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Knowledge Sharing and Communities of Practice 171

that fi rms, within certain limits, have an advantage over markets in creating and
sharing intellectual capital.
Knowledge-sharing communities are the primary producers of social capital as they
provide the opportunity for individuals to develop a network with members who share
similar professional interests. The community provides a “ Who ’ s who ” in the form of
yellow pages to help make connections between members. The community provides
a reference mechanism to quickly enable members to evaluate content, solve prob-
lems, and make decisions based on vetted, validated, and current knowledge. Social
networks can increase productivity by reducing the costs of doing business. Social
capital facilitates coordination and cooperation. However, social capital also has an
important downside ( Portes and Landolt 1996 ): communities, groups, or networks
that are isolated, parochial, or working at cross-purposes to the organization ’ s collec-
tive interests.
A broader understanding of social capital accounts for both the positive and nega-
tive aspects by including vertical as well as horizontal associations between people,
and includes behavior within and among organizations, such as fi rms. This view rec-
ognizes that horizontal ties are needed to give communities a sense of identity and
common purpose, but also stresses that without bridging ties that transcend various
social divides (e.g., religion, ethnicity, socioeconomic status), horizontal ties can
become a basis for the pursuit of narrow interests, and can actively preclude access to
information and material resources that would otherwise be of great assistance to the
community (e.g., tips about job vacancies, access to credit).

Measuring the Value of Social Capital
Organizations have begun to implement a large number of communities of practice
in the hopes of achieving such benefi ts as:
• Building loyalty and commitment on the part of stakeholders
• Promoting innovation through better sharing of best practices
• Improving effi ciency of processes
• Generating greater revenue and revenue growth
• Decreasing employee turnover and attrition
It remains a challenge to be able to evaluate whether or not communities in fact
achieve these objectives — or even to measure whether or not progress has been made
toward such goals. Communities of practice come packaged with a business plan —
they are there for a business reason and as such they must be evaluated just like any