The basic concept of social capital is that social networks have value. The larger, deeper, and richer your social network is, the more social capital you have.
Being part of a social network, being inter-connected with other people has value, even to those people who are on the periphery of the network. Social capital incorporates not just friendships and social ties, but a wide array of identifiable benefits that flow from the exchange of trust, communication, and collaboration.
“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)
“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 can be positive – an asset that you use to create value for yourself and tap into for the benefit of others. It can also be negative. A lack of relationships or associations with people who are perceived as a threat can decrease the value of your social network.
One of the key components to social capital is trust. In fact, many studies measure social capital by asking “Do you trust the others?” Other studies analyze the participation in volunteer groups, associations or civic activities.
Social capital is difficult to quantify – there is no simple and widely accepted way to measure the current state of an individual’s social capital or the changes in their social capital. But social capital is an important asset for both individuals and businesses.
When a business accesses social capital, it eases entry into new markets and new customer bases, and delivers opportunities for expansion and cross-promotion. Looking analytically at the social network of the individuals involved in the business can speed this process. If you can identify who has what connections, and who are the key influencers in their networks, you can foster relationships and build bridges to people who might be needed.
In my next blog post, I will share some tools you can use to analyze and better understand your social networks .
This guest blog post is courtesy of Bennett Resnik, a consultant on social capital and networks, and the creator of “The Hands We Shake” lecture series on how to build, grow, and sustain social capital. He is an expert in networking strategy and social capital retention. Bennett has helped start-ups, small businesses, non-profits and individuals develop a comprehensive strategy to build and cultivate their social capital.