Social Capital Theory

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Social capital theory

Background

The term “Social Capital” originated from the areas of sociology and political science
and originally appeared in Hanifan (1916) study of rural schools community centers. It appeared
later in community studies where networks of strong personal relationships provided the basis
for trust, cooperation and collective action which were key for the survival and functioning of
city neighborhoods (Jacobs, 1965). Then at the individual level, Loury (1977) studied the
resources intrinsic in family relations and community social structure and their role in the
development of young children. The concept was then applied to a wide range of social
phenomena such as the development of human capital, economic performance of firms,
geographic regions, and nations (Nahapiet & Ghoshal, 1998). Now it can be found in a wide
range of social science disciplines, such as sociology, political science, and economy (Adler and
Kwon, 2002), in addition to organizational and management sciences (Huysman & Wulf, 2004).

Definitions Social capital is used to describe relational resources implanted in personal ties,
which are useful in the development of individuals in community social organizations and has
been conceptualized either as a set of social resources embedded in relationships or more broadly
as including, in addition to social relationships, the norms and values associated with them (Tsai
& Ghoshal, 1998). An example of definitions which focused on the social resources embedded in
relationships is Burt’s (1992) who defined social capital as “friends, colleagues, and more
general contacts through whom you receive opportunities to use your financial and human
capital” (p. 9). An example of definition which focused on the norms and values associated with
the social relations is Woolcock’s (1998) who defined it as “the information, trust and norms of
reciprocity inherent in one’s social network” (p.153).

Social capital is the goodwill available to individuals or groups. Its source lies in the structure
and content of the actor’s social relations. Its effects flow from the information, influence, and
solidarity it makes available to the actor”

Social capital is the the aggregate of the actual or potential resources which are linked to
possession of a durable network of more or less institutionalized relationships of mutual
acquaintance and recognition (Bourdieu 1983: 249). Social capital is defined by its function. It is
not a single entity, but a variety of different entities, having two characteristics in common: they
all consist of some aspect of a social structure, and they facilitate certain actions of individuals
who are within the structure (Coleman 1994: 302).

Whereas physical capital refers to physical objects and human capital refers to the properties of
individuals, social capital refers to connections among individuals – social networks and the
norms of reciprocity and trustworthiness that arise from them. In that sense social capital is
closely related to what some have called “civic virtue.” The difference is that “social capital”
calls attention to the fact that civic virtue is most powerful when embedded in a sense network of
reciprocal social relations. A society of many virtuous but isolated individuals is not necessarily
rich in social capital’ (Putnam 2000: 19).

‘Social capital refers to the institutions, relationships, and norms that shape the quality and
quantity of a society’s social interactions… Social capital is not just the sum of the institutions
which underpin a society – it is the glue that holds them together’ (The World Bank 1999).

Social capital is defined by the OECD as “networks together with shared norms, values and
understandings that facilitate co-operation within or among groups”. In this definition, we can
think of networks as real-world links between groups or individuals. Think of networks of
friends, family networks, networks of former colleagues, and so on. Our shared norms, values
and understandings are less concrete than our social networks. Sociologists sometimes speak of
norms as society’s unspoken and largely unquestioned rules. Norms and understandings may not
become apparent until they’re broken. If adults attack a child, for example, they breach the
norms that protect children from harm. Values may be more open to question; indeed societies
often debate whether their values are changing. And yet values – such as respect for people’s
safety and security – are an essential linchpin in every social group. Put together, these networks
and understandings engender trust and so enable people to work together.

According to John Field, the fundamental of social capital is that ‘relationship matters’. It helps
people to commit themselves to people in the community. It eventually becomes a shared set of
values, virtues and expectation within society as a whole. However, Robert Putman (1993; 2000)
is the person who launched social capital which focused on research and policy discussions. The
World Bank also chose social capital as a useful organising idea. They argue that ‘increasing
evidence shows that social cohesion is critical for societies to prosper economically and for
development to be sustainable’ (The World Bank 1999). In this piece we explore the idea of
social capital and the contribution by voluntary clubs to social capital.

“Social capital” may first have appeared in a book published in 1916 in the United States that
discussed how neighbours could work together to oversee schools. Author Lyda Hanifan referred
to social capital as “those tangible assets [that] count for most in the daily lives of people:
namely goodwill, fellowship, sympathy, and social intercourse among the individuals and
families who make up a social unit”.

That gives some sense of what’s meant by social capital, although today it would be hard to
come up with a single definition that satisfied everyone. For the sake of simplicity, however, we
can think of social capital as the links, shared values and understandings in society that enable
individuals and groups to trust each other and so work together.

Cities and traditional suburbs have given way to “edge cities” and “exurbs” – vast, anonymous
places where people sleep and work and do little else. As people spend more and more time in
the office, commuting to work and watching TV alone, there’s less time for joining community
groups and voluntary organisations, and socialising with neighbours, friends and even family.

Varieties of social capital… There’s much debate over the various forms that social capital takes,
but one fairly straightforward approach divides it into three main categories: h Bonds: Links to
people based on a sense of common identity (“people like us”) – such as family, close friends
and people who share our culture or ethnicity. h Bridges: Links that stretch beyond a shared
sense of identity, for example to distant friends, colleagues and associates. h Linkages: Links to
people or groups further up or lower down the social ladder.

The potential benefits of social capital can be seen by looking at social bonds. Friends and
families can help us in lots of ways– emotionally, socially and economically. In the United
Kingdom, for example, a government survey found that more people secure jobs through
personal contacts than through advertisements. Such support can be even more important in
countries where the rule of law is weak or where the state offers few social services: clans can
fund the education of relatives and find them work, and look after orphans and the elderly.

But bonds can hinder people, too. Almost by definition, tightly knit communities, such as some
immigrant groups, have strong social bonds, with individuals relying heavily for support on
relatives or people who share their ethnicity. Simultaneously, their lack of social bridges can turn
them into eternal outsiders from wider society, sometimes hindering their economic progress. Of
course, social exclusion works both ways: tightly knit groups may exclude themselves, but they
may also be excluded by the wider community. Like almost any form of capital, social capital
can also be put to ends that harm other people. The links and trust that allow drug cartels and
criminal gangs to operate are a form of social capital, albeit one that the rest of us could do
without. Companies and organisations can also suffer if they have the wrong sort of social
capital– relationships between colleagues that are too inward-looking and fail to take account of
what’s going on in the wider world. Conversely, social capital can also help businesses. In
Bowling Alone, Putnam attributes a large part of the success of Silicon Valley in the United
States to formal and informal co-operation between start-up companies in the area.

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