Informal networks, social capital, and ethical challenges in international business

The influence of informal networks and their implications for managing abroad is a novel and emerging area of research in the international business domain. Networking is generally regarded as a positive and essential business activity, facilitating the building of social capital through the process. Although informal networks and social capital are often associated with solidarity, participation, and inclusion, these are not universal outcomes, which raise ethical concerns. This chapter discusses the ethical challenges associated with social capital acquisition in informal networks for multinational enterprises (MNEs). Ethical challenges include corruption, gender discrimination endangering global diversity and inclusion policies, biased human resource management (HRM) in connection to reference-based hiring that potentially favors network members, property rights protection as well as expatriate network access. The chapter makes a contribution to developing informal networks and social capital research as a field distinct from conventional social network research.