1992, Tim Rowley was a young entrepreneur with a B.A. in Economics
and a one-person research firm. Charged with helping a courier company
to understand dwindling shipments to South Africa, Rowley was fascinated
by the possibilities. Why had companies that regularly sent shipments
to South Africa suddenly developed a conscience about apartheid?
These were the kinds
of questions about management that intrigued Rowley, and he decided that
an academic career was the best way to explore them. "As a faculty
researcher at U of T," says Rowley, "I can address entire business
problems rather than just putting out fires, which is a big limitation
for managers today. This freedom allows me to focus on new and exciting
A scholar of "social
network" theory, which is largely derived from sociology, Rowley
developed an interest in applying this unique concept to "stakeholder
research" in order to solve management problems.
business relationships doesn‚t tell the whole story," contends Rowley.
"Every business has a variety of stakeholders: shareholders, suppliers,
customers, taxpayers, community groups, environmental activists, and so
on. The amount of influence these groups have on its business practices
can vary widely. How an organization interacts with these groups can determine
its success or failure just as much as its financial and human capabilities."
The key, says Rowley,
is "social capital" which, he argues, is equally if not more
important than financial capital. "Toyota, for example, has a real
competitive edge over the larger North American car manufacturers because
it deals with its suppliers in a unique way," claims Rowley. "Toyota
invites all of its suppliers to meet and talk with one another in order
to improve efficiency and pass the cost savings on to Toyota. While the
company gives up power by letting its suppliers interact like this, it
has developed a social network that will have a positive impact on its
argues Rowley, "can be more competitive even if they‚re not the biggest,
simply by building and leveraging their connections to the right firms,
banks, government organizations, lobby groups, and so forth. We can actually
have a competitive advantage based on social capital."
represents the first time social network theories have been applied to
stakeholder research, and it highlights the importance of relationships
in a business‚s success or failure. He believes this work could open a
new window on management theories, and may suggest innovative solutions
to contemporary problems.
In time, Rowley‚s
research may offer Canadian businesses a new method for developing
strategic alliances, for creating valuable partnerships, and for
leveraging their social capital. Breaking the boundaries established
by theories of financial management, Rowley‚s work could be applied
to the one-person shop as easily as the multi-national corporation
Ų holding great promise for the strength of Canada's economy.
- Althea Blackburn-Evans