We present new evidence indicating that changing from a traditional human resource management (HRM) environment to an innovative one entails a change not only in formal work practices, but also in the informal networks and patterns of interaction among employees. We focus on differences in the social capital of these workplaces and measure differences in the structure of interactions and information transfer among employees across a sample of manufacturing lines with a common production technology and different HRM systems. We then consider the implications of these differences and show that the change from one form of workplace practices to the other is therefore not just a matter of paying for the direct costs of a new set of HRM practices. Rather, it would involve a disruptive overhaul in the entire network of interactions among all workers at the plant.
