What does the network make money from?
A simple answer, whether it depends on commerce or electronics, is meaningless We need more targeted analysis.
We have noticed that in every revolution, profits always become a stable thing by adding new asset varieties. For example, from the nomadic era to the agricultural era, land is a new input; During the industrial revolution, private capital used to buy assembly line equipment was a new investment. The combination of new technology and business is always a specific form of new assets. What about the information age? If we always treat e-commerce and commerce as independent things, we will never be able to grasp the essence of profit without going deep into the asset analysis at the level of property rights. Therefore, what we have to do is to explore new asset varieties, conduct operation management and measurement.
Social capital (also known as "social network") is such a new type of asset that links "network" with "interest".
Social Capital: A New Asset Variety
Social capital is relative to private capital.
In the research report "Expanding the Means of Measuring Wealth-Indicators of Environmental Sustainable Development" by the Environment Bureau of the World Bank, there is a chapter devoted to the evaluation indicators of social capital, entitled "Social capital: the missing link?"
The World Bank believes that social capital, like other forms of capital, is an input in the development process. On the macro level, social capital has become the fourth kind of capital in the production function. Like human capital, it is both a consumer product and an investment. But the difference is that social capital can only be obtained by one group and has the characteristics of public goods.
Social capital has a wonderful nature, which makes it seem to exist specifically for the network, so it has become a unique capital variety of the network economy. That is: the more this capital is shared, the more it is shared. It coincides with Metcalfe's law (network value is not in nodes, but in relationships). It can be recalled that capital investment in industrial economy does not have this nature.
For example, interpersonal relationship is a kind of social capital. The more cooperative relationships you share with others, the richer your social capital will be. The wealth of relationships exists in the form of sharing, and you share it with your friends. As the saying goes, there are many friends. The reality is not exact. When there is only one friend, there is really just one more way. However, with the increase of the number of friends (nodes), the road (business opportunities) grows exponentially, not arithmetically. It can be seen that the value of the relationship completely conforms to the definition of technical network by Metcalfe's law. At the same time, the relationship is interactive, not one-way. For example, you can't just use others and you can't let others use you. In that case, the relationship can't last. As a kind of social capital, the nature and mutual benefit of interpersonal network from the perspective of "business" are exactly the same as those of distributed computing and interactivity (such as TCP/IP) from the perspective of "electronics". Relationship is the product of "electronics" and "commerce".
For another example, trust is also a kind of social capital. It is also shared and interactive. The larger the circle of people who trust you, the more valuable the trust is; Trust must be mutual. This business characteristic also just echoes the technical characteristics of TCP/IP.
The steam engine technology and its corresponding capital products in the industrial revolution do not have this feature of social capital. It must exist through proprietary (capital is not shared with stakeholders) and one-way profit generation (only bosses can earn workers, not workers can earn bosses). These two ways of making money can't be the same.
There is a ridiculous thing in the online community in China today: many experts have talked about online profit for a long time, and they don't even know what the most basic social capital is. It's like a group of landlords boasting to herders that they can profit from agriculture, but they don't even know what land is.
As a new asset variety, it must have fully established commercial and institutional functions.
The commercial function of social capital is to effectively reduce transaction costs and coordination costs, increase trading opportunities, and realize network effects. Social capital can replace formal contract and save the cost of formal contract. For example, if you reach a single transaction with a trusted "related household", the process will definitely be much simpler and the possibility of being fooled will definitely be much smaller. In other words, social capital has the optimization function of improving synergy in resource allocation.
The World Bank provides three theoretical bases for why social capital can become an input and bring benefits like land and money:
First, information sharing: in a transparent process of encouraging cooperation and information sharing among enterprises, we should establish an interactive mutual knowledge, reduce uncertainty and internalize the formal system, so as to achieve the effect of compulsory performance and reduce the cost of signing contracts.
Second, the coordination of actions: the uncoordinated or speculative behavior of economic sectors may lead to the failure of social capital as a formal system (such as law) and the failure of the market, and groups can reduce speculation by establishing repeated interactions between individuals, which can strengthen trust (Dasgupta 1988).
Third, joint decision-making: this is a necessary condition for providing public goods and managing the externalities of market processes. Better sharing can stimulate better coordination, thus improving everyone's productivity. That is, under the network conditions, it is fairer and more efficient.
The institutional function of social capital is that it can realize the organizational function of enterprises in the way of market. Network is a "third mode" organization system between market and enterprise. The particularity of "the third country" lies in the institutional nature of social capital, a new asset. Comparing the social capital in the network system with the contract in the market system and the property right in the enterprise system, the law is: the transaction cost in the market is high and the organization cost is low; Enterprises have low transaction costs and high organizational costs. Social capital has low transaction cost and low organization cost. The biggest discovery of Saxony's research on Silicon Valley and Expressway 128 is the institutional function of social capital. The institutional background for the success of Chinese and Indians in Silicon Valley is that the association, a "relationship" and "trust" manufacturing factory, has replaced the market system and enterprise system, saved transaction costs and enhanced business opportunities.
Social Capital Assessment: World Bank Project
If social capital only stays in the academic research stage and cannot enter the banking or accounting system, it is like having a good weapon but not using it in place. Fortunately, the World Bank first noticed a problem. Mastering social capital is changing from an art that only a genius can master to a technology that everyone can operate.
The World Bank study answers why it is necessary to measure social capital outside the formal accounting system. It is believed that social capital makes up for the gray area in the relationship between capital input and output in terms of comprehensively balancing the relationship between politics and economy, the relationship between formal and informal systems, and the relationship between internal and external.
The World Bank has adopted some indicators actually used in empirical research to evaluate social capital. According to several definitions of social capital from narrow extension to broad extension, it is mainly divided into the following four categories:
The first kind of indicators mainly measure horizontal social capital. The World Bank is called the horizontalassociation, and its theoretical basis is the narrowest definition of social capital put forward by Putnam. The main feature of this definition is to promote coordination and cooperation among joint members for common interests.
The indicators include: the number and types of joint and local institutions, the trust within the trade association, the scope of members, the understanding of the degree of community organization, the scope of participation in decision-making, the dependence on the support network, the unity of kinship within the association, the unity of income and occupation within the association, etc.
The second kind of indicators mainly measure vertical social capital. Its theoretical basis is the second broader concept of social capital put forward by Kalman, that is, vertical correlation. Vertical alliance is characterized by the hierarchical relationship and uneven distribution of power among members. This view captures the social structure and all the norms that supervise interpersonal behavior to the maximum extent.
The idea of index design is to directly estimate the impact of the specific composition of social capital on economic growth, investment or rights and interests. For example, to what extent can an organization or institution help to improve the effectiveness of market output (by reducing information or incentive problems), to what extent can an organization or institution provide "optimal" quantity of public goods (through joint decision-making), the role of industry groups in solving information and incentive problems (whether contracts can be implemented in a simple, transparent and coherent legal environment), and the role of credit as a substitute for formal institutions in protecting property rights and contracts in growth.
The third category of indicators examines the impact of social integration and social differentiation on economic achievements. There are similar studies in China, such as "Evaluation and Measurement Model of Internal Conflicts in China Enterprises" by Tang Faliang, which analyzes the corporate culture factors that affect corporate cohesion from the micro level.
The fourth category of indicators is based on the broadest definition of social capital, and the theoretical basis is the broad concept of social capital proposed by North and Olson. The generalized social capital theory regards the formal system as social capital, that is, the formal system is the capital that provides public goods to the system. It includes formal institutional relations and structures such as government and legal norms. The evaluation idea is to look at the economic role of the government in maintaining property rights and managing the externalities of economic processes (including public goods). Contract execution, risk of property confiscation, corruption, etc. It should be measured.
The World Bank's social capital evaluation index has the characteristics of authority (according to the definition of classical theory), orthodoxy (World Bank) and macro (facing countries and regions). As for how to measure corporate social capital from the micro level and combine it with benefits, it is still a frontier problem to be explored.
Design of evaluation index of enterprise social capital
Qiu Haixiong, Bian He, put forward a social capital index system suitable for enterprises in China in The Social Capital of Enterprises and Its Efficacy.
Firstly, the corporate social capital is summarized from three aspects: vertical connection, horizontal connection and social connection. According to the situation in China, three indicators are designed.
The first indicator is whether the legal representative of the enterprise has ever served in a higher-level leading organ. Our hypothesis is that the legal representative of an enterprise holds a post in a higher-level leading organ, which means that the vertical connection of the enterprise has advantages, and vice versa. I think this indicator is a bit far-fetched. Under the condition of market economy, it is better to measure the legal representative's position in the industry self-regulatory organization.
The second indicator is whether the legal representative of the enterprise has worked in any other cross-industry enterprise and held leadership positions such as management and operation. The assumption of using this indicator is that if the legal representative of the enterprise has the above experience, it means that the horizontal connection of the enterprise is dominant, and vice versa.
The third indicator is whether the social contacts and contacts of enterprise representatives are extensive, which is a subjective evaluation indicator of ranking; Enterprises with a wide range have an advantage in social communication, while enterprises with a low range are at a disadvantage.
The same scheme also uses two alternative indicators to indirectly measure corporate social capital:
The first indicator is the education level of enterprise representatives. The research of social stratification and management science proves that education level is the premise of ability and is positively related to ability (Blau and Duncan,1967; Forest and edge,1991; Lou Heqiu, 1997). To this end, they assume that the higher the education level of entrepreneurs, the greater the social capital of enterprises may be.
The second indicator is the administrative level of the legal representative of the enterprise. According to the theory of social resources, the higher the status, the easier it is to develop social relations and the stronger the ability to obtain resources (Lin, 1982). This theory enlightens us that the higher the administrative level of enterprise representatives, the greater the cost of exerting their initiative and changing their behavior, so the greater the amount of their social capital may be.
According to the data collected by Bian and Qiu Haixiong in long-term follow-up research, about 3% of the total output value of enterprises is used for the communication expenses of enterprises. Enterprises participating in management associations and paying membership fees and time are actually the investment behavior of social capital.
For further research in the future, Bian and Qiu Haixiong suggested using three entrepreneurial initiative variables.
First, entrepreneurs' awareness of developing and utilizing social capital.
Second, the time and energy invested by entrepreneurs in the development and utilization of social capital.
Third, the proportion of resources that entrepreneurs invest in the development and utilization of social capital.
Qiu Haixiong's plan in Bian He involves eight indicators, which is characterized by a detailed description of the social capital stock. However, how to measure social capital flow has not put forward a solution.
In other studies, other indicators related to relationship and trust are put forward, such as whether the information of marketing object, marketing project, distribution of marketing network and price advantage is open and transparent internally, whether the quality report and customer feedback of enterprise products are shared with enterprise suppliers in real time, whether the process quality control is shared with relevant business partners in real time, whether the variety and quantity of products are communicated with relevant business partners in real time, the number of times that enterprise members are fined, factories or enterprises violate rules and regulations or receive improvement warnings, etc. All for reference.
Social capital should have become the core concept of enterprise informatization and the new capital to enhance the competitiveness of enterprises in the network era. But not many people in China realize this. At present, the lack of social capITal is the crux of the Zhongguancun problem, and it is also the main reason why the IT industry can't produce Silicon Valley and the information efficiency of traditional enterprises is low. According to the World Bank, there are four kinds of capital in the production function of other enterprises in the future, while we only have three kinds. How can we compete without a large category of weapons? I hope you can think deeply about this problem. (Text/Jiang Qiping)