Where to start on social capital

Undoubtedly social media has affected the way we connect, how we keep and develop relationships and how employees in organisations’ can connect.  It has provided a newer set of technologies and as such, has shifted the way the world works and, to an extent, the way we think.

Social media has also brought a renewed interest in social capital – in terms of research into the phenomenon, and how it impacts on our lives.  Organisations using business models or organisational techniques created before the proliferation of electronic media do carry skepticism about social media and building social capital through it.  The scepticism can exist at various levels – including business to business, innovation and internal connection of staff (Kaplan, Haenlein, 2010).  Grounding use of social media tools for the creation and proliferation of social capital through established theory and academic study may be important for some of these organisations to move forward in this field.

First thing is first, what is social capital?

There is no one set dictionary definition for social capital.  While research has been ongoing since the 1910s with LJ Hanifan introducing the term to academic circles – establishing social capital almost as a form of goodwill within social circles – over any form of financial transactions.  (Annals of the American Academy of Political and Social Science, Vol 67, 1916). Quantifiable research was sporadic throughout the next decades until the 1990s and more recently with the advent of online social networking.

Despite the more recent work from Putnam, Ritchie/Robison/Lindon a common definition has not been settled upon but, conceptually social capital has become clearer with people interacting in networks to connect, assist, be assisted in their tasks etc.  It is necessary for individuals and organisations to build a stock pile trust, relationships, skills that can then be used for mutual benefit.

Social Capital has also built on other theories – and the interaction of individuals and organsaitions has seen theories of their own be built.

The theories have largely been drawn from sociological theories – or theories that explain social interaction and social knowledge.

According to the publication – “Linking Social Capital to Knowledge Productivity – An exploitative Study on the Relationship Between Social Capital and Learning in Knowledge-Productive Networks” Structural Hole Theory and Network Closure Theory are the current theories that suggest the future for social capital.

In essence and according to Erik Noyes of Boston University, Structural Hole Theory “predicts that a company’s connections — and more specifically its absence of certain connection — will shape its access to unique information, i.e., information which other companies may struggle to obtain based on their position in a firm network.”  (http://www.bu.edu/tech/research/visualization/about/gallery/structhole/)

Through a study by Ronald Burt, the Network Closure Theory suggest “is that social capital is created by a network of strongly interconnected elements” (http://homes.chass.utoronto.ca/~wellman/gradnet05/burt%20-%20STRUCTURAL%20HOLES%20vs%20NETWORK%20CLOSURE.pdf)

In current day business and in everyone’s personal lives, we accrue and spend a value of social capital.  We do it in the way we connect, interact, innovate and use our individual expertise.  More and more, the world is turning from what you know and who you know – to now, what you are known for.  Additionally, we have more tools to communicate with people across our communities than ever before.  As such, our communities are changing.  It no longer relies on family, direct office co-workers or physical proximity – you can connect with people across the world; across large and decentralised organisations.  Friends are made where you may never meet – may never step foot in the same country.  Through effective use of social media, the tools that are now available, sales, innovation and enduring relationships can be fostered and built on.


Keep an eye out for more videos and posts on social capital, including the tools of the trade.

(c) 2012, Sam Tickell

For more motorsport related posts, please visit www.racerviews.com