Social Capital at Work: Networks and Employment at a Phone Center

Abstract

This article argues that a common organizational practice-the hiring of new workers via employee referrals-provides key insights into the notion of social capital. Employers who use such hiring methods are quintessential "social capitalists," viewing workers' social connections as resources in which they can invest in order to gain economic returns in the form of better hiring outcomes. Identified are three ways through which such returns might be realized: the "richer pool," the "better match," and the "social enrichment" mechanisms. Using unique company data on the dollar costs of screening, hiring, and training, this article finds that the firm's investment in the social capital of its employees yields significant economic returns.