Teamwork: A Winning Condition for the Economy?
10 February 2009
Read by 1644 persons
Simon Field, OECD Centre for Educational Research and Innovation
Directorate for Education, Employment, Labour and Social Affairs
Teamwork is as essential to business success as it is to a football team's victory. However, few attempts have been made to measure its contribution to the economy or to determine the costs of its absence. It may be time to pay more attention to this invisible asset.
What makes a football team win: star players, sometimes bought at great expense, a determined and skillful coach, or an exemplary captain? While all these factors are important, victory will also largely depend on less tangible factors such as team spirit and good communication between players. It is under these conditions that a player will know when and how to pass or shoot. A good company also needs effective managers, appropriate tools and equipment, and skilled personnel. But its success, like that of the football team, also relies on mutual trust among staff and shared goals. More broadly, the success of a company depends not only on the quality of its production, but also on the trusting relationships it has with its customers and contractual partners, whether it is respecting delivery deadlines or maintaining the quality of its products.
Teamwork is generally so commonplace that it sometimes goes unnoticed. Traditional economic theory recognizes the role played in production by physical capital, the amount of labor and, increasingly, the quality of that labor, in other words, human capital. But it apparently leaves aside "social capital," that is, the networks and norms that underpin most economic activities and, in fact, social activities.
However, focusing on social capital allows for the discovery of new solutions. For example, economists fear that markets may not play their role when one party to a transaction is better informed than the other. When someone tries to sell me a used car that makes a strange noise, how can I know if it is an old fault or a recent symptom that I should worry about? We can certainly resort to traditional solutions, such as regulatory mechanisms (trade rules, for example) and investments in information (a mechanic's services to examine the vehicle), but these solutions are costly.
The concept of social capital offers a different and simpler approach. In a climate of trust, I can ask the seller where the noise is coming from and trust their answer. The honest seller also benefits, as they feel less compelled to grant a discount to address the buyer's uncertainties about the quality of the product. This is probably why used car sales often take place in the workplace, where trusting relationships exist and the possibility of sanctions imposed by the injured party, in other words, social capital. More generally, strengthening social capital should increase market efficiency and increase the level of production.
In recent years, a stream of researchers has attempted to define and measure the multiple mechanisms through which established social norms and networks support and stimulate social and economic activity. Economically, they have thus observed in various regions of Italy a relationship between the level of trust and the effective use of credit; they have also highlighted in many European countries the important role played by local social networks in helping job seekers find work.
Other researchers link social capital to non-economic outcomes such as improved health, education, public affairs management, child protection, and lower crime rates. According to a major study conducted in the United States, an excluded person who manages to integrate into a social group would see their health improve to the point of halving their risk of death. According to research conducted in Sweden, social contacts reduce the risk of developing Alzheimer's disease. It even seems that this seemingly magical remedy in the case of social ills also influences the feeling of individual well-being.
However, the enthusiasm generated by the concept of social capital in academic circles and, increasingly, in political circles, should not hide the fact that it raises real difficulties. Even if the expression in most cases only covers informal norms and social networks, it is sometimes used in a very broad sense, some going so far as to include institutions such as legal systems. And, despite some seemingly very strong evidence, no one has yet been able to prove that social capital increases economic production.
This may be due to the difficulty of agreeing on how to measure it, but also undoubtedly to the fact that economic dynamism sometimes requires, alongside teamwork, fierce competition and radical innovations that threaten existing norms and networks. Little research has been done and opinions differ on how to promote "positive" forms of social capital - solidarity among neighbors, for example - to the detriment of its "negative" forms, such as organized crime. As research progresses, uncertainties will dissipate and it will be easier to identify areas where investments in the study and measurement of human capital can prove most useful. So what are the factors that contribute to the success of a society? Undoubtedly quality people, knowledge and resources, effective administration, laws and institutions. But also teamwork - social capital - thanks to which society is not reduced to the sum of its components.
Posted on February 10, 2009
observateurocde.org
Directorate for Education, Employment, Labour and Social Affairs
Teamwork is as essential to business success as it is to a football team's victory. However, few attempts have been made to measure its contribution to the economy or to determine the costs of its absence. It may be time to pay more attention to this invisible asset.
What makes a football team win: star players, sometimes bought at great expense, a determined and skillful coach, or an exemplary captain? While all these factors are important, victory will also largely depend on less tangible factors such as team spirit and good communication between players. It is under these conditions that a player will know when and how to pass or shoot. A good company also needs effective managers, appropriate tools and equipment, and skilled personnel. But its success, like that of the football team, also relies on mutual trust among staff and shared goals. More broadly, the success of a company depends not only on the quality of its production, but also on the trusting relationships it has with its customers and contractual partners, whether it is respecting delivery deadlines or maintaining the quality of its products.
Teamwork is generally so commonplace that it sometimes goes unnoticed. Traditional economic theory recognizes the role played in production by physical capital, the amount of labor and, increasingly, the quality of that labor, in other words, human capital. But it apparently leaves aside "social capital," that is, the networks and norms that underpin most economic activities and, in fact, social activities.
However, focusing on social capital allows for the discovery of new solutions. For example, economists fear that markets may not play their role when one party to a transaction is better informed than the other. When someone tries to sell me a used car that makes a strange noise, how can I know if it is an old fault or a recent symptom that I should worry about? We can certainly resort to traditional solutions, such as regulatory mechanisms (trade rules, for example) and investments in information (a mechanic's services to examine the vehicle), but these solutions are costly.
The concept of social capital offers a different and simpler approach. In a climate of trust, I can ask the seller where the noise is coming from and trust their answer. The honest seller also benefits, as they feel less compelled to grant a discount to address the buyer's uncertainties about the quality of the product. This is probably why used car sales often take place in the workplace, where trusting relationships exist and the possibility of sanctions imposed by the injured party, in other words, social capital. More generally, strengthening social capital should increase market efficiency and increase the level of production.
In recent years, a stream of researchers has attempted to define and measure the multiple mechanisms through which established social norms and networks support and stimulate social and economic activity. Economically, they have thus observed in various regions of Italy a relationship between the level of trust and the effective use of credit; they have also highlighted in many European countries the important role played by local social networks in helping job seekers find work.
Other researchers link social capital to non-economic outcomes such as improved health, education, public affairs management, child protection, and lower crime rates. According to a major study conducted in the United States, an excluded person who manages to integrate into a social group would see their health improve to the point of halving their risk of death. According to research conducted in Sweden, social contacts reduce the risk of developing Alzheimer's disease. It even seems that this seemingly magical remedy in the case of social ills also influences the feeling of individual well-being.
However, the enthusiasm generated by the concept of social capital in academic circles and, increasingly, in political circles, should not hide the fact that it raises real difficulties. Even if the expression in most cases only covers informal norms and social networks, it is sometimes used in a very broad sense, some going so far as to include institutions such as legal systems. And, despite some seemingly very strong evidence, no one has yet been able to prove that social capital increases economic production.
This may be due to the difficulty of agreeing on how to measure it, but also undoubtedly to the fact that economic dynamism sometimes requires, alongside teamwork, fierce competition and radical innovations that threaten existing norms and networks. Little research has been done and opinions differ on how to promote "positive" forms of social capital - solidarity among neighbors, for example - to the detriment of its "negative" forms, such as organized crime. As research progresses, uncertainties will dissipate and it will be easier to identify areas where investments in the study and measurement of human capital can prove most useful. So what are the factors that contribute to the success of a society? Undoubtedly quality people, knowledge and resources, effective administration, laws and institutions. But also teamwork - social capital - thanks to which society is not reduced to the sum of its components.
Posted on February 10, 2009
observateurocde.org
