Basic Concepts of Social Capital

Following is from Social Capital: Prospects for a New Concept by Paul S. Adler and Seok-Woo Kwon, The Academy of Management Review. Vol. 27, No. 1 (Jan. 2002), pp 17-40. Via JSTOR.

Social capital has at least two perspectives: 1) the social relations existing within a group, such as the members of a church or the employees of a business (internal social capital); and 2) the social relations bridging one group to another, such as the relationships between churches or businesses (external social capital).

Social capital is capital in the sense that it has value, it persists, it can be accumulated or diminished, and it has a contingent future value.  The value comes from both the structure and the content of the ties between persons or groups.  That is, being well connected is generally better than being isolated, and being connected to resourceful, capable, trustworthy persons is better than being connected to persons without resources, ability, or trustworthiness.

The closure of a group is the degree to which the connections of an actor in the group are themselves connected with each other.  The more closed a group is, the more trust there will be and the more enforceable the norms of the group will be.  On the other hand, the brokers (those who are known and trusted) in a more open or sparse group will tend to have more power than they would otherwise have in a closed group (because they control the flow of information and resources between disconnected nodes or groups).

The benefits of social capital include access to information, both internally and externally; influence, control, and power in the form of political IOUs or bridging disconnected groups; and solidarity, i.e. strong norms and beliefs combined with a high degree of closure that leads to lower monitoring costs and higher commitment.

The risks involved with social capital include investment of time and resources in establishing and maintaining relationships that may bear little fruit; project teams with strong ties may be less productive than those with weak ties because they are less costly to maintain; bridging capital becomes less valuable as the actor’s contacts become more connected themselves; solidarity can become a liability when an actor lacks any external ties to the group, or other nodes in the group become dependent on the actor.

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