Introducing Social Capital Value Add: Manifesto for New Social Network Structural Management of Corporate Value

Abstract

Within the field of social capital study, concerns have been expressed that deviations from a fundamental understanding that social capital is captured from embedded resources in social networks may reduce the intellectual enterprise to a catch all fad (Lin, Cook, Burt, 1999). This paper is an argument that sometime in 2004, when broadband internet connections became more prevalent than those of less capacity, individuals became empowered as our most intense form of media. Scaled up effects of the Individual as Medium including: • increased information flow, • exertion of influence, • expansion of social credentials and reinforcement of identity and recognition, are consistent with a network theory of social capital. Corporations are exposed to new risks and opportunities due to these scaled up forms of social capital and they require new methods to manage them. Social Capital Value Add is introduced as such a new method, designed to link the pioneering intellectual enterprise of social capital to value based management and the priorities of marketers. A plausible SCVA valuation method is proposed to demonstrate how these links may be articulated in a way that is meaningful for investors and corporate managers."social capital"; "corporate value"; "Web 2.0"; finance; "corporate valuation"; valuation; "social media"; blog; podcast; RSS; syndication; "memetic brand"; marketing; "social networks"; brand, 2.0; Burt; “structural holes”; “weak ties”; “Nan Lin”; “social capital value add”; Cayley; broadband; “Olav Sorenson”; Ning; Facebook; MySpace; “Marc Andreesen”; “Mark Zuckerburg”; Skype; “inflection point”; “Point of inflection”; Granovetter; goodwill; “Matthew O. Jackson”; “idea habitats”; Heath; Berger; embeddedness; “embedded ties”; Uzzi; “network effects”; trust; reputation; “corporate reputation”; McLuhan; “Understanding Media”; “Marshall McLuhan”; “extensions of man”; “information flow”; “exertion of influence”; Rathergate; “information cascade”; Watts; Gladwell; Friedman; CGM; “consumer generate media”; word-of-mouth; WOM; buzz; “PR 2.0”; “public relations”; PR; CRM; “CRM 2.0”; “customer relationship management”; “social credentials”; recognition; identity; “social recognition”; “Individual as Medium”; I.A.M.; SCVA; “market positioning”; findability; “Jack Trout”; “Al Ries”; “Seth Godin”; humbug; “economic profit”; "economic value add"; “EVA”; “Interbrand”; “Microsoft Yahoo”; Digg; “value based management”; “Dell Hell”; “Kyle Minogue”; “Agent Provocateur”; Wal-Mart; “brand valuation”; “digital footprint”; “social identity”; “social engagement”; “value added earnings”; “branded earnings”; “Chris Anderson”; “The Long Tail”; “reciprocity”; CSR; “corporate social responsibility”; green; sustainability; E-Bay, Amazon; “rate & review”; comments