BUSINESS NETWORKS

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Business Networks

Social Capital

Social capital is fast becoming a core concept in business, political science, and sociology. An increasing number of research articles and chapters on social capital are appearing, literature reviews have begun to appear, books are dedicated to it, and the term in its many uses can be found scattered across the internet (as a business competence, a goal for non-profit organizations, a legal category, and the inevitable subject of university conferences). Portions of the work are little more than loosely- formed opinion about social capital as a metaphor, as is to be expected when such a concept is in the bandwagon stage of diffusion. But what struck me in preparing this review is the variety of research questions on which useful results are being obtained with the concept, and the degree to which more compelling results could be obtained and integrated across studies if attention were focused beneath the social capital metaphor on the specific network mechanisms responsible for social capital.

Cast in diverse styles of argument (e.g., Coleman, 1990; Burt 1992), social capital is a metaphor about advantage. Society can be viewed as a market in which people exchange all varietyof goods and ideas in pursuit of their interests. Certain people, or certain groups of people, do better in the sense of receiving higher returns to their efforts. Some enjoy higher incomes. Some more quickly become prominent. Some lead more important projects. The interests of some are better served than the interests of others. The human capital explanation of the inequality is that the people who do better are more able individuals; they are more intelligent, more attractive, more articulate, more skilled.

Social capital is the contextual complement to human capital. The social capital metaphor is that the people who do better are somehow better connected. Certain people or certain groups are connected to certain others, trusting certain others, obligated to support certain others, dependent on exchange with certain others. Holding a certain position in the structure of these exchanges can be an asset in its own right. That asset is social capital, in essence, a concept of location effects in differentiated markets. For example, Bourdieu is often quoted as in Figure 1 in defining social capital as the resources that result from social structure. Coleman, another often-cited source as quoted in Figure 1, defines social capital as a function of social structure producing advantage (Coleman, 1990, 302; from Coleman 1988). Grounds his influential work in Coleman's argument, preserving the focus on action facilitated by social structure: “Social capital here refers to features of social organization, such as trust, norms, and networks, that can improve the efficiency of society by facilitating coordinated action.” I echo the above with a social capital metaphor to begin my argument about the competitive advantage of structural holes (Burt, 1992).

So there is a point of general agreement from which to begin a discussion of social capital. The cited perspectives on social capital are diverse in origin and style of ...