Social capital (SC) and its importance in achieving organisational strategic intent in state-owned companies (SOCs) is an important consideration in this article. Key attributes relevant to building SC in the workplace include shared values, trust, cooperation, communication, sharing of information, reciprocity and resilience (Buta, 2016; Read, 2013). According to Leenders (2014) SC exists when multiple stakeholders cooperate and coordinate action towards the success of an organisation, and everyone benefits.

The awareness of the impact of SC and the role it plays in the organisational effectiveness of SOCs has been underestimated. Social capital is found in the quality of relationships that exist amongst multiple stakeholders of an organisation (Read, 2013; Svenson et al., 2016; Zavyalova et al., 2016). Putnam (1995) asserted that SC has a collective value that arises from trust, norms and reciprocity, which can also improve the efficiency of a society. In addition, Leenders (2014) affirms that SC is a source of non-financial capital and is predominantly present in positive human relationships and as a result of it, there is mutual benefit for all stakeholders.

State-owned companies, as defined by the Companies Act (PricewaterhouseCoopers [PWC], 2012), and mandated by government, are accountable to provide public services such as electricity, water and transport. State-owned companies in South Africa have been in the spotlight over the last decade for being captured by corrupt relationships, and the leadership of these SOCs have been at the centre of these events (Madonsela, 2019; Commission of Inquiry, 2020). The reputation of SOCs in South Africa, including that of the top leadership, is viewed by the public as extremely poor (Makoni, 2015). The South African government expects SOCs to provide efficient infrastructure and services to society and enable socio-economic advancement (Sithomola, 2019). Unhappy stakeholders of SOCs have been negatively affected by poor service delivery associated with poor leadership who were appointed into political office rather than being selected for their effectiveness and taking responsibility for the management and care of state resources (Sebake & Sebola, 2014). What is missing is echoed by Zavyalova et al. (2016) that trust is developed in the presence of quality relationships, which is the core ingredient of SC, and this leads to developing and sustaining a good reputation with all stakeholders.

According to Makoni (2015) multiple stakeholders, all taxpayers, which include employees, customers and suppliers, contribute to the sustainability of SOCs. These stakeholders have lost confidence in the leadership of SOCs because of constant negative perception and constant bailouts from the government. Establishing practical solutions that will help to turn SOCs around is critical (Kumalo & Scheepers, 2020) and may contribute to stakeholders overlooking existing challenges and beginning to regain confidence, which can serve as a key intangible resource (Zavyalova et al., 2016). However, a solid foundation of trust developed in the presence of quality relationships (SC) also leads to having a positive perception with stakeholders. Intangible strategic assets significantly contribute to increasing SC within the SOC, and it is deemed to be critical for effective future actions and decisions in organisations (Baka, 2016; Zavyalova et al., 2016).

Research suggests that quality relationships consist of high levels of trust, which leads to positive SC (Uslaner, 2012). Similarly, where there is negative SC, there have been low levels of trust, high levels of corruption and poor public service delivery (Bjørnskov, 2011; Uslaner, 2012). The expectation from the government is that SOCs provide services reliably and avoid poor service delivery (Makoni, 2015; Sebake & Sebola, 2014). If the leadership of SOCs can achieve reliable service delivery, it could lead to the public being happy and restore trust and satisfaction in the SOC and its leadership.

Whilst most research is focussed on the value gained from the presence of positive SC (Buta, 2016; Read, 2013), SC has a dark side, which destroys trust and does not serve the greater good of people (Leenders, 2014). This comes in the form of relationships that foster corruption and diminish the value of SC. This ‘dark side of social capital’ means that together with political interference, poor leadership in SOCs may lead to ‘social liability’ (Gabbay & Leenders, 2001).

Current evidence led by the Zondo Commission of Inquiry reveals that this dark side and the negative impact it has had on public confidence in SOCs are largely brought about by dysfunctional leadership and corrupt relationships amongst various stakeholders (https://www.statecapture.org.za/site/hearings/date). The relational contracts with chief executive officers appointed by political leaders are a main source of the challenges being experienced within SOCs in South Africa (Makoni, 2015). Hence, the proposal by Manyaka and Sebola (2013) that only training will solve the problems facing the public and politicians in public offices has relevance (cited in Sebake & Sebola, 2014, p. 747). Although corrupt relationships are a grave concern that needs to be addressed in SOCs, this article focusses on the importance of SC and how leadership can serve as a catalyst to leverage this important intangible asset and extract value through rebuilding quality relationships amongst key stakeholders.

The effect of the relationships in SOCs involving corruption, mistrust and poor governance has led to multiple economic, social and politically complex challenges resulting in leadership ineffectiveness, which will take SOCs decades to recover from. Authors have written about the use of SC, which enables a few to personally benefit and others to be deprived (Leenders, 2014; Song, 2013). Currently, there is a bleak outlook for SOCs and there still appears to be no answers for leadership regarding the role they could be playing in changing the context for stakeholders away from fear and hopelessness towards future optimism. Those who have attempted to challenge the status quo and bring about change have been fearful of reprimand by SOC and the government-appointed executives, who are expected to remain loyal to their political sponsor. Leaders seeking to initiate and lead change within SOCs find it difficult to break through the power structures and egos of top executives and political leaders (Gabbay & Leenders, 2001). Executives seeking to maintain the status quo are fearful of blame or getting fired, and instead they act to guard their reputation, career and social status, which means this level of self-interest results in them not always serving other key stakeholders very well (Makoni, 2015).

A government interference in SOCs has been a key barrier to positive change, resulting in senior leadership feeling disempowered to make decisions that will help to turn the SOCs around. There is too much political interference (Makoni, 2015). Rumours spread rapidly in an SOC and have been the cause of unhappiness in employees and external stakeholders alike. Decisions made by the leadership, usually leaked days before official announcements, can have adverse effects on employee well-being, resilience and productivity. The leadership responsible for redesigning SOC processes frequently experience barriers against the power structures that exist. As such, several attempts to redesign processes have failed or can only be executed after long and intolerable scuffles between senior leadership and the employees. Unlike financial capital, SC erodes when it is not used. Social capital has durability into which other resources can be advanced or complemented, with the expectation of future benefits (Leenders, 2014).

Social capital falls within a broad scope of resources, such as quality relationships, and it demonstrates how society can achieve success together. However, it does require genuine investment by multiple stakeholders and for everyone to prosper (Kwon & Adler, 2014). According to Coleman (1998) the main task for researchers is to advance analytically sound measures of SC such as a framework or model that is useful to develop SC. Furthermore, researchers should be mindful of the shifting nature of social relations, the current context and how it is affected by the micro-, meso- and macro-environment. The discourse of SC research is important to multiple stakeholders who are involved in cooperative behaviours. It addresses questions related to interpersonal trust and quality relationships, which has consequences for equality and inequality in society (Leenders, 2014).

Multiple stakeholders referred to in this study include executives, management, non-management, suppliers and customers. Given the complex, multifaceted environment within which an SOC operates, multiple stakeholders have differing expectations. For example, the government expects them to deliver a service to the public, executives expect huge bonuses, employees expect job security, customers expect fair prices and reliable service and suppliers expect opportunities for collaboration. Meeting these differing expectations remains the responsibility of the SOCs leadership, who are entrusted with safeguarding the SOC and its sustainability efforts, as well as with maintaining a good reputation with the public. The SOC also has expectations from employees, suppliers and customers. These reciprocal expectations are inherent in how stakeholders perceive a quality relationship. No study has yet been undertaken to articulate what the factors are that would increase SC that would lead to gains for the SOC and multiple stakeholders.

The research purpose was to understand which factors constitute a quality relationship that could contribute to SC from a multiple stakeholder perspective in a single case. The first objective was to hear the views of multiple stakeholders on a quality relationship and to develop a model. The second objective was to have the model validated by a group of experts. The goal of this article is to provide insight to leaders, who are a catalyst in growing SC to gain value for the SOC. The validated model for SC was established as part of a bigger research project. This article also highlights the underlying needs that would trigger the cooperative behaviours.

A 21st-century perspective of SC refers to the accessibility to resources and opportunities. As a non-tangible asset, research indicates that SC contributes to economic growth within and outside of an organisation. Akrofi (2016) asserts that SC gives competitive advantage from the relational dynamics that cannot easily be imitated, and it is a capability that requires focus.

The concept of SC has gained greater focus since the 1990s, being studied by academics across multiple disciplines. Social capital has broad definitions, and multiple stakeholders have different perspectives for creating value from the relational dynamics that exists within the asset (Adler & Kwon, 2002; Nahapiet & Goshal, 1998). The commonalities of most definitions of SC are that they focus on social relations that have productive benefits (Leenders, 2014, p. 1764). Multiple stakeholders place trust in the leadership of an organisation, which facilitates willingness to cooperate in an organisational context. It is important to note that trust as a concept and key ingredient of a quality relationship has been studied at both an individual and collective level.

The literature highlights several SC dimensions, such as structural, cultural (Udayaadithya & Gurtoo, 2014; Zadeh, Feizi, & Alipour, 2013), relational and cognitive dimensions (Nahapiet & Goshal, 1998). Hanifan (1916, as cited by Read, 2013, p. 998) coined the term ‘social capital’ to describe ‘goodwill, fellowship, mutual sympathy and social intercourse among a group of individuals and families who make up a social unit’. Hanifan proposed that these intangibles make life worthwhile to people in their everyday lives. He claims, ‘social capital is a kind of social investment created by getting people in the community to socialise and work together’ (Read, 2013, p. 998). Putnam (1995) raised the importance of SC as a theoretical concept and simplified it for the understanding of the political and general public. Leenders (2014) encourages other academics to advance Putnam’s research by introducing new models or interventions (Leenders, 2014).

Social capital has been discussed in terms of trust, cooperative networks, values and norms of reciprocity and access to resources and opportunities. Trust is the belief that one party gives to the other to promote cooperation and coordination of action that leads to mutual value. When an individual is found to be trustworthy, it ultimately affects how willing others in the group will be to reciprocate trust (Fu et al., 2004; Udayaadithya & Gurtoo, 2014). Similarly, SC has been found in unique attributes necessary in cooperative networks. The unique attributes bind the participants of networks and communities that make cooperative action possible. The total amount of actual and potential resources derived from the intangibles equates to SC, and it can manifest from strong or weak social bonds within an organisational setting. Furthermore, SC was found to manifest in the living and fulfilment of values and norms of reciprocity shared by a group of individuals in the organisation and leads to mutual benefit. Norms are those subtle expectations and unwritten rules of behaviour that reside within groups in terms of how they treat each other (Cohen & Prusak, 2001; Fu et al., 2004; Nahapiet & Ghoshal, 1998; Young, 2014).

The opportunity for increased social connection and collaboration is derived from the ability of organisations to understand the complexity and to learn how to replicate it (Gholami & Salimi, 2014). Each of the four SC themes has unique features, underpinned by varying theoretical approaches and how the authors have defined them. However, it is only through the reciprocal value of SC and the qualities found in the exchange process that SC evolves into capital (Bourdieu, 1986; Coleman, 1988; Fukuyama, 2001; Nahapiet & Goshal, 1998; Putnam, 1995; Read, 2013; Udayaadithya & Gurtoo, 2014; Young, 2014).

Coleman (1998) claims that SC is created by rational, purposeful individuals who attempt to maximise their individual opportunities and build networks to further their self-interest. Coleman views SC as a social contract and suggests that individuals must have trust that others will reciprocate their actions and will feel some sort of social obligation to do so (Coleman, 1998; Leenders, 2014). On the contrary, Putnam (1995) argues that SC is a key component to building and maintaining consensus. The author states that there was a noticeable decline in SC when there are lower levels of trust in government. Additionally, there was a decline in SC when lower levels of public participation and effective action could not be leveraged in pursuit of shared objectives. Similarly, SC is a cause as well as an outcome that leads to positive outcomes, such as economic development and a decrease in criminal activity, and its existence is contingent upon the same positive outcomes (Portes, 1998).

According to Zak (2006), trust depends on the social, legal and economic environment and empirically trust is amongst the most important constructs to promote economic growth. Given the social engagement, increasingly stakeholders hold each other more accountable to behave in ways that will lead to higher levels of collaboration and improved decision-making. In understanding trust, Zak (2006) introduced an experiment to test the trustworthiness amongst participants. The author found, despite sacrifices made at an individual level by the participants, there was no guarantee that others would be trustworthy enough to reciprocate cooperative and collaborative behaviours. Therefore, there must be conditions that permit increased levels of trust and cooperation that will be observable in the attributes displayed by leaders, which will in turn improve the quality of the relationships required for SOCs to be effective (Zak, 2006).

Kwon and Adler (2014) emphasise that the positive effects of SC flow from information, influence and solidarity available, which requires the deployment of the individual’s social resources in purposive actions (Leenders, 2014; Lin, 2001). Obstacles for cooperative behaviours are triggered by the unethical behaviour of leadership. According to Pastoriza et al. (2013), top leaders who behave with honesty and integrity and make ethical decisions have a greater chance of influencing stakeholders positively, thus contributing to the stock of SC. Similarly, Van Lange et al. (2011) assert that people are more likely to cooperate when they believe there is possible reward, now and into the future.

A review of the literature shows the differences and similarities multiple stakeholders need from leadership to find mutual satisfaction (Akins et al., 2013; Fu et al., 2004; Metcalf & Benn, 2013). Multiple stakeholders will hold a view about the organisation based on the universal desirable or undesirable judgements of self and others, thereby evaluating the organisational reputation (Baka, 2016). These judgements are often observed by the desirable and undesirable attributes of leadership (House et al., 2004; House et al., 2014).

However, the presence of SC exists within the goodwill associated with ‘less harsh judgements’ from stakeholders towards leadership. Goodwill has been found to serve as a buffer for an organisation, specifically following a negative event. Zavyalova et al. (2016) assert that the SC earned from receiving goodwill is often accrued by an organisation with a high reputation as perceived by stakeholders. Given this advantage, organisations can filter unnecessary information and create essential access to knowledge entrenched in the social networks. The authors define reputation as ‘the public recognition and perceived social approval of an organisation that, at high levels, can serve as a key intangible resource’ (Zavyalova et al., 2016, p. 255). Given the evidence from the state inquiry, an extraordinary effort placed on regaining public recognition and social approval can rebuild the trust found in SC that will resolve current and future organisational challenges.

Sustainability can be achieved with the right mix of SC (Buta, 2016) that places importance on the uniqueness of the social, environmental, political and financial contexts (Kwon & Adler, 2014). Therefore, an organisation must evaluate whether it has the ability to meet the needs of multiple stakeholders, thus acquiring vital resources for sustainability. Harnessing the latent potential and positive impact that leadership can have on SC can no longer be delayed, as it will impact the organisation undesirably (Uhl-Bien & Arena, 2016). Akrofi (2016) confirms that leaders with access to critical knowledge, who can acquire it swiftly before their rivals, can establish a competitive edge for themselves. Core to the creation and maintenance of SC through building quality relationships and confidence with multiple stakeholders are leaders who have a role to play (Kumalo & Scheepers, 2020; Makoni, 2015).

For the purpose of this article, the opportunity for leaders to invest in SC exists and can contribute to gains for the SOC. This will be discussed in more detail next.

Leaders act as a catalyst for effectiveness made possible through purpose, prioritisation, alignment, communication and gaining the commitment of people. This requires them to understand the social context of all stakeholders. According to Stoughton and Ludema (2012), the advent of new insights for organisational effectiveness empowers senior leaders to establish an inclusive culture by addressing initiatives for sustainability. Most importantly, stakeholders want effectiveness across all dimensions of social (people), economic (profit), environmental (planet) and technical (innovation) environments as an outcome. For example, customers want reliable product and service, suppliers need opportunities for growth, employees need career advancement and reward and organisations want loyalty and productivity.

The sample selected for this study was purposive, and the multiple stakeholder groupings consisted of employees, managers, executives, suppliers and customers. The use of purposive sampling met the terms of selecting a diverse sample as proposed when using qualitative research (Henning et al., 2010). A minimum sample size of five participants per focus group for each stakeholder group was selected for the qualitative data collection, phase 1. To start phase 2, 30 experts, 6 from each stakeholder group, who did not participate in phase 1, were invited. The details of the internal and external experts who participated in phase 2 are provided in Appendix Table 1-A1 and Table 2-A1, respectively.

The purpose of the qualitative phase 1 was to explore the phenomenon by collecting data during focus groups and semi-structured interviews from multiple stakeholders at an SOC. To answer the research question in phase 1, open-ended questions regarding the quality of relationship were consistently asked to all stakeholders. Broadly, what constitutes a quality relationship found in SC, for each of the stakeholder groups and the organisation from the perspective of both parties? What does each stakeholder want from the other? All five stakeholder groups were asked the same set of questions as follows:

A Delphi technique using a self-administered survey design, based on a seven-point Likert scale to validate the model, was implemented in phase 2. Experts were provided with clear instructions and they had an opportunity to provide comments to inform their ranking. In addition, experts were asked to provide the researchers with specific biographical data that illustrate the diversity of the sample. The biographical data are provided in Appendix 1.

During the focus groups and interviews, participants recorded their perceptions on multicoloured cards. The Delphi survey was developed in Microsoft Excel and the send and return process was online. Data were transcribed and recorded by using Microsoft Excel during both phases. All the data met with the standards of data storage in qualitative research on a computer that used an encrypted password.

Good qualitative research ensures trustworthiness and rigour (Treharne & Riggs, 2014). The most frequently cited quality criteria, including five key concepts, namely credibility, transferability, dependability, confirmability and authenticity developed by Guba, Lincoln and colleagues (as cited in Treharne & Riggs, 2014, p. 57), were adapted for this study, as summarised next.

The data were analysed inductively and until a point of saturation of the data collection phase was reached. The inductive approach was used to capture the essence of each discussion at the end of the focus group or interview participants assisted the researcher to make logical associations from the data. An inductive approach means that the researcher goes back and forth between data collection and analysis to help clarify the recurring themes. During phase 1, the interpretation of the codes, categories and emerging themes led to the initial stages of theory generation. The researcher took written memos at the end of each discussion, which assisted with the interpretation of all the data sources. Content analysis employing relevance and frequency of the theme, whilst maintaining the meaning of what participants expressed, was used to draw conclusions about the perceptions of multiple stakeholders regarding SC. The final themes and descriptions were presented to the experts for their level of agreement, asking them to rank each theme and to comment on the description provided.

A Delphi technique was used to validate the model in phase 2. Delphi is a multistage cooperative process of ranking, designed to collect individual expert opinions and consolidate it into group consensus, namely the analysis (Grisham, 2009). Managing the data was an integral part of field work and analysis. With insights from authors, two rounds of Delphi were introduced, and data were analysed by using mean scores, percentage consensus, capturing qualitative responses, refining the survey items and developing a unique feedback report presented to each expert and to initiate round 2. At the end of round 2 the analysis approach was interpreted from a multiple stakeholder perspective, which represents the collective results. The analysis was concluded based on consensus regarding the relevance of the theme, the description provided and reaching stability for each survey item, which determined the stopping of rounds. Authors suggest a consensus of 60% after two rounds (Von der Gracht, 2012) and the stopping criteria for stability, which meant a less than 15% change in the mean score of two distributions of results (Habibi et al., 2014) is adequate.

This qualitative report demonstrates the richness of the findings by writing up the perceptions of multiple stakeholders by using tables and narratives. Information about the experts is provided to demonstrate the purposive selection of internal and external stakeholders. Consensus scores are provided in percentages and the criteria for stability are shown. The most important purpose is to contribute to the scientific body of knowledge by the introduction of a validated model for the role of SC with leadership as a catalyst in the effectiveness of an SOC.

There were two research objectives in this study: firstly, to develop a model for SC in the context of an SOC and secondly, to validate the model. A multiple stakeholder perspective using a sequential qualitative approach led to the new theory building. The results for SC and associated cooperative behaviours by leadership that would make them effective are discussed for phases 1 and 2.

If the SOC is looking for loyalty, timeous payment and value from suppliers, it will be important for them to take the first step towards reconciliation with stakeholders. Many SOCs have brought the country into disrepute and economic recession, some of which have been shut down to bankruptcy as a consequence. In this instance, the less fortunate become even more less fortunate, with less and less access to products and services. With an openness to accept their wrongdoings and an appetite to learn, leadership can exhibit the qualities validated by the model. The potential to fix the current relational dynamics, which will have a positive spin-off for the SOC in the form of SC, exists. The benefits of investing in SC will positively impact relationships leadership have with employees, customers and suppliers over time and can change the current negative perceptions. To overcome the current corrupt behaviours, leadership can make the shift and choose to demonstrate ethical behaviours, reinforced as the golden thread for all cooperative behaviours by stakeholders and serve as a catalyst to restore the political, societal, environmental and economic health in our country. Song (2013), Buta (2016) and others confirm that the potential value of SC has positive spin-off for other forms of capital. The public at large offers social approval for the conscious activities of an SOC, and it is often given in return for something called goodwill.

The public has the right to know what has been found in the SOC. Given the academic standards and processes, it is not possible to make sensitive details explicit in this study. The recommendation is that given the right timing and communication channels, such as journal publications and social media platforms, as well as an opportunity to engage key stakeholders, awareness can be raised for the SC qualities that require deliberate investment and an elevation to higher levels of urgency.

There is no exact truth in qualitative findings, and the results are not necessarily generalisable (Anney, 2014). However, the results from this study could be used as a foundation to investigate how all SOCs and leadership can benefit in future. Furthermore, in order for the leadership to be proactive about finding an antidote for the negative impacts on stakeholders, future SC research in the context of SOCs should be explored. This is particularly important against the backdrop of the dark side of the relationship, which has pervaded SOCs and global relationships.

Kofi Annan puts it eloquently: ‘If corruption is a disease, there can be no better cure than transparency’.

The study had two objectives, firstly, to understand the phenomenon of SC and to develop a model, which can be understood, given the perspective of multiple stakeholders. This was made possible by the researchers hearing the voices of multiple stakeholders, internally and externally. Secondly, experts who have a deep understanding of the SOC, validated the model, which brings simplicity to a multidimensional concept such as SC. This is primarily because of its intangible nature and the uniqueness in which it is developed. However, the upside of the intangibles is that they provide competitive edge for organisational leadership when they are able to make sense of how they can be a true catalyst for the much-needed cure from corruption and decline. Leadership can achieve this when they take accountability for the change to consider SC as an important indicator that can be measured in terms of the actions taken and shifts made through observation and feedback. It may be predicted that ultimately, these cooperative actions will be visible in the tangible indicators.