African Americans, 157 after-school, 139 age, viii, 12, 15, 25, 28, 32, 34, 36, 59, 64, 78, 79, 81, 110, 113, 114, 117, 130, 163, 165, 179, 183, 217, 281, 283, 295 ageing, x, 151 ageing population, x, 151

agents, vii, 15, 19, 26, 92, 94, 95, 96, 159, 248, 265, 272 aging, 206 aging society, 206 agricultural, 74, 190, 194, 195, 196, 197, 199, 205, 207, 208, 216, 235, 272, 285, 306, 308, 310, 320 agricultural economics, 272 agriculture, 192, 195, 199, 209, 247, 286, 307, 316, 319, 321 agroforestry, 311, 313, 318 aid, 146, 157, 207, 281 aiding, 207 air, 10, 192, 195 Albania, 17, 96 Alberta, 135, 215 alcohol, 127, 222 Algeria, 96 alienation, 237 alpha, 56 alternative, xiii, 2, 36, 154, 216, 247, 272, 331, 342, 355, 364 altruism, 88 amalgam, 18, 21 ambidexterity, 366 ambiguity, 357 American Council on Education, 13 American Indian, 13 amino acids, 193 ammonia, 192 Amsterdam, 169 anaerobic, 192 analysis of variance, 40 analysts, 4 analytical framework, 19 Angola, 232 animals, 92 annual rate, 233 ANOVA, 40, 114 antagonism, 24, 93

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368

Index

antecedents, 366 anthropology, 21 apples, 158 application, vii, viii, 1, 2, 16, 19, 23, 25, 33, 34, 40, 44, 45, 86, 216, 218, 237, 238, 244, 252, 289, 303, 327, 344 applied research, 40 arbitration, xii, 230 argument, 44, 70, 109, 123, 127, 128, 154, 155, 157, 166, 206, 252, 272, 273, 280, 296, 356 Aristotle, 92, 93 Army, 43 Asia, vi, 109, 189, 193, 207, 209, 211, 212, 281, 285, 320 Asian, xi, 189, 190, 191, 193, 194, 206, 212, 277, 284 assessment, xi, 7, 24, 63, 139, 140, 142, 143, 144, 145, 146, 147, 156, 177, 215, 226, 238, 247, 265, 269, 319, 320, 321, 348 assets, vii, xii, 1, 70, 76, 132, 139, 142, 143, 147, 218, 229, 260, 306, 326, 357 assimilation, 95, 98, 171, 172 assumptions, 6, 80, 138, 330 asylum, 153, 162, 163, 164 asymmetry, 351 Atlas, 193, 210 atmosphere, 53, 57, 58, 61, 198, 201 attachment, 185 attitudes, viii, 15, 16, 18, 25, 26, 37, 38, 39, 40, 44, 45, 285, 306 attractiveness, 340 Australia, 15, 150, 160, 161, 306, 320 Austria, 96 authenticity, 12, 62, 331 authority, xiii, 41, 93, 217, 219, 225, 235, 236, 241, 243, 245, 246, 247, 250, 252, 253, 254, 255, 256, 258, 259, 261, 265, 267, 305, 306, 311, 314, 317, 318, 335, 340, 364 autocorrelation, 80 autonomy, 24, 39, 326, 363 availability, 53, 74, 84, 126, 198, 238, 250 awareness, 24, 145, 202, 236, 250, 259, 260, 262, 267, 317, 347

B babies, 343 backlash, 166 bacterial, 192 Bangladesh, 96, 305, 307, 308, 314, 319, 320, 321 bank account, 221, 246, 316 banking, 197 bankruptcy, 363 bargaining, 158, 357, 358

barriers, 26, 45, 138, 165, 167, 279 basic research, 39, 40 basic trust, 140 basketball, 110, 112 beef, 193 beer, 127 behavior, xi, xiii, 70, 86, 156, 174, 177, 178, 179, 180, 181, 183, 184, 185, 187, 198, 201, 272, 275, 276, 278, 281, 285, 290, 291, 292, 293, 294, 295, 300, 301, 302, 303, 306, 366 behavioral aspects, 175 behavioral problems, 177 behaviours, 127 Beijing, 212 Belarus, 96 Belgium, 96, 350 beliefs, 169, 286 belongingness, 175 benefits, xiii, 10, 13, 18, 26, 29, 35, 36, 53, 69, 70, 74, 82, 84, 85, 143, 145, 147, 152, 153, 158, 159, 175, 206, 207, 223, 239, 265, 271, 274, 276, 277, 278, 280, 282, 283, 307, 310, 311, 317, 319, 326, 327, 360, 362 benign, 9 beverages, 127 bias, 75, 76, 162, 163, 275 bilingual, 62, 162 binding, xii, 200, 202, 230, 267 biodiversity, 321 biotechnology, 41, 327 birth rate, 206 black market, 166 Blacks, 133, 170 blocks, 159, 223, 255 body mass index (BMI), 110, 111, 115, 116, 118, 119, 122, 130, 132, 135 bonding, 2, 3, 18, 140, 142, 151, 154, 155, 156, 157, 162, 166, 167, 168, 170, 174, 175, 178, 184, 311, 318 bonds, 7, 59, 105, 142, 327, 329 boreholes, 223 borrowing, 141, 293 Bosnia, 17, 161, 162, 163, 164, 167 Boston, 13, 14, 47, 148, 350, 352, 367 Botswana, 269 bottlenecks, 44 boys, 248 Brazil, 161 breakdown, 217, 342 bribery, 158 British Columbia, 103 brokerage, 326 Brussels, 46, 47, 156

Index BU, 324, 330, 333, 335, 336, 337, 339, 341, 342, 344, 346 Buddhist, 313 building blocks, 333 buildings, 8, 10, 12, 256 Bulgaria, 96 Burkina Faso, 320 burning, 166 burnout, 61 business environment, 68, 72, 73, 75, 77, 84 business model, xiii, 355, 356, 357, 358, 360, 361, 362, 363, 364, 365 buyer, 248

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C Cambodia, 193, 198, 199, 201 campaigns, 267 Canada, x, 71, 96, 103, 104, 108, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 127, 128, 129, 131, 132, 133, 135, 173, 215 canals, xi, 190, 192, 193, 198, 202, 205, 210 capacity building, 266, 317 capital accumulation, 202, 212, 278 capitalism, 14, 118, 169, 210 capitalist, 160 cardiovascular risk, 186 caregiver, 177, 179, 182, 183 Caribbean, 133 carrier, 29, 33, 35, 36, 41 case study, 3, 143, 150, 152, 195, 211, 256, 276, 279, 290, 308, 309, 319, 326 catalyst, 185, 190 Catholics, 163, 164 cattle, 193, 317 Caucasian, 110, 112, 132 causal relationship, 143, 355, 357, 358 causality, x, 78, 85, 137 causation, 4 cell, 115, 200, 241, 242, 250, 252, 253, 363 cement, 245 Census, 129, 132, 135, 179, 269, 276, 290 Centers for Disease Control (CDC), 139, 148 Central Bank, 77, 273 central city, 187 centralisation, 159 CEO, 72, 75, 331 certificate, 239, 340 certification, 84 channels, 78, 207, 265, 272, 280, 283 Child Behavior Checklist, 178 child development, 183 child well-being, 174 childhood, 186

369

children, xi, 105, 127, 131, 155, 156, 171, 176, 177, 178, 179, 180, 181, 184, 185, 187, 215, 219, 223, 224, 226, 316, 317 Chile, 88, 96 China, 87, 88, 193, 210, 211, 212, 282, 284, 321 Christians, 307 chronic disease, 149 chronic stress, 186 cigarettes, 284 citizens, 43, 48, 129, 152, 153, 158, 159, 165, 236, 256 citizenship, 152, 217 civil servant, xii, 230, 242, 259, 260 civil servants, xii, 230, 260 civil society, 46 civil war, 285 civilian, 21 classes, 233 classical, 19, 92, 154, 332, 334 classification, 235, 256, 291, 346 classroom, 223, 224 clay, 192 cleaning, 9, 52, 316 cleavages, 155, 166, 167 clients, 3, 52, 277, 338, 339, 340, 347 closure, 71, 113, 154, 156, 326 clustering, 303, 304 clusters, 22, 307, 333, 334, 347 Co, v, 13, 40, 47, 64, 141, 170, 171, 173, 180, 181, 182, 210, 212, 227, 284, 320, 321, 361, 363 CO2, 171 coaches, 363 coalitions, 148 coastal management, 321 codes, 217 coding, 112, 332 coefficient of variation, 301 cognitive development, 185 cognitive dimension, 70, 359 coherence, 206 cohesion, xiii, 87, 139, 178, 279, 287, 305, 309, 310, 312, 350 cohesiveness, 142, 143 cohort, 186 collaboration, viii, 15, 23, 26, 65, 143, 144, 219, 243, 245, 251, 252, 261, 262, 264, 314, 315, 318, 335, 336, 339, 340, 344, 346, 361 collaborative approaches, 144 collateral, 284 Colombia, 150, 186, 211 Colorado, 227 Columbia, 320 Columbia University, 320

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370

Index

commerce, 48 commercialization, vii, 15, 23, 38, 39, 41, 44, 45 commons, 196, 197, 307, 319, 320 communication, ix, xii, 50, 53, 55, 57, 61, 63, 68, 139, 144, 146, 153, 207, 208, 219, 229, 242, 250, 265, 284, 309, 310, 336, 342, 364, 366 communication skills, 63, 364 Communism, 158 communist countries, 161 communities, viii, xi, xii, 3, 5, 49, 50, 51, 53, 55, 58, 59, 61, 62, 69, 72, 74, 94, 127, 139, 141, 144, 145, 147, 148, 153, 166, 173, 174, 176, 187, 206, 215, 217, 218, 219, 220, 221, 224, 225, 227, 229, 230, 231, 234, 235, 239, 240, 248, 249, 250, 251, 252, 256, 257, 258, 259, 260, 261, 265, 266, 267, 271, 273, 274, 276, 277, 281, 283, 306, 307, 308, 314, 321, 337 community service, 216 comorbidity, 184, 185 compensation, 72, 89, 235, 241, 242, 252, 253, 254, 256, 262, 302 competence, 50, 54, 55, 57, 58, 60, 61, 169, 343, 347 competition, 17, 42, 45, 78, 79, 81, 86, 88, 89, 93, 101, 127, 165, 194, 330 competition policy, 17 competitive advantage, 72, 73, 84, 324, 340, 346, 351, 359, 362, 365 competitiveness, 19, 41, 45, 47, 302 competitor, 348 complement, 331, 358 complex systems, 248 complexity, 9, 73, 217, 328, 366 compliance, 34 components, x, xi, 38, 39, 41, 91, 107, 142, 145, 146, 173, 174, 175, 178, 318, 361, 363 composition, 162, 174, 177, 289, 312 comprehension, 332, 355 computing, 27 concentrates, 20, 192 concentration, 153 conception, ix, x, 91, 92 conceptual model, 62 conceptualization, x, 103, 104, 105, 106, 107, 357 concrete, 31, 32, 255, 327, 335, 339, 341 conditioning, 10 conductive, 19 confidence, 75, 115, 190, 257, 309, 311 confidence intervals, 115 configuration, xiii, 72, 107, 323, 324, 325, 327, 330, 333, 345, 347, 348, 357 conflict, xii, 94, 127, 128, 141, 230, 250, 251, 252, 255, 256, 260, 261, 262, 271, 273, 274, 275

conflict resolution, xii, 141, 230, 251, 252, 255, 256, 260, 261, 262, 271, 273, 274, 275 conformity, 217 confusion, 106, 198, 239 Congress, 47, 211 connectivity, 9, 310, 336, 337, 348 consensus, 105, 200, 224, 236, 250, 309, 315 consent, 236, 256, 262 conservation, 205, 306, 308, 310, 318, 319, 320, 321 consolidation, 204 Constitution, 236, 237, 269 constraints, 108, 113, 124, 262, 264 construction, 36, 74, 124, 154, 156, 209, 218, 234, 245, 253, 254, 261, 312, 315 consultants, 242, 338 consulting, 250, 328 consumers, 279, 297 consumption, 127, 194, 290, 294 content analysis, 56 contextualization, 331 continuity, 257, 359 contracts, 73, 75, 83, 84, 158, 159, 272, 336, 342, 343 control, 26, 74, 77, 78, 109, 114, 117, 123, 127, 129, 156, 163, 185, 192, 202, 205, 231, 234, 246, 251, 253, 254, 256, 257, 261, 262, 264, 265, 266, 299, 330, 364 conversion, 235, 265 cooking, 219, 225, 316 Copenhagen, 65 coronary heart disease, 62 corporations, 73, 74, 323, 330, 332 correlation, 76, 80, 78, 281 corruption, 21, 24, 46, 95, 158, 159, 166 cost structures, 338 Costa Rica, 161 cost-effective, 203 costs, 1, 4, 19, 21, 83, 94, 95, 96, 98, 154, 157, 158, 159, 166, 199, 205, 218, 221, 223, 224, 242, 254, 265, 272, 280, 282, 283, 285, 307, 311, 313, 316, 321, 335, 357, 358 country of origin, 159, 163 couples, 128, 225 courts, 158, 254, 262 covering, xii, 238, 271, 272, 283 cows, 312, 316 creative potential, 41 creativity, 2, 9 credit, 272, 288, 289, 311, 315, 317, 320 credit market, 272, 289 crime, xii, 158, 176, 227, 271, 273, 274, 275, 288, 290 criminal behavior, 286

Index criminal gangs, 53 criminal justice, 142 criminality, 165, 166 critical analysis, 332 criticism, 2, 138 Croatia, v, vii, 15, 17, 19, 21, 22, 24, 25, 26, 27, 31, 35, 36, 37, 38, 39, 40, 41, 43, 46, 47, 48, 96 crops, 193, 194, 195, 196 cross-country, 47, 284, 287 cross-cultural, 124 cross-sectional, 69, 78 cultivation, 92, 190, 192, 193, 194, 195, 197, 307, 311, 313, 316, 318 cultural character, 25 cultural differences, 336 cultural factors, 18, 19, 22, 37, 43, 274 cultural heritage, 37, 104 cultural influence, 20 cultural norms, 45, 74 cultural values, 26, 48 culture, viii, ix, 6, 7, 10, 14, 21, 38, 42, 46, 49, 55, 57, 59, 61, 65, 91, 106, 145, 170, 251, 285, 312, 314, 361, 362 customers, 3, 70, 72, 74, 78 cycles, 4, 358 Czech Republic, 96

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D Dallas, 173 danger, 337 Danish International Development Agency (DANIDA), 219 data collection, 220, 330, 331 data set, 108 database, 19, 140, 160, 161 dating, 29 death, 112, 130, 223, 287 debt, 274 decentralisation, 157, 267 decision making, 73, 74, 144, 150, 218, 242, 261, 266, 338 decision-making process, 77, 218, 267, 313, 315 decisions, 7, 73, 159, 224, 225, 231, 247, 250, 261, 276, 277, 278, 279, 287, 313, 314, 315, 317, 338, 364 decomposition, 192 deep-sea, 6 deficiency, 22, 112, 128, 261 deficit, viii, 16, 24, 37, 39, 41, 42, 45, 48 definition, 1, 5, 6, 18, 20, 21, 23, 50, 53, 77, 92, 93, 140, 216, 257, 266, 308, 326, 355 degradation, 306 delinquency, 178

371

delivery, 62, 257, 263, 265, 266 democracy, vii, ix, 48, 64, 91, 98, 157, 160, 217, 227, 273, 320 democratization, 363 demographic characteristics, 18, 174 Denmark, 96, 151, 152, 153, 155, 156, 160, 161, 162, 163, 164, 165, 166, 167, 168, 169, 171 density, 85, 142, 146, 231, 241, 258, 263 Department of Education, 63 Department of Health and Human Services, 148 dependent variable, 32, 109, 111, 114, 179 deposits, 315 depressed, 10, 111, 127, 130 depression, 109, 110, 111, 113, 115, 118, 121, 122, 123, 125, 129, 130, 132, 134, 177, 179, 183, 184, 185, 186, 187, 303 depressive disorder, 185 depressive symptoms, xi, 174, 176, 177, 179, 180, 181, 183, 184, 187 deprivation, 186 destruction, 226 developing countries, 19, 87, 96, 144, 176, 186, 206, 207, 218, 272, 283 development policy, 262 deviation, 281 dichotomy, 109 dictatorship, 157, 160 differentiation, 88, 124, 302, 325, 333 diffusion, xii, 16, 271, 272, 273, 279, 359 digestion, 194 diminishing returns, ix, 68, 75, 82, 83, 84 direct measure, 129 direct observation, 220 discharges, 195 discipline, 6, 190 discomfort, 111 Discovery, 350, 352 discretionary, 158 discrimination, 112, 114, 129, 132, 133, 134, 152 disorder, 176, 178, 184, 185 dispersion, 88 disposition, 74, 261 disputes, 23, 24, 190, 238, 252, 253, 262, 263 dissatisfaction, 57 distress, 65 distribution, xi, 30, 111, 114, 133, 189, 192, 193, 203, 205, 206, 208, 209, 210, 298, 316 divergence, 192 diversification, 297, 301 diversity, 52, 145, 146, 170, 172, 174, 212, 257, 333 division, 72, 262, 309, 318, 332 division of labor, 72 divorce, 112

372

Index

dominance, 249 dominant strategy, 201 donor, 252, 317, doors, 340, 342 double jeopardy, 134 draft, 227 drainage, 193, 198, 245 dream, 13 drinking, 127, 226, 313, 316 drought, 209, 210 droughts, 209 drying, 192 duration, 142, 196, 242, 244, 260 duties, ix, 91, 92, 315 dynamic theory, 288

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E earth, 227, 313 earthquake, 277 Eastern Europe, 18, 47, 155, 158, 171 Eastern Germany, 160 ecological, 148, 174, 175, 176, 178, 184, 236 Ecological Economics, 320 economic activity, 93, 94, 100, 273, 274 economic behaviour, 16, 20, 92 economic change, 47, 234 economic development, 17, 18, 20, 41, 47, 48, 207, 247, 272, 273, 274, 279, 281, 282, 286, 288, 289, 300 economic disadvantage, 178, 180, 181, 182, 183 economic efficiency, 95, 193, 278 economic growth, ix, x, 16, 19, 20, 21, 37, 46, 68, 91, 92, 94, 95, 97, 100, 157, 158, 159, 205, 234, 272, 275, 278, 279, 282, 284, 287, 363 economic growth rate, 37 economic incentives, 317 economic indicator, 272 economic institutions, 286 economic integration, 281 economic performance, xii, 46, 99, 271, 283 economic policy, 277 economic resources, 361 economic sociology, 169 economic status, 106, 113, 320 economic systems, 20 economic theory, 303, 365 economically disadvantaged, 183 economics, 18, 123, 138, 272, 274, 278, 280, 287, 290, 292, 302, 303, 319, 320 economies of scale, 357, 363 ecosystems, 307

Education, 1, 12, 13, 14, 17, 18, 43, 61, 62, 63, 64, 65, 110, 113, 131, 132, 135, 149, 226, 227, 284, 349 educational attainment, 179 educational background, 165, 250 educational research, 20, 65 educators, ix, 50 efficient resource allocation, 139 egalitarianism, 21, 38, 45 egg, 193 ego strength, 5 Egypt, 289 elaboration, 94, 96, 97, 98, 99 elasticity, 278, 298, 302, 358 elderly, 152, 317 election, 93 emerging economies, 68, 69, 72, 73, 76, 85, 86, 87 emotional, 111, 128, 178, 185, 279, 336, 337, 348, 359 employees, viii, 50, 53, 54, 55, 58, 59, 60, 63, 72, 77, 78, 79, 81, 86, 356, 358, 359, 361, 362, 363, 364, 365 employers, 3 employment, 27, 68, 165, 179, 233, 284, 311, 356, 360, 362, 363, 365, 367 empowered, 363, 364 empowerment, viii, ix, 49, 50, 52, 53, 54, 58, 59, 60, 61, 62, 64, 207, 225, 226, 267 encouragement, 60 endogeneity, 275 energy, 29, 130, 194 energy consumption, 194 engagement, 20, 32, 59, 140, 146, 166, 216, 231, 235, 320 England, 157, 158, 170, 288 enlargement, 152 enterprise, 7, 19, 154, 156, 332, 333, 342 entertainment, 216, 275 enthusiasm, 29 entrepreneurs, 18, 23, 30, 36, 38, 44, 71, 89, 159, 169, 332, 346 entrepreneurship, 27, 37, 38, 39, 40, 41, 45, 68, 88, 345 environment, viii, 9, 16, 19, 21, 26, 53, 58, 59, 72, 73, 74, 84, 95, 138, 185, 187, 195, 203, 226, 239, 240, 247, 248, 249, 266, 268, 292, 309, 319, 321, 326, 363 environmental change, 278 environmental characteristics, 62 Environmental Protection Agency, 77 environmental sustainability, 233 epidemiology, 148 equality, 80, 152, 217, 288

Index

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equilibrium, 200, 201 equity, 234, 323, 329, 332, 333, 342, 357 ergonomy, 63 estimating, 301 estimators, 299 Estonia, 96 ethical standards, 364 ethics, x, 91 Ethiopia, 268 ethnic groups, 127, 153, 155, 160, 162, 164, 167, 170, 307 ethnic minority, 113, 167 ethnicity, 108, 111, 113, 124, 127, 129, 172, 312 etiology, 176, 185 Europe, 8, 9, 17, 19, 46, 47, 50, 64, 109, 151, 153, 168, 169, 171, 320 European Commission, 17, 19, 50, 152 European policy, 23 European Union (EU), 17, 19, 21, 47, 48, 153, 211, 321 Europeans, 165 EUROSTAT, 47 evolution, 11, 170, 320, 362, 366 examinations, 176 execution, 93, 94, 250, 261 exercise, 92, 110, 112, 251 expert systems, 4 expertise, 4, 51, 52, 68, 73, 74, 75, 84, 86, 261, 319, 336, 337, 364 exploitation, 21, 30, 31, 32, 73, 77, 89, 306, 357 exposure, 41 external costs, 321 external influences, 7 external relations, 332, 337 external shocks, 281 externalities, 155, 156, 217 externalizing, 179, 185 externalizing behavior, 185 eyes, 336

F face-to-face interaction, 157 facilitators, 139, 263 factor analysis, 35, 38, 56, 76 failure, 25, 53, 145, 157, 165, 249, 250, 264, 277, 342 fairness, 140, 217 faith, 311, 312 familial, 185 family, vii, ix, xi, 13, 14, 59, 67, 68, 69, 71, 72, 73, 74, 75, 76, 77, 78, 80, 81, 82, 83, 84, 85, 86, 87, 88, 89, 95, 104, 105, 106, 107, 108, 109, 111, 114, 117, 121, 123, 124, 125, 127, 128, 143, 145,

373

150, 156, 157, 162, 163, 175, 215, 219, 223, 248, 263, 295, 306, 310, 312, 316 family firms, 71, 86, 87, 88 family life, 13, 14 family members, 77, 111, 112, 128, 143, 219 family structure, 112, 117, 121, 123 family studies, 104, 105, 106 family support, xi, 215 farm land, 205 farmers, 190, 193, 195, 196, 197, 198, 199, 202, 204, 205, 206, 207, 208, 209, 306, 311, 321 farming, 190, 198, 220, 308, 313, 315, 319, 320 farmland, 196 farms, 224 farsightedness, 348 fat, 111 fatalities, 275, 283 fear, 178, 184, 256, 262 fears, 217, 225 February, 131, 148, 149, 150, 165, 166, 211, 245, 252, 314, 319 fee, 221, 237, 317 feedback, 24, 145, 147, 250, 251, 261 feeding, 358 feelings, 95, 140, 309, 310, 312, 314, 364 fees, 221, 223, 224, 226, 238, 239, 316 females, 113, 117, 220, 222, 279, 280, 290 fertility, 192 fertilization, 192 fertilizers, 192, 311, 317 film, 41, 165, 166, 275, 290 finance, 39, 76, 247, 249, 261, 324, 332, 346 financial capital, xiii, 68, 106, 128, 157, 305, 314, 317 financial development, 286 financial institution, 73, 207, 257 financial loss, 348 financial resources, 30, 31, 36, 40, 68, 73, 84, 95, 239, 249 financial support, 168, 226, 310, 316 financing, 23, 27, 30, 41, 152, 207, 333 Finland, v, viii, 21, 48, 49, 50, 51, 56, 62, 63, 64, 65, 96, 152, 160, 161, 186, 351 Finns, 62 fire, 68, 88, 273, 286 firearm, 142, 148 firewood, 223 firm size, 78 firms, vii, ix, 10, 16, 21, 67, 68, 71, 73, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 86, 88, 89, 169, 274, 278, 279, 323, 328, 343, 347, 351, 355, 356, 359, 360, 361, 365 fish, 313

374

Index

fishing, 110, 112 fitness, 60, 64 flexibility, 2, 73, 247, 262 floating, 193 flooding, 192, 245 flow, xi, 3, 38, 40, 45, 152, 153, 189, 192, 198, 224, 250, 255, 265, 294 fluctuations, 195 focus group, 253 focusing, 76, 85, 261, 328 food, 193, 194, 223, 231, 289 foodstuffs, 194 football, 279, 290, 293, 296, 298, 299, 304 foreign firms, 88 forest management, xiii, 305, 307, 314, 320 forestry, xiii, 210, 305, 307, 308, 318, 319 forests, 307, 312, 315, 318, 319 formal sector, 249, 257, 264, 265, 266 fragility, 341 fragmentation, 217, 273, 290 France (FRA), 96, 161, 211, 216, 273 franchise, 298, 299 fraud, 264 free riders, 201 freedom, 39, 93, 154, 156, 165, 168, 284, 363, 364 Friday, 295 Friedmann, 234, 268 friendship, xi, 92, 93, 105, 215, 217, 221, 222, 223, 224, 226, 248 frog, 345 frustration, 145, 207, 336 fuel, 194 fulfillment, 128 funding, 31, 37, 44, 68, 118, 138, 144, 251, 252, 324 funds, 31, 61, 73, 236, 238, 244, 246, 249, 250, 251, 260, 263, 267, 316 futures, 247

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G game theory, 200 games, xiii, 156, 166, 200, 285, 291, 292, 293, 294, 295, 296, 297, 298, 299, 300, 302 gangs, 318 GDP, 96, 98, 99, 152, 272 GDP per capita, 98 gender, viii, 15, 25, 32, 36, 38, 113, 179, 183, 186, 222, 223, 225, 226, 227, 281, 295 generation, xiii, 71, 89, 96, 104, 169, 206, 281, 323, 324, 327, 339, 340, 343, 348, 360 Geneva, 136, 227 geography, 287 Germany, xiii, 22, 96, 135, 160, 161, 229, 268, 273, 323, 324, 330, 353

gifts, 249, 316 ginger, 313 global networks, 6 global warming, 194 globalization, 42 goals, 3, 5, 9, 17, 23, 30, 53, 55, 59, 72, 139, 144, 146, 147, 318, 324, 326, 336, 356, 358, 359, 364 God, 217 Goodness of Fit, 122 governance, xi, 19, 20, 21, 71, 83, 88, 189, 190, 194, 202, 205, 206, 207, 208, 209, 210, 234, 235, 246, 257, 262, 266, 284, 307, 319, 343, 344, 357 government, iv, vii, ix, xii, 16, 17, 18, 19, 20, 21, 22, 24, 25, 31, 37, 38, 41, 42, 43, 45, 48, 67, 70, 72, 73, 74, 75, 76, 77, 78, 83, 84, 85, 118, 125, 140, 141, 142, 144, 152, 202, 205, 206, 207, 219, 230, 236, 239, 241, 244, 246, 247, 248, 250, 251, 252, 254, 255, 256, 259, 260, 261, 262, 263, 266, 267, 277, 306, 307, 308, 310, 311, 316, 318, 320, 338 government failure, 205 government policy, 24, 25, 118 grading, 2 grain, 191 grains, 192, 194 Grameen Bank, 320 grants, 277 grassroots, 230, 236, 250, 252, 256, 314 gravity, xi, 189, 198 Great Britain, 96 Greece, 96 green revolution, 288 ground water, 196 group activities, 112, 122, 127 growth, ix, x, 16, 19, 20, 21, 37, 46, 62, 64, 68, 73, 74, 87, 91, 92, 94, 95, 96, 97, 98, 99, 100, 157, 158, 159, 192, 205, 231, 234, 247, 257, 259, 267, 272, 275, 278, 279, 282, 284, 287, 289, 290, 324, 326, 346, 361, 363 guidance, 55, 144, 242, 249, 257, 264, 319 guidelines, 236, 259 guilt, 364 guilty, 201

H H1, 25, 33, 44, 160, 351 H2, 25, 44, 160 hands, 224, 253, 334 happiness, 92, 93, 94, 95 hardships, 209 harm, 41 harmonization, 266

375

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Index Harvard, 13, 47, 86, 87, 100, 132, 135, 148, 168, 210, 226, 268, 284, 285, 286, 287, 288, 302, 319, 349, 350, 352, 367 harvesting, 224, 225, 316 health, viii, ix, x, xi, xii, 13, 14, 43, 49, 50, 51, 52, 53, 54, 55, 59, 60, 61, 62, 63, 64, 65, 103, 104, 105, 106, 107, 108, 109, 110, 111, 112, 113, 114, 115, 117, 118, 121, 122, 123, 124, 125, 126, 127, 128, 129, 130, 132, 137, 138, 139, 144, 145, 146, 147, 148, 149, 173, 174, 175, 176, 177, 184, 185, 186, 225, 226, 236, 245, 271, 273, 279, 280, 287, 288, 315, 316 Health and Human Services, 148 health care, 55, 60, 63, 64, 118 health education, 139 health problems, xi, 109, 174, 175, 176, 177, 184 health status, 111, 118 healthcare, 142 hearing, 111, 262 heart, vii, 1, 62 heating, 10 height, 110, 130, 254 helix, 24, 38, 46 heterogeneity, 72, 273, 277, 279, 288, 290 heterogeneous, xii, 124, 271, 283, 288 heteroscedasticity, 299 high risk, 196 high school, 125, 179, 180 higher education, vii, 1, 5, 7, 8, 10, 317 hip, vii, ix, 68, 77, 82, 128, 325, 337 hiring, 283, 289 hockey, 110, 112 holistic, 4, 51, 60, 267, 329 Holland, 55, 62, 366 home ownership, 248, 249 homeowners, 143 homogeneity, 281, 312 homogenous, 40, 114, 142, 166, 273 honesty, ix, x, 91, 92, 93, 94, 96, 100 Hong Kong, 61 hospital care, 152 hospitals, 27 host, 118, 152, 159, 161, 167, 220, 295, 296, 297, 300 hotels, 257 House, 63, 64, 168, 254, 287 household, 110, 111, 112, 113, 117, 118, 128, 177, 219, 249, 309, 311, 313, 315 household composition, 112 household income, 113 households, xi, 20, 108, 179, 215, 218, 219, 220, 225, 248, 249, 252, 253, 257, 309, 310, 311, 313

housing, 153, 219, 231, 233, 234, 240, 241, 247, 248, 249, 251, 252, 256, 257, 258, 259, 262, 263, 268 Housing and Urban Development, 240 human, ix, xii, xiii, 2, 5, 9, 10, 20, 41, 47, 68, 69, 71, 72, 87, 91, 92, 94, 95, 97, 106, 128, 152, 153, 157, 166, 168, 226, 229, 242, 262, 267, 271, 278, 279, 281, 282, 286, 289, 290, 292, 303, 305, 306, 314, 317, 342, 346, 360 human activity, 94 human behavior, xii, 271, 292 human capital, ix, 5, 69, 87, 91, 92, 94, 95, 97, 106, 128, 166, 168, 226, 278, 279, 281, 282, 286, 289, 290, 306, 317 human resources, 2, 72, 87, 267, 346, 360 human rights, 152 Hungary, 47, 96, 227 husband, 219, 222 husbandry, 317, 318 hygienic, 316 hypothesis, viii, 16, 25, 33, 37, 42, 44, 45, 58, 61, 80, 82, 118, 134, 160, 161, 164, 167, 274, 287, 303, 310

I IBM, 338 ice, 110, 112 id, 105, 121, 122, 207, 223, 279, 343, 344 identification, 17, 70, 243, 265, 349 identity, 5, 8, 14, 70, 71, 326 immersion, 71, 194 immigrants, 104, 106, 114, 117, 121, 123, 129, 152, 153, 154, 155, 156, 157, 162, 163, 164, 165, 167, 168, 170 immigration, 152, 153, 162, 163, 164, 165, 265, 352 implementation, viii, xii, 5, 16, 17, 24, 26, 40, 43, 45, 49, 56, 57, 58, 60, 61, 139, 144, 146, 152, 202, 203, 205, 206, 218, 221, 229, 230, 231, 234, 236, 239, 240, 242, 245, 246, 247, 250, 251, 259, 260, 261, 263, 264, 266, 267, 306, 313, 316, 347, 365 in situ, 76, 279, 281 inauguration, 293, 298 incentive, 37, 152, 294, 296, 301, 358, 360 incentives, 8, 38, 95, 207, 265, 284, 306, 329, 340 incidence, 62, 109, 113 inclusion, xiii, 37, 52, 139, 305, 309, 310, 312 income, xii, 3, 13, 64, 110, 113, 114, 117, 124, 129, 132, 152, 183, 186, 187, 205, 230, 234, 235, 238, 239, 240, 244, 249, 251, 259, 268, 273, 277, 280, 281, 283, 285, 287, 288, 295, 296, 297, 299, 300 income inequality, 273, 277, 281, 287 income tax, 238

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376

Index

incomes, 10, 128, 207, 249, 295, 306 independence, 80, 231 independent variable, 25, 34, 76, 78, 114, 115, 179 India, 96, 153, 156, 166, 172, 226, 307, 320 Indian, 152, 288 indication, viii, 15, 26, 114, 255, 265 indicators, x, 2, 37, 103, 104, 107, 109, 111, 112, 117, 123, 140, 142, 145, 146, 148, 175, 247, 284, 309 indices, 140, 174, 207, 272 indirect effect, 12, 106 individual perception, 175 individualism, 45 Indonesia, 193, 272, 321 industrial, xii, 18, 23, 27, 31, 33, 41, 77, 158, 233, 240, 271, 272, 273, 278, 324, 328, 333, 334, 336, 340 industrial application, 31, 33 industrial policy, 18 industrial revolution, 158 industrialization, 266, 288 industry, vii, viii, 15, 18, 19, 23, 24, 25, 26, 29, 30, 31, 32, 35, 36, 37, 38, 39, 40, 41, 42, 45, 76, 78, 86, 275, 289, 290, 311, 330, 331, 333, 337, 338, 341, 346, 361, 362, 363 inelastic, xiii, 291, 300, 301, 302 inequality, 152, 277, 281, 284, 288, 290 inert, 38, 39 inertia, 327 inferences, 109, 115 inferior goods, 300 inflation, 80 informal practices, 3 informal sector, 249, 265, 272, 288 information age, 88, 217 information exchange, 1, 7, 74, 306 information sharing, 70, 143, 146 infrastructure, 22, 23, 38, 39, 41, 61, 193, 205, 208, 209, 210, 233, 234, 239, 241, 245, 250, 258, 259, 313, 314, 316 inheritance, 235, 260 inherited, 17, 266 initiation, 185, 187, 236, 242, 259, 260, 267 innovation, v, vi, vii, viii, xiii, 4, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 37, 39, 43, 44, 45, 46, 47, 48, 68, 134, 212, 263, 272, 286, 302, 321, 323, 324, 327, 330, 333, 337, 338, 339, 343, 344, 346, 347, 348, 350, 351, 352, 353, 355, 356, 357, 358, 359, 360, 361, 362, 363, 364, 365, 366 inorganic, 311 insecurity, 185, 231 insight, 26, 83, 84, 112, 147, 167 inspection, 237, 239

instability, 18 institutional change, vii, viii, 6, 7, 12, 15, 16, 17, 19, 20, 21, 26, 45, 46, 291, 302 institutions, viii, ix, x, xii, 7, 8, 10, 15, 16, 17, 18, 20, 21, 22, 23, 25, 27, 30, 34, 36, 37, 38, 40, 42, 43, 44, 45, 46, 48, 70, 72, 74, 77, 91, 98, 141, 145, 147, 151, 152, 153, 155, 157, 158, 159, 160, 163, 164, 165, 167, 170, 171, 202, 206, 230, 239, 241, 242, 244, 247, 249, 251, 259, 260, 261, 262, 264, 266, 267, 272, 273, 277, 282, 287, 306, 309, 320, 338, 345 instruction, 63, 65, 241, 245 instruments, 16, 23, 42, 45, 48, 143, 236, 254, 255, 316 insurance, 3, 152, 195, 277, 289, 321 intangible, ix, 1, 22, 67, 68, 72, 105, 357 integration, x, 5, 7, 17, 38, 138, 139, 148, 151, 152, 153, 155, 157, 159, 164, 165, 166, 167, 169, 176, 217, 248, 281, 303, 357 integrity, 261 intellectual capital, 88, 356, 358, 359, 367 intellectual property, 23, 40 iintelligence, 47, 361 intentions, 31, 32, 33, 236, 241, 246, 342 interaction, ix, xi, xiii, 12, 16, 20, 22, 50, 53, 54, 55, 58, 61, 94, 95, 115, 125, 129, 157, 166, 167, 178, 179, 183, 208, 215, 220, 222, 224, 225, 240, 242, 265, 273, 276, 280, 283, 291, 292, 293, 297, 299, 300, 301, 302, 317, 335, 336, 342, 357, 359 interaction effect, 115, 179, 292, 300 interaction process, 224 interactions, vii, 1, 5, 6, 9, 10, 12, 16, 20, 70, 71, 139, 142, 224, 243, 275, 312, 356, 359, 364 interactivity, 22 interdependence, 71 interdisciplinary, 112, 147, 154, 272, 363 interest groups, 158, 338 interface, 45, 320, 340, 349 intermediaries, 68 Internal Revenue Service, 77 internal validity, 332 internalizing, 176, 179 international financial institutions, 207 international trade, 193, 289 Internet, 24 interpersonal relationships, 68, 70, 279, 282 interval, 257 intervention, x, 137, 138, 139, 143, 144, 145, 146, 147, 249, 254, 265, 310 interview, 63, 108, 177, 255, 331 interviews, xiii, 56, 108, 144, 145, 162, 219, 240, 241, 263, 309, 323, 329, 330, 331, 333, 338, 346 intrinsic, 26, 83, 249, 334

377

Index intrinsic motivation, 26 intuition, 162, 295 Investigations, 168 investment, 24, 40, 73, 77, 146, 190, 192, 193, 198, 208, 218, 219, 221, 224, 234, 235, 254, 267, 273, 282, 318, 324, 325, 330, 331, 332, 333, 334, 335, 336, 337, 338, 339, 341, 342, 343, 344, 345, 346, 347, 348, 356, 358, 359, 360, 365 investors, 332, 337, 338, 343 Iraq, 153, 164 iron, 254 irrigation, xi, 189, 192, 193, 194, 195, 196, 197, 198, 199, 202, 204, 205, 206, 207, 208, 209, 210, 211, 213, 313 Islam, 170, 320 island, 88 isolation, 42, 53, 112, 114, 142, 156, 176, 178, 179, 181, 187, 327 Israel, 140, 146, 150 Italy (ITA), 20, 22, 48, 64, 94, 96, 149, 171, 211, 269, 288

J

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Japan, vi, xii, xiii, 46, 96, 131, 161, 189, 193, 195, 199, 200, 202, 204, 205, 206, 210, 211, 212, 271, 273, 274, 275, 276, 277, 278, 279, 281, 282, 283, 286, 287, 289, 290, 291, 293, 294, 298, 300, 303, 304, 305, 320 Japanese, 131, 135, 203, 205, 210, 211, 212, 277, 281, 282, 283, 288, 289, 290, 291, 294, 296, 302, 303, 304, 352 Jefferson, 137 Jews, 163, 164 jobs, 3, 28, 157, 165, 364 joint ventures, 73, 74 judge, 158 Judiciary, 43 jurisdiction, 244 justice, 17, 93, 142, 217, 346

K kappa coefficient, 56 Kenya, 232 Keynes, 12 Khasia, 309, 310, 311, 312, 313, 314, 315, 317, 318, 320 killing, 166 King, 233, 293 knowledge acquisition, 73, 89, 329 knowledge capital, 37 knowledge economy, 16, 17, 23, 365

knowledge transfer, xiii, 22, 323, 324, 325, 327, 328, 330, 331, 332, 333, 336, 337, 339, 342, 343, 344, 345, 346, 347, 348 knowledge-based economy, 165 Korea, 96, 193, 211, 298 Korean, 157, 298, 303 Kurds, 162 Kyrgyzstan, 96

L L1, 351 labor, 75, 152, 165, 170, 192, 193, 194, 198, 199, 204, 207, 208, 220, 223, 224, 225, 226, 250, 272, 280, 282, 288, 292, 311, 312, 314, 315, 316, 317, 318 labor force, 282 labor markets, 272 labor productivity, 204 labor-intensive, 225 labour, 6, 20, 26, 105, 167, 245, 259, 261 labour force, 26 labour market, 105, 167 labour market integration, 167 lakes, 236 land, xii, 74, 75, 192, 193, 194, 204, 205, 206, 224, 225, 229, 230, 231, 233, 234, 235, 236, 237, 238, 239, 240, 241, 242, 243, 244, 245, 246, 247, 249, 250, 251, 252, 253, 254, 255, 256, 257, 258, 259, 260, 261, 262, 263, 264, 265, 266, 267, 268, 269, 306, 310, 311, 313, 316, 318, 319, 320, 346 land acquisition, 254, 262 land tenure, xii, 229, 230, 231, 233, 235, 236, 240, 241, 258, 259, 261, 313 land use, xii, 229, 230, 231, 235, 241, 242, 243, 244, 245, 246, 247, 250, 251, 252, 253, 258, 259, 261, 262, 263, 265, 266, 267, 269, 306 land-use, 318 language, 158, 165, 186 large-scale, 152, 206, 210, 217 latent variables model, 132, 186 Latino, 125, 135, 184 law, 17, 21, 152, 159, 165, 226, 236, 237, 253, 254, 256, 257, 266 laws, 93, 152, 237, 253, 256, 261, 262, 265, 274 lawyers, 262, 274, 290, 338 layering, 257 leaching, 192 leadership, 2, 55, 60, 62, 71, 142, 216, 224, 244, 250, 256, 306, 314, 317 leakage, 207 leaks, 193 learning, ix, 3, 4, 5, 6, 9, 10, 11, 12, 14, 22, 44, 47, 50, 53, 55, 59, 61, 62, 63, 64, 65, 245, 259, 278,

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378

Index

279, 286, 288, 289, 290, 324, 327, 328, 329, 331, 337, 342, 345, 348 learning environment, 14 learning process, 290, 324, 337, 342, 348 leasehold land, 237 Lebanon, 153, 162, 164, 165 legislation, 60 leisure, viii, 13, 49, 57, 59, 96, 114, 127, 275 leisure time, 59, 127 lending, 141, 284 levees, 192, 198 liberal, vii, ix, 91, 152, 168 liberty, 208 licenses, 40 licensing, 75 Life Cycle Assessment, 194 life satisfaction, 273, 284 lifelong learning, 55 lifestyle, 3 lifestyles, 2, 3, 127 likelihood, 115, 121, 122, 125, 166, 267, 275, 280, 282 limitation, 107, 112, 124 limitations, 85, 93, 111, 113, 126, 175, 349, 356, 358 linear, ix, 67, 82, 83, 84, 88, 106, 107, 111, 126, 127 linguistic, 290, 307 linkage, 48, 294 links, 6, 19, 42, 45, 64, 70, 93, 95, 97, 98, 100, 159, 176, 189, 190, 231, 247, 259, 262, 310 Linux, 338, 364 Lithuania, 96 litigation, 274, 286 livestock, 316, 317 living environment, 245, 256 living standard, 207 living standards, 207 loans, 315, 317 lobby, 334 lobbying, 260, 317 local authorities, 230, 246, 251, 256, 260, 261, 262, 266 local community, xii, 61, 141, 145, 208, 229, 236, 252, 253, 254, 256, 257, 260, 261, 263, 266, 306 local government, 141, 219, 236, 250, 252, 277, 318, 320 location, 10, 275, 281, 303 London, 1, 12, 13, 14, 46, 47, 61, 87, 131, 134, 168, 172, 186, 269, 286, 319, 320, 321, 349 loneliness, 58 long period, 145 long work, 29 longevity, 312 longitudinal studies, 59, 349

longitudinal study, 59, 62 long-term impact, 37 Los Angeles, 13, 293 losses, 192, 201, 294 low-income, 64, 132, 183, 187, 239, 251 low-level, 312, 318 loyalty, 72, 84, 128, 285 Luxembourg, 96 lying, 193

M M.O., 185, 187, 284 Macedonia, 17, 96 machinery, 264 machines, 333 mainstream, vii, 1, 307 maintenance, ix, 51, 60, 61, 63, 91, 92, 193, 205, 206, 219, 224, 226, 234, 239, 315, 316 maize, 193 major cities, 192 Major League Baseball, 292, 298, 304 majority group, 123, 129 Malaysia, 212 males, 113, 220, 222, 225, 279, 280, 290 management committee, 141, 362 management practices, 360, 361, 362, 364, 365 manners, 343 manufacturer, 273, 278, 363 manufacturing, 78, 284, 361, 363 manufacturing companies, 361 mapping, 142 marginal utility, 275, 294 marginalisation, xii, 230 marginalization, 128, 156 Marines, 294, 295 marital status, 112, 179 market, 19, 21, 33, 38, 41, 42, 61, 68, 72, 73, 74, 75, 78, 89, 152, 158, 159, 164, 165, 167, 170, 196, 221, 234, 248, 257, 264, 265, 272, 274, 276, 278, 280, 281, 282, 288, 289, 290, 296, 297, 300, 311, 314, 324, 333, 337, 346, 358, 360, 361, 365 market prices, 311 market segment, 74 market value, 165, 361 marketing, 78, 333 marketplace, 9, 86 markets, 19, 61, 235, 248, 265, 268, 274, 277, 281, 282, 345, 363, 367 marriage, 163, 221, 222 married couples, 219, 220 masonry, 249 mass media, 217 Massachusetts, 226

379

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Index material resources, 29 maternal, xi, 174, 177, 178, 179, 180, 181, 183, 184, 185 maternal age, 179 maternal care, 177, 179, 181, 182, 183 matrix, 201 meals, 219, 223 meanings, 5, 171 measurement, 2, 8, 21, 76, 106, 140, 141, 142, 143, 145, 147, 149, 150, 155, 175, 288, 293, 309, 321 measures, ix, x, 19, 21, 22, 24, 50, 62, 76, 85, 89, 103, 108, 109, 111, 114, 115, 116, 117, 121, 122, 123, 124, 125, 126, 129, 137, 138, 140, 141, 142, 145, 147, 149, 162, 175, 178, 184, 202, 203, 206, 234, 266, 309, 331 meat, 193, 361 media, 217, 250, 338 median, 179 mediation, xii, 10, 184, 229, 251, 260 melting, 128 membership, 171, 178 men, 59, 62, 163, 218, 219, 220, 222, 223, 225, 244, 315 mental health, xi, 4, 133, 147, 173, 174, 175, 176, 177, 178, 181, 183, 184, 185, 186, 187 mental illness, 186 mentor, 343, 348 MES, 17 messages, 9, 12 meta-analysis, 185 metaphor, 216, 337 metropolitan area, 233, 266 Mexican, 106, 125, 127, 132, 135, 168, 288 Mexico, 96, 170, 189 Miami, 9 microbes, 192 Middle East, 166 middle income, 249 migrant, 152, 154 migrants, x, 151, 152, 155, 156, 159, 160, 161, 163, 164, 165, 167, 169, 171, 288 migration, 151, 152, 153, 154, 155, 156, 159, 162, 166, 167, 171, 285 Millennium Development Goals, 231, 269 minimum wage, 167 minorities, 106, 113, 116, 117, 122, 125, 153, 154, 155, 156 minority, 32, 112, 114, 116, 118, 122, 123, 124, 125, 127, 128, 129, 167, 312, 330 minority groups, 123, 124, 127 mirror, 276 misconception, 244, 357 MIT, 283

mixing, 10 mobility, 38, 154, 273, 282, 287, 352 modalities, 256, 259, 260, 262, 263, 267 modeling, 124, 126 models, xiii, 26, 80, 88, 104, 115, 122, 123, 124, 138, 139, 144, 179, 355, 356, 357, 358, 365 modern society, 217, 274, 280 modernisation, 18 modernity, 1, 4 moisture, 195, 198 mold, 292 money, vii, 9, 15, 31, 59, 60, 140, 141, 158, 208, 221, 223, 244, 261, 311, 312, 316, 343 Mongolia, 321 monopoly power, 158 monsoon, xi, 189, 191, 192, 193, 194, 206, 207 Montenegro, 17 morality, 280 morals, x, 91 Morocco, 165 mortality, 59, 62, 287 Moscow, 156, 171 mothers, 177, 183, 184 motion, 241 motivation, viii, 16, 18, 25, 26, 30, 31, 32, 33, 37, 40, 44, 45, 57, 58, 201, 207, 260, 263, 300, 317, 331, 336, 343 motives, 30, 31, 33, 34 mouth, 284 movement, 152, 192, 217 Mozambique, 283 multiculturalism, 128 multidimensional, xi, 53, 174, 175, 176, 177, 183, 184, 308 multidisciplinary, 149 multinational corporations, 73, 74, 87, 366 multiples, 237 multiplier, 336, 340 multivariate, 179 murder, 166 muscle, 111 muscle mass, 111 music, 41 Muslim, 152, 153, 162, 165, 168 Muslims, 153, 156, 166, 172 mutual respect, 307 mutuality, 336

N naming, 221 Nash, 200, 201 Nash equilibrium, 200, 201 nation, 16, 19, 20, 41, 108, 115, 170, 281

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380

Index

national culture, 41 National Health Interview Survey, 108 National Health Service, 14 national parks, 236 natural, xii, xiii, 10, 19, 27, 29, 33, 71, 92, 193, 200, 236, 271, 273, 277, 278, 287, 290, 305, 306, 307, 309, 310, 314, 317, 318, 319, 320, 321 natural capital, 317 natural disasters, xii, 271, 273, 277, 278, 287, 290 natural environment, 309 natural resource management, xiii, 305, 306, 314, 318, 321 natural resources, xiii, 305, 306, 307, 320 natural science, 27, 29, 92 neck, 59 negative externality, 280 negative relation, vii, ix, 68, 82, 97, 100, 128, 325 neglect, 217 negotiating, 200, 202, 260 negotiation, 5, 236, 243, 253, 263 neighbourhoods, 153, 253 Nepal, 307, 319 Netherlands, 96, 320 network, xi, xiii, 6, 11, 16, 20, 23, 29, 50, 53, 65, 69, 70, 71, 85, 88, 93, 98, 142, 143, 145, 146, 149, 154, 156, 166, 173, 174, 175, 176, 178, 179, 181, 182, 183, 184, 186, 189, 190, 206, 208, 216, 275, 277, 279, 282, 284, 285, 289, 310, 323, 324, 325, 326, 327, 328, 329, 331, 332, 333, 334, 336, 337, 338, 339, 340, 341, 342, 345, 346, 347, 348, 352, 357, 359 network members, 53, 178, 327 networking, ix, xii, 4, 6, 12, 37, 45, 53, 67, 68, 69, 70, 72, 73, 74, 75, 76, 77, 78, 80, 82, 83, 84, 85, 86, 88, 144, 230, 250, 252, 259, 262, 267, 311, 340, 344 New Frontier, 352 New Jersey, 211, 269 New Mexico, 189 New Orleans, 172 New South Wales, 141 New York, 13, 14, 47, 62, 86, 87, 88, 131, 132, 133, 148, 149, 156, 168, 169, 170, 171, 186, 227, 268, 269, 283, 284, 285, 286, 287, 289, 293, 320, 321, 349, 350, 352, 366 New Zealand, 144, 145, 146, 150, 160, 161, 269 Newton, 217, 227 NGOs, xiii, 305, 307, 310, 314, 315, 316, 317, 318, 319 niche market, 345 Nielsen, 16, 18, 20, 47 Nigeria, 289 nitrogen, 192

nonwhite, 156 normal, xi, 7, 111, 114, 189, 195, 199, 200, 201, 208, 219, 300 normal conditions, 195 normal distribution, 114 normal goods, 300 norms, vii, ix, x, 1, 18, 20, 21, 22, 37, 40, 45, 46, 53, 70, 71, 74, 91, 92, 93, 94, 95, 96, 100, 105, 139, 140, 142, 143, 146, 154, 156, 190, 197, 201, 205, 209, 217, 251, 253, 265, 272, 273, 274, 276, 278, 281, 285, 286, 287, 288, 290, 306, 307, 336, 344, 348, 358, 364 North America, 109 North Carolina, 67 Northeast, 108 Norway, 152, 160, 161 novelty, 9 nuclear, 128 nucleus, 248 nurses, viii, ix, 49, 50, 51, 52, 56, 58, 59, 60, 63, 64, 65 nursing, 65 nutrients, 193

O obesity, 110, 187 objectivity, 39, 92 obligations, 93, 94, 105, 158, 258, 264, 309, 313 observations, 75, 167, 222, 317 obsolete, 327, 347 occupational, viii, ix, 49, 50, 51, 52, 54, 55, 56, 57, 58, 59, 60, 61, 64, 65, 337 occupational health, viii, ix, 49, 50, 51, 52, 55, 56, 58, 59, 60, 64 oil, 193 one-sided test, 299 online, 34, 319, 323 open economy, 157 openness, 26, 38, 273 operating system, 364 operator, 364 opportunism, 95 opposition, 24 oppression, 163 optical, 341 organ, 315, 317 organic, 11, 156, 311 Organization for Economic Co-Operation and Development (OECD), 12, 16, 18, 19, 20, 21, 22, 47, 48, 96, 105, 129, 134, 152, 211, 212 organizational culture, 84, 328 orientation, viii, 15, 18, 24, 37, 38, 40, 41, 42, 52, 68, 86, 88, 89, 139, 140, 218, 337, 363

Index orthodox, 92 output per worker, 286 outsourcing, 267 overload, 53, 58 oversight, 144 overweight, 109, 110, 111, 115, 121, 122, 125, 127, 130 ownership, 86, 88, 143, 218, 230, 237, 239, 240, 248, 249, 257, 258, 259, 260, 265, 313, 318, 364 oxygen, 68, 88, 192

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P Pacific, xiii, 291, 292, 294, 295, 296, 299 pain, 111 Pakistan, 153, 160, 161, 164, 165, 167 Pakistani, 162, 163, 164 paradox, 7, 89, 101 parenting, 185 parents, 53, 112, 127, 143, 185, 223, 224, 328 Paris, 8, 47, 166, 227 Parliament, 236, 237, 246, 250 participant observation, 329 particles, 192 partnership, 32, 41, 50, 55, 62, 139, 142, 147, 231, 234, 244, 267, 331, 336, 345, 346 partnerships, 146, 147, 148, 149 pastures, 198 patents, 23, 24, 25, 30, 34, 35, 40, 44, 361 pathways, 177 pay off, 170 payroll, 294, 301 PCs, 331, 333, 334, 335, 336, 337, 338, 340, 341, 346, 348 PDC, 264 peer group, 107, 125, 127, 128, 364 peers, 72, 73, 75, 85, 127, 275 penalty, 262 Pennsylvania, 13 pensions, 152, 153 per capita income, 98, 295, 297, 300 perception, 25, 29, 44, 87, 141, 184, 277, 327, 360 perceptual performance, 76 peri-urban, 241 permanent resident, 220 permit, 8, 254, 261, 358 personal benefit, 29 personal goals, 5 personal identity, 5 personal life, 5 personal relationship, 310, 312 personality, 185 perturbations, 235 Peru, 320

381

pharmaceuticals, 336 Philadelphia, 13, 137, 142, 144, 146, 353 Philippines, 96, 161, 285, 306, 307, 319, 321 philosophy, 42, 92 phone, 11, 103, 141, 162 phosphates, 192 photographs, 254 physical activity, 60 physical education, 64 physical environment, 10 physical health, 174 physiological, 195 pig, 193 planning, xii, 52, 56, 58, 60, 61, 139, 142, 143, 144, 148, 149, 218, 219, 225, 227, 229, 230, 231, 234, 235, 236, 239, 240, 241, 242, 243, 244, 245, 246, 247, 250, 251, 252, 253, 256, 257, 258, 259, 261, 262, 263, 264, 265, 266, 267, 268, 269, 306, 314, 328 planning decisions, 139 plants, 192 platforms, 38, 166 play, xiii, 22, 202, 217, 225, 231, 248, 249, 250, 259, 265, 272, 274, 276, 277, 291, 292, 293, 294, 296, 297, 298, 299, 302, 303, 314, 315, 318, 347, 356, 364 pleasure, 130 plums, 158 Poland, 96, 152, 156, 168 police, 43, 143, 158, 254, 275 policy initiative, 165 policy makers, 18, 22, 137, 167, 307 policy making, 21 political aspects, 16 political democracy, 98 political leaders, 73, 76, 77, 312 political participation, 108 political parties, 43, 99, 152 political power, 158 political stability, 48 politicians, vii, ix, 7, 68, 73, 74, 75, 77, 79, 80, 82, 83, 84, 86, 242, 250, 311 politics, 53, 124, 141 polygamy, 220 poor, xi, xii, 57, 68, 110, 118, 129, 143, 152, 153, 157, 174, 176, 184, 215, 218, 224, 230, 231, 234, 239, 240, 249, 251, 256, 257, 258, 262, 266, 307, 316, 317, 318, 321 poor health, 110, 118, 129, 174 population, 37, 40, 62, 108, 110, 126, 127, 129, 153, 160, 162, 164, 165, 166, 177, 187, 193, 206, 231, 232, 233, 249, 257, 288, 297, 300, 301, 307, 329 population growth, 231, 257

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382

Index

pore, 192 portfolio, 324, 328, 334, 337, 340, 341, 342, 345 Portugal, 96 positive attitudes, 42 positive correlation, 37 positive relation, 96, 99, 100, 126 posture, 57 poultry, 193 poverty, xii, 21, 93, 179, 180, 183, 185, 194, 207, 226, 227, 230, 231, 244, 248, 251, 256, 257, 258, 266, 267, 314 poverty alleviation, 257 poverty reduction, 231, 258, 266 power, 2, 3, 13, 74, 93, 124, 125, 127, 142, 148, 155, 157, 158, 159, 160, 161, 164, 167, 169, 216, 220, 252, 314, 316, 328, 357, 358 power relations, 328 power sharing, 158 powers, 237, 262 pragmatic, 6 prayer, 313 precedents, 76 precipitation, 191 prediction, 301 predictors, 59, 62, 109, 177, 185 pre-existing, 3 preference, 240, 257, 274 pregnancy, 110 pregnant, 130 prejudice, 112 premium, 13, 238 preschoolers, 185 president, 315 pressure, 153, 280, 281, 296, 364 prestige, 246 prevention, 51, 142, 143, 148, 184, 280 price changes, 300 price effect, 195, 300 price manipulation, 78 prices, xiii, 19, 221, 291, 296, 301, 311, 360, 361 primary care, 177 primary school, 52, 316, 317 primate, 233, 248 private, 4, 9, 16, 17, 27, 57, 58, 88, 158, 160, 166, 196, 197, 216, 234, 240, 245, 248, 249, 253, 263, 264, 267, 289, 311, 333 private benefits, 158 private good, 196, 197 private ownership, 248 private property, 158, 216 private sector, 16, 234 privatisation, 17 privatization, 42

proactive, 75, 332 probability, 121, 200, 201, 203, 300 probability distribution, 203 probation, 364 problem solving, 149 production, ix, 7, 16, 19, 24, 26, 29, 30, 32, 33, 91, 190, 191, 193, 194, 195, 196, 258, 285, 306, 311, 346, 357, 361 production costs, 19 productivity, ix, x, 62, 64, 91, 92, 94, 95, 98, 204, 210, 258, 272, 290 productivity growth, 290 professional growth, 64 profit, 31, 40, 92, 200, 201, 361, 364 profitability, x, 91 profits, 154, 200, 221, 361 program, x, 32, 35, 40, 43, 44, 137, 138, 139, 142, 143, 144, 145, 146, 147, 148, 165, 291, 310, 311, 317, 323, 324, 329, 330 programming, 138, 143, 144, 176, 226 proliferation, 230, 253, 266 promoter, 64, 324, 343 property, 21, 23, 40, 239, 243, 251, 255, 257, 273 property owner, 251 property rights, 21, 158, 273 proposition, 159 prosperity, 87, 137, 227 protected areas, 306 protection, xii, 40, 42, 45, 165, 271, 273, 277, 306, 313, 318 protective role, 42 protein, 193 protocols, 241, 247 prototype, 23 proxy, 97, 112, 114, 145, 167, 175, 297, 298, 309 pseudo, 115, 169 psychological health, 175 psychological stress, 58 psychology, 29 psychosocial work conditions, 55 PTA, 141 public, vii, ix, x, 2, 8, 9, 15, 16, 17, 19, 21, 23, 24, 27, 37, 38, 39, 40, 46, 50, 52, 53, 59, 62, 73, 74, 77, 87, 88, 98, 137, 138, 139, 140, 142, 143, 144, 147, 148, 149, 150, 152, 159, 166, 169, 170, 176, 179, 196, 197, 205, 206, 212, 222, 234, 235, 236, 239, 242, 243, 247, 248, 249, 251, 252, 253, 254, 255, 256, 257, 260, 265, 266, 267, 276, 277, 282, 287, 289 public administration, 17, 24 public companies, 88 public goods, 206, 282

Index public health, x, 52, 62, 137, 138, 139, 140, 143, 144, 147, 148, 150, 176 public interest, 205, 236, 257 public opinion, 276 public policy, 19, 37, 142, 145, 152, 159, 212, 287 public resources, 39, 40 public schools, 87 public sector, 152, 205, 234, 239, 249, 265, 266, 267 public service, 73, 77, 243 public works projects, 205, 206 pulse, 333 P-value, 180

Q qualifications, 152 qualitative research, 144, 329, 330 quality control, 32 quality improvement, 145 quality of life, xii, 186, 247, 267, 271, 273 quartile, 178 questionnaire, 25, 26, 27, 36, 56, 75, 155, 165, 309 questionnaires, 75, 108, 277, 329

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R race, 108, 114, 124, 129, 141, 293, 294, 297, 298 racial categories, 113 racial minorities, 122 racism, 112, 113, 129, 185 radius, 156 rain, xi, 190, 192, 193, 195, 198, 255 rainfall, 190, 192, 193, 195, 197, 208 random, 108, 126 range, 4, 7, 10, 12, 23, 24, 111, 147, 155, 174, 176, 195, 249, 257, 272 ratings, 291 rationality, ix, 71, 91, 156, 200 raw materials, 74 reality, 320, 362 reasoning, 218, 337, 346, 349 recall, 125 reciprocal relationships, 309 reciprocity, vii, ix, x, 1, 12, 71, 74, 84, 91, 92, 93, 94, 95, 100, 105, 139, 142, 143, 145, 146, 147, 190, 208, 217, 281, 285, 288, 306, 307, 309, 344, 359, 364 recognition, xii, 44, 69, 139, 156, 216, 230, 251, 260, 264, 347, 357 reconciliation, xii, 146, 190, 229 reconstruction, 62 recovery, 239, 261 recreation, 139 reflection, 286

383

reforms, 153, 205, 227, 261 refuge, 93 refugees, 106, 162, 163, 170 regional, 50, 62, 77, 114, 207, 227, 233, 266, 273, 284, 287 regression, x, 32, 78, 80, 103, 114, 115, 118, 179, 181, 274, 279, 293, 297, 298, 302 regression analysis, x, 32, 103, 293, 298 regressions, 297, 299 regular, 39, 61, 157, 166, 167, 217, 246, 249, 265, 292, 293, 294, 297, 298, 358 regulation, 158, 253, 257, 265 regulations, 23, 73, 78, 84, 262, 306 rehabilitation, 55, 234 reinforcement, 358 rejection, 45 relationship, vii, ix, xi, 3, 4, 5, 12, 18, 22, 38, 42, 46, 61, 67, 69, 72, 74, 75, 77, 78, 82, 83, 84, 85, 88, 105, 106, 107, 108, 122, 126, 127, 128, 129, 143, 147, 173, 176, 184, 191, 198, 237, 273, 275, 277, 278, 284, 288, 303, 311, 312, 314, 317, 325, 327, 328, 334, 335, 336, 337, 338, 340, 342, 347, 348, 356, 357, 358 relationship management, 348 relationships, ix, 3, 4, 10, 16, 18, 47, 59, 62, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 80, 82, 83, 84, 85, 86, 87, 94, 96, 105, 128, 139, 140, 143, 147, 174, 175, 185, 205, 208, 216, 220, 221, 274, 278, 279, 282, 283, 288, 306, 309, 310, 311, 312, 326, 331, 342, 347, 351, 352, 355, 356, 357, 358, 359, 365, 367 relatives, 219, 223, 248, 249, 252, 254, 280, 309, 310, 311 relevance, 109, 147, 156, 206, 209, 346 reliability, 27, 38, 108, 118, 149, 177, 351 religion, 163, 165, 170 religious groups, 142, 250 rent, 158, 238, 253, 256, 257 repair, 221, 222, 223, 224, 226, 313, 316 replication, 249, 330 representative samples, 127 representativeness, 177 reputation, 71, 141, 311, 327, 344, 357 research and development (RandD), v, viii, ix 17, 18, 19, 20, 22, 23, 38, 40, 49, 50, 51, 52, 55, 58, 59, 60, 61, 350, 356, 358, 361, 365 research design, 329 reserves, 236 reservoir, 195, 196, 197, 199 reservoirs, 195, 197, 202 residential, 185, 187, 235, 252, 268, 273 residuals, 80 resilience, 174

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384

Index

resolution, xi, xii, 141, 152, 189, 202, 229, 251, 252, 255, 256, 260, 262, 271, 273, 274, 275, 315 resource allocation, 139 resource management, xiii, 207, 305, 306, 307, 321 1 responsibilities, 68, 207, 239, 265 responsiveness, 315 restructuring, 292 retaliation, 178 retirement, 27, 303 returns, 208, 210, 235, 365 reunification, 153, 162, 163, 164 revenue, 221, 222, 224, 226, 258, 311, 336 rewards, 356, 358, 359 rice, 190, 191, 192, 193, 194, 195, 197, 198, 202, 207, 208, 209, 311 rice field, 192, 194 rigidity, 326 rings, 316 risk, 3, 7, 45, 68, 88, 159, 161, 162, 166, 167, 174, 178, 185, 194, 196, 201, 217, 342, 343, 361 risks, 1, 2, 55, 59, 110, 195, 274, 277, 330, 344, 364 river basins, 195 rivers, 206, 236 robustness, 284, 358 role conflict, 53 Romania, 96, 156, 158, 161, 168, 169 Rome, 268, 319 rubber, 311, 314, 317, 318 rule of law, 21 Rumania, 152 rural, xi, 105, 152, 153, 156, 202, 205, 206, 207, 208, 213, 215, 216, 217, 218, 224, 225, 226, 227, 249, 284, 285, 287, 289, 306, 307, 308, 309, 310, 314, 319, 320, 321 rural areas, 105, 152, 218, 249, 284, 308 rural communities, 218, 224, 225, 226 rural development, 202, 206, 213, 217, 224, 225, 306, 314, 320, 321 rural people, 218, 224, 225 Russia, 155, 160, 161, 170, 171, 281 Russian, 156, 320 rust, 1, 140, 216, 217, 224

S safeguard, 157, 338 safety, 55, 141, 145, 146, 224, 277 salaries, 3, 249 salary, 276, 311, 312, 313, 364 sales, 221, 264, 346, 358 salts, 192 sample, 27, 37, 40, 45, 75, 76, 78, 80, 83, 84, 108, 111, 114, 115, 116, 117, 118, 121, 123, 129, 143,

162, 163, 176, 177, 179, 181, 183, 184, 187, 198, 219, 220, 281, 298, 299, 328 sample survey, 143 sampling, 108, 220, 330 sanctions, 70, 264, 272, 274, 281, 282, 287, 306, 327, 335 sand, 245 sanitation, 226, 227, 316 satisfaction, viii, 16, 18, 25, 26, 34, 37, 41, 42, 44, 45, 57, 98, 273, 284 saturation, 331, 332 Saturday, 295, 297, 299, 301 savings, 249, 315, 317 scarce resources, 61 scarcity, 152, 195, 196, 248, 279, 314 Schiff, 154, 171 Schmid, 272, 289 scholarship, 8, 12 school, viii, ix, 3, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 64, 65, 87, 107, 125, 127, 128, 139, 179, 180, 185, 187, 216, 219, 222, 223, 224, 226, 227, 316, 317 school achievement, 127 school community, viii, 49, 50, 51, 52, 53, 54, 55, 57, 60, 61 school culture, viii, 49, 53, 55, 59 school management, 55, 59 school work, 58 science education, 61 scientific community, vii, 15, 25, 29, 38, 44, 45 scientific knowledge, 19 scores, 44, 110, 111, 160, 161, 167, 178 search, 13, 22, 48, 289, 332, 361 second generation, 165, 171, 172, 211 Second World War, 205 secondary education, 179 secrets, 222, 225 secular, 217 secularism, 21 security, 9, 185, 194, 230, 231, 235, 237, 239, 241, 257, 261, 262, 266, 268, 273 sediments, 192 seed, 330 segregation, 152 selecting, 219 Self, 76, 109, 110, 132, 133, 134, 169 self esteem, 5, 260 self help, 249, 268 self-care, viii, 49, 57, 59 self-help, 249 self-interest, 53, 146, 197 self-rated health, 62, 109, 132, 186 self-reflection, 51

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Index self-report, 118, 186, 187 seller, 248, 311 semantic, 9 sensitivity, 89, 247 separation, 24, 53, 112, 361 Serbia, 17, 161 Serbs, 162 series, 46, 78, 80, 301, 303, 341 service provider, 142, 144 services, iv, 23, 30, 32, 33, 114, 129, 143, 144, 149, 152, 156, 166, 205, 207, 208, 209, 216, 233, 234, 241, 243, 248, 296, 309, 318, 335, 346 settlements, xii, 9, 10, 229, 230, 231, 232, 233, 239, 242, 245, 250, 251, 252, 254, 255, 256, 258, 259, 260, 261, 262, 266, 267 settlers, 250, 251, 264, 311, 312 sex, 110, 114, 130, 187, 283 shadow prices, 199 shape, 7, 18, 22, 37, 124 shaping, 18, 21, 22 shares, 7, 40, 43, 152, 341, 359 sharing, 4, 6, 11, 20, 51, 70, 139, 143, 144, 146, 158, 265, 285, 327, 350, 358, 360, 361, 364 shelter, 248 shock, 235 shocks, 281 short period, 195, 235 short run, 165, 167, 358 shortage, 68 short-term, 74, 145, 194, 201, 256, 306 siblings, 111 sign, 93, 143, 238, 246, 301, 313 signs, 7, 297, 298, 300, 301 Silicon Valley, 10, 13, 97, 100 similarity, 44 sine, ix, 91 Singapore, 61 sites, 7, 193, 263, 308, 309, 310 skills, 5, 19, 51, 57, 63, 68, 74, 75, 84, 86, 165, 183, 216, 306, 346, 364 skin, 112, 114, 128 Slovakia, 96 Slovenia, 17, 96 slums, 257, 284 small firms, 80, 341 smokers, 280 smoking, 64, 280 soccer, 110, 112 sociability, 14 social assistance, 152 social benefits, 152, 153, 207, 274 social category, 22 social class, 53, 61

385

social cohesion, xiii, 178, 279, 287, 305, 309, 310, 312 social conflicts, 231, 315 social construct, 19 social context, xi, 4, 145, 146, 173, 174, 175, 177, 184 social control, 154 social development, xi, 21, 41, 61, 207, 215, 310, 313, 314, 315, 318 social distance, 282 social environment, 53, 147, 176, 184, 186, 279 social evaluation, vii, 15, 18, 22, 43 social exclusion, 21, 118, 248 social fabric, 210 social factors, 18, 279 social group, 98, 156, 166, 240, 249, 250 social hierarchy, 128 social inequalities, 124, 249 social influences, 275 social institutions, 45, 113 social integration, 5, 7, 157, 176, 217 social isolation, 112, 142, 176, 178, 179, 181, 187 social learning, 279, 288 social life, 14, 59, 139, 310 social network, vii, ix, x, xi, xiii, 1, 4, 9, 22, 53, 68, 69, 70, 71, 72, 73, 75, 76, 77, 78, 80, 83, 85, 87, 88, 91, 92, 95, 98, 100, 105, 142, 143, 145, 148, 173, 174, 175, 176, 178, 181, 247, 248, 275, 276, 277, 279, 284, 285, 289, 290, 307, 321, 323, 324, 325, 327, 328, 329, 346, 348, 349, 351 social norms, 93, 94, 217, 274, 276, 278, 285, 286, 290 social obligations, 309 social order, 166 social organization, 217, 218, 224, 272, 306, 310, 314, 315, 359 social participation, 62 social phenomena, 1 social problems, 249 social psychology, 65 social relations, 3, 4, 20, 59, 69, 70, 71, 72, 77, 106, 175, 248, 249, 327, 364 social relationships, 59, 69, 70, 71, 72, 175 social resources, 60, 69, 70, 106, 111, 112, 114, 118, 128, 174, 175 social sciences, 29, 105 social services, 248 social structure, 53, 86, 87, 175, 176, 216, 273, 277, 279, 286, 325, 326, 359 social support, viii, 50, 55, 59, 148, 157 social systems, 4, 206, 275 social theory, 148, 150, 226, 319 social work, 65, 313

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386

Index

socialisation, 348 socialism, 29, 37, 42, 45 socialist, 18, 118, 321 socialist transformation, 18 socioeconomic, 287 sociological, vii, 15, 22, 154, 175, 273 sociologists, 92, 155, 156 sociology, 19, 21, 37, 61, 86, 100, 152, 169, 216 software, 10, 33, 142, 338, 361, 364 soil, 192, 195, 198, 316, 319 soil erosion, 192, 316 soil particles, 192 solidarity, 2, 53, 154, 156, 157, 242, 310 Somalia, 153, 164, 165 South Africa, 232 Southeast Asia, 281, 285 Soviet Union, 47 soybeans, 194 Spain (SPA), 91, 96 spatial, xii, 8, 10, 230, 231, 234, 242, 246, 247, 251, 266 specificity, 326, 348 spectrum, 356, 364 speculation, 235, 257 speech, 111 speed, 217 spin, 21, 23, 24, 25, 33, 346 sponsor, 344 sports, 127, 142, 157, 166, 275, 292, 296, 297, 300, 301, 302, 303 spouse, 112, 163 SPSS, 115, 179 Sri Lanka, 226 stability, 48, 71, 205, 359 stages, 23, 126, 138, 361 stakeholder, 319 stakeholders, xiii, 18, 22, 70, 144, 202, 219, 231, 234, 239, 250, 251, 259, 261, 305, 306, 313, 319 standard deviation, 78, 298 standard error, 299 standards, 17, 73, 84, 157, 217, 241, 246, 250, 254, 261, 262, 264, 331, 361, 364 stars, 293 starvation, 207 state-owned enterprises, 73, 74 statistics, 56, 80, 115, 149, 179, 295, 299 statutory, 239, 265, 266 stock, 6, 39, 62, 144, 157, 198, 210, 274, 275, 309, 356, 357, 358, 365 storage, 195 strategic management, 87 strategic planning, 328

strategies, xii, 54, 87, 88, 115, 124, 156, 157, 176, 177, 184, 200, 229, 247, 256, 263, 267, 302, 319, 343, 367 streams, 313 strength, 109, 139, 147, 289 stress, 38, 53, 58, 61, 62, 64, 129, 186, 198 stressful life events, 185 stretching, 4 strikes, 292, 303 structural adjustment, 23 structural changes, 17 structural dimension, 70, 175, 335, 344, 359 structural equation model, 56, 58, 61, 64 structuring, 19 students, 8, 9, 10, 17, 128, 160, 292, 316 subgroups, 125 subjective, 58, 76, 89, 286, 287 subjective well-being, 286, 287 subjectivity, 361 sub-Saharan Africa, 70, 71 Sub-Saharan Africa, vi, xii, 69, 229, 230, 231, 232, 234, 262, 263, 266, 267 subsistence, 277, 289 substitutes, xiii, 76, 291 suburbs, 206 suffering, 84 suicide, xii, 271, 273, 279, 280, 287, 290 suicide rate, 287 summaries, 63, 209 Sunday, 295, 297, 299, 301 superimposition, 265 superiority, 296 supervisor, 246, 303 suppliers, 70, 72, 77, 338, 339, 340, 357, 358 supply, xi, 152, 189, 192, 195, 196, 197, 198, 199, 207, 208, 218, 226, 227, 234, 248, 311, 313, 315, 316 supporting institutions, 68, 72, 77 surface water, 194, 198 Surgeon General, 135 surgical, 311 surplus, 18, 198, 335 surprise, x, 91, 128 survey design, 76 survival, 42, 59, 62, 71, 73, 83, 153, 319, 342 sustainability, 138, 139, 140, 145, 146, 147, 227, 233, 236, 249, 267, 306, 307, 314, 321 sustainable development, 190, 226, 227, 248, 261, 272, 306, 319, 320 Sweden, 47, 96, 152, 160, 161, 170, 286, 287 swelling, 192 Switzerland, 282, 286 symbiosis, 193

Index symbolic, 156, 166 sympathy, 216, 343 symptoms, xi, 6, 174, 177, 179, 180, 181, 183, 184, 187 synergistic, 190, 208, 209 synergistic effect, 190, 209 synthesis, 104, 146 systems, xi, 1, 4, 7, 11, 16, 21, 22, 40, 41, 42, 43, 44, 46, 55, 68, 70, 88, 107, 189, 194, 195, 196, 197, 198, 202, 206, 207, 208, 209, 210, 212, 218, 219, 221, 222, 224, 226, 233, 236, 237, 248, 264, 265, 273, 274, 275, 302, 306, 307, 308, 319, 320, 328, 358, 360, 364

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T Taiwan, 72 talent, 75, 362 tangible, 22, 29, 69, 93, 107, 218 tanks, 316 Tanzania, xii, 96, 229, 230, 231, 232, 233, 235, 236, 239, 240, 245, 252, 256, 259, 261, 262, 263, 268, 269, 287 tar, 312 targets, 59, 207 task force, 252, 260, 261 taste, 193 taxation, 152 taxes, 158 tea, 312 teachers, 8, 10, 51, 52, 53, 61, 62, 64, 65, 219 teaching, viii, 6, 29, 50, 58, 59, 61, 63, 217 team members, 364 technical change, 21, 286 technocratic, 234 technological progress, 278 technology, vii, 15, 16, 17, 18, 19, 21, 23, 25, 26, 30, 38, 39, 40, 41, 45, 46, 47, 68, 87, 89, 95, 98, 207, 272, 279, 283, 290, 293, 306, 318, 323, 324, 331, 333, 337, 341, 345 technology transfer, 19, 21, 23, 38, 39, 40, 41, 279, 290, 324 telephone, 56, 108 tenants, 242, 244, 245, 250, 251, 253, 277 tension, 205, 208 tenure, xii, 229, 230, 231, 233, 237, 241, 256, 257, 261, 262, 263, 266, 267 tertiary education, 48 Texas, 132, 173 Thailand, 212 theft, 318 thinking, vii, 1, 3, 8, 31, 32, 54, 104, 266, 327, 328, 344, 346, 347 threats, 24, 84

387

threshold, 74, 75, 82, 84, 85, 203, 209 threshold level, 75, 82, 84 thresholds, 247 timber, 311 time periods, ix, 67, 69, 75, 76, 83 time pressure, 53 time series, 78, 80, 301, 303 title, 230, 245, 257 Tokyo, 189, 212, 286, 302, 303, 305 tolerance, 4, 140, 144, 145, 146 top management, 72, 86, 87, 324, 364 top-down, 240 total factor productivity, 272 Toyota, 327, 350 tracking, 143, 145, 147, 247 trade, 70, 171, 193, 200, 221, 273, 285, 286, 289, 320, 339 trading, 159, 282, 337 tradition, 303 traditionalism, 25, 37, 38, 41, 45 traffic, 274 training, 24, 51, 70, 75, 110, 112, 249, 266, 267, 293, 306 trans, 131 transaction costs, 1, 4, 94, 95, 96, 98, 158, 159, 205, 272, 282 transactions, 72, 142, 143, 146, 264, 274, 278 transfer, xiii, 1, 19, 21, 23, 38, 39, 40, 41, 71, 198, 199, 200, 201, 279, 290, 323, 324, 325, 327, 328, 330, 337, 339, 342, 345, 347, 349, 350 transformation, xiii, 12, 18, 167, 237, 289, 323, 325, 341, 344, 348 transformation processes, 341, 344 transformations, 349 transition, 16, 17, 21, 37, 46, 47, 87, 88, 157, 169, 186, 249, 281, 283, 326 transition countries, 37, 47 transition period, 281 transitions, 187 transmission, 73, 83, 94, 95, 97 transnational, 169 transparency, 24, 267, 313 transpiration, 193, 195 transport, 237 transportation, 68 trees, 313, 316, 317, 318 Triads, 334, 353 triangulation, viii, 49, 56, 219, 329, 331 tribal, 13, 260, 307 tribes, 248 trusts, 43, 141, 283, 290, 306, 309, 312 trustworthiness, 70, 74, 84, 331 T-test, 80

388

Index

tuition, 317 Turkey, 153, 161, 164, 165, 167 turnout, xii, 271, 273, 276, 287 turnover, 362 two-way, 242 typology, 155, 202, 258, 259, 266, 267

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U Uganda, xii, 96, 229, 230, 231, 232, 233, 235, 236, 237, 238, 239, 240, 247, 248, 263, 268, 269 Ukraine, 152 umbilical cord, 340 uncertainty, 12, 73, 75, 88, 217, 239, 298, 303, 335 underlying mechanisms, 147 UNDP, 218, 227, 233, 240, 314, 316, 321 unemployment, 152, 153, 164, 165, 249 unemployment rate, 153, 164, 165 UNESCO, 218, 227 UN-Habitat, 231, 232, 240, 269 uniform, 105, 123, 163 unions, 157 United Kingdom UK, 47, 61, 87, 100, 168, 169, 170, 171, 211, 273, 320, 321, 366 United Nations (UN), 136, 194, 227, 231, 232, 240, 269, 314 United States, x, xii, 96, 103, 104, 106, 108, 113, 114, 115, 116, 117, 118, 119, 120, 121, 122, 123, 124, 127, 128, 129, 131, 133, 135, 160, 171, 234, 271, 273, 282, 289, 303, 320 universities, 1, 2, 6, 7, 8, 10, 11, 17, 20, 22, 27, 38, 39, 40, 41 university community, 12 university students, 10 unpredictability, 159 updating, 265 upload, 168 urban areas, 153, 197, 206, 207, 231, 233, 248, 253, 257, 259, 265, 267, 301 urban centers, 233 urban policy, 249 urban population, 233, 248 urban settlement, 231, 252, 255 urbanisation, 230, 231, 233, 234, 262, 266, 268 urbanization, 233, 265 urbanized, 295, 296

V validity, 80, 89, 107, 108, 118, 125, 150, 332 values, viii, x, 3, 6, 7, 16, 20, 21, 22, 25, 26, 37, 40, 44, 45, 48, 71, 79, 80, 91, 92, 93, 94, 95, 115, 146, 169, 170, 201, 205, 235, 239, 247, 251, 260,

264, 265, 285, 298, 299, 301, 306, 310, 312, 336, 361, 362 vandalism, 141 variability, 194, 195 variables, viii, 16, 25, 26, 44, 56, 76, 77, 78, 80, 82, 108, 109, 111, 112, 113, 114, 115, 117, 121, 122, 123, 129, 130, 131, 160, 163, 179, 196, 286, 297, 298, 300, 301, 309, 319 variance, 40, 75, 80, 114, 115, 122, 129 variation, 118, 122, 129, 202, 296, 297, 299, 312, 330 vehicles, 245 Venezuela, 96 ventilation, 10 venture capital, 323, 329, 330, 346 venue, 221 Vermont, 184 versatility, 2 vertical integration, 357 victimization, 178, 184 victims, 277 Vietnam, 186, 193, 288 Vietnamese, 157, 172 vignette, 3 village, 141, 200, 206, 211, 236, 241, 261, 309, 310, 311, 312, 313, 314, 315, 316, 317 Villagers, 311, 313, 314, 315, 316, 317, 318 violence, 142, 143, 148, 156, 166, 184, 190 violent crime, 187 virtuous cycles, 358, 365 visible, 106, 112, 116, 117, 118, 122 vision, 62, 111, 226, 360 visualization, 247 vitamin B1, 193 vocational, 62, 165 vocational education, 62, 165 voids, 68, 73 volleyball, 110, 112 voluntary organizations, 155, 166, 273 voter turnout, xii, 271, 273, 276, 287 voters, x, 151, 152, 153, 166 voting, 141, 276, 290

W wages, 13, 157, 166 Wales, 141 walking, 10, 110, 141 war, 17, 93, 262, 273, 274, 275, 282 water, xi, 170, 189, 190, 192, 193, 194, 195, 196, 197, 198, 199, 200, 201, 202, 205, 206, 207, 208, 209, 210, 211, 215, 218, 219, 220, 221, 222, 223, 224, 225, 226, 227, 245, 250, 255, 258, 313, 315, 316

389

Index

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water resources, 192, 193, 195, 196, 200, 201, 227 water rights, 206 water supplies, xi, 189 waxes, 126 weakness, 266 wealth, ix, 3, 91, 92, 93, 153, 177, 261, 337 web, 6, 8, 12, 26 web-based, 26 welfare, x, 151, 152, 153, 155, 159, 160, 164, 165, 166, 167, 168, 170, 171, 309, 317 welfare state, x, 151, 152, 153, 155, 159, 160, 164, 165, 166, 167, 168, 170 wellbeing, 64 well-being, viii, ix, xi, 19, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 63 well-being, 64, 105, 106, 107, 108, 112, 123, 124, 125, 126, 127, 129, 137, 176, 215, 216, 218, 223, 224, 225, 263, 286, 287 wells, 226, 313, 316 western countries, x, 151, 152, 153, 155, 160, 161, 162, 163, 164, 165, 167 Western countries, 194 Western Europe, x, 151, 153, 160, 284 wetlands, 236 wheat, 193, 195 winning, 293, 294, 297, 298, 299 wisdom, 19, 85 wives, 219, 220, 223 women, 59, 62, 165, 176, 177, 183, 187, 218, 219, 220, 222, 225, 226, 237, 240, 244, 314, 315, 317

wood, 312 work environment, 360 workers, 9, 10, 13, 152, 158, 303, 360, 364 workforce, 17, 73, 206, 363 working conditions, 50, 52, 54, 55, 57, 58, 60, 61, 157 workload, 52, 53, 54, 55, 57, 58, 62, 225 workplace, 59, 60, 352 World Bank, 21, 48, 96, 97, 98, 99, 100, 101, 140, 141, 142, 148, 149, 168, 169, 171, 206, 210, 211, 218, 227, 269, 285, 320, 321 World Health Organization (WHO), 50, 54, 61, 62, 110, 111, 135, 136, 218, 227 World War II, 156 writing, 105, 184, 224, 241, 250, 335, 343, 344, 363

X X-axis, 195

Y Y-axis, 195 yield, 143, 147, 192, 210 youth studies, 106, 125 Yugoslavia, 17, 18, 42, 153, 164

Z zoning, 234, 241, 263