Governance & the International Firm 325325 UniMelb 13 The darker side of Social Capital = Nepotism n Negative effects of Social Capital (and Guanxi): –The same forces that enhance bounded solidarity, restrict those effects for outsiders –Cozy intergroup relations of the kind found in high solidarity communities can give rise to a gigantic free- riding problem –Demands for conformity and privacy and autonomy of individuals were reduced accordingly –Embeddedness in social structures can be turned into less than socially desirable ends (e.g.
{}