Tag Archives: what is social capital

Social Capital– Power of Virtual Social Currency for an Expanding Social Economy: Key Driver for Sustained Growth…

Social capital is an asset, its currency and it refers to relationships that people or organizations have with each other. Social capital is leveraged in many different ways in the business world– from getting a job by knowing someone, to making business deals, to establishing trusted alliances, to developing merger and acquisition scenarios… These and many other relationships have common goals in mind.  According to Konstanze Alex Brown; social capital is critical for fueling business relationships for sharing, innovating… and the bigger the network of real and relevant social engagement the more access to social capital…

The concept of social capital is not new, but its application have been relatively limited due to less-than-evident connection to measurable economic value (think ROI). But things are changing; social return-on-investment (SROI) is becoming a hot buzz word and organizations are finally figuring out how to apply social analytics and derive actionable insight from social networks that can lead to increased social capital…  Critics argue that social capital is nothing new– that it’s the latest buzz word meaning all things to all people– but it lacks empirical specificity…

In the article Social Capital by Ivan Misner writes: Social capital is built by design, not chance… it’s very similar to a monetary account for it, too, is accumulated by an individual or organization for production of wealth… Put more simply, it’s an accumulation of resources developed through social networks… According to Wayne Baker; success is social and all things that are customarily thought of as contributing to success are, in fact, intertwined with social networks… 

Social capital is about the value of social networks– the bonding and bridging of people, organizations, business… with norms of reciprocity. it’s goodwill and its value lies in the structure and content of the social relationships. According to Cindy Blackstock, Marilyn Weiss; social capital extends beyond the traditional ideas of networking, to something deeper and more meaningful– it’s the building of genuine, long-lasting relationships… Fostering strong social capital is simply imperative for an organization’s long-term success...

 In the article Social Capital Matters In Business by Vanessa DiMauro writes: Social capital is ability to retain customers, and attract and keep staff, and growth… The central premise is that social networks have value, and the collective value of all these networks (who people know) and the inclinations that arise from the networks to do things for each other (norms of reciprocity)…  

According to Yoon J. Lee; social capital is form of economic and cultural capital in which social networks are central and transactions are marked by– reciprocity, trust, cooperation… It’s currency and valued like a bank account– when capital is withdrawn the account balance is reduced–and unless it’s replenished with deposits, eventually the account can be overdrawn… 

In the article Valuing Social Capital by PwC writes: Companies are increasingly seeing the value of social impact valuation, and are adopting approaches, such as; social return-on-investment (SROI). Companies that employ social impact measurement are able to know and understand which decisions lead to useful social impact and which don’t… Hence, they are better able to manage and value the impact of social programs. Social impact valuation allows social costs and benefits to be properly identified and accounted for– meaning that long-term benefits or costs can be measured and managed like any other asset or liability…

It’s about leveraging network links between people/organizations… According to Jay Palter; building social capital is akin to investing for long-term accumulation, rather than for short-term profits… It requires investment of time and resources without expectation of any immediate measurable return… Hence, think social capital in term of engaging deep relationships, developing thought leadership, and networks of resources. 

In the article Invest in Social Capital by Laurence Prusak, Don Cohen write: Strong relationships are the fuel of great organizations. They run much better when people know and trust one another– deals move faster and more smoothly, teams are more productive, people learn more quickly and perform more creativity… Social capital is a term that nicely captures the notion that investments of social currency in relationships will return real gains that show-up on the bottom line…

Yes, it all sounds pretty simple and straightforward; organizations need only get their people connected with one another and wait for the payback: Easy, right? Well ‘no’; wrong for two reasons: First, social capital is under assault in many organizations because of– rising volatility and over reliance on virtuality… More simply, it’s under assault because building relationships in turbulent times is tough, and tougher still with many employees working off-site, or on their own…

Second, social capital is under assault because few organizations know how to invest in it. Knowing that good relationships help organizations thrive is one thing; making relationships happen is quite another.  These are virtual times… Most people used to work at the office, but now aided by technology, work happens in all imaginable configuration   of time and space, e.g.;  telecommuters, virtual team members, and laptop– toting road warriors abound…

Virtuality is an asset for many organizations– chances are you are one yourself or have a slew of them working for you… According g to Laurence Prusak and Don Cohen; there are advantages to volatility and virtuality, e.g.; volatility gives opportunity– for every organization crushed by new technology, a new one is born… virtuality is flexibility– organizations gain great mobility– being anywhere, at anytime with instant access to huge amounts of information…

But volatility and virtuality also erode relationships, which is why– organizations must learn to invest in social networks… According to Eva Cox; social capital is the fabric or glue that connects people and organizations… it’s the preeminent, most valued form of any capital– providing currency to build truly successful organization. Without a hefty social capital bank account, an organization cannot be sustained or fully developed…

Social Capital– Drives Business Success, Most Valued Form of Capital: Winning the Game of Connection, Engagement.

Central premise of ‘social capital’ is that social networks have value. Social capital refers to collective value of all ‘social networks’ [who you know] and the inclinations that arise from these networks to do things for each other [norms of reciprocity]… The term ‘social capital’ emphasizes not just warm and cuddly feelings but wide variety of quite specific benefits that flow from the– trust, reciprocity, information, cooperation associated with social networks…

According to Robert Putnam; similar to the notions of physical and human capital, social capital is a currency in the form of; networks, norms, trust… that allows organizations to develop tolerance to deal with– conflicts, differing interests, developing new business initiatives… According to Baker; if you think of human capital as ‘what’ an organization knows (i.e., knowledge, skills, experience…) then access to social capital depends on ‘who’ it knows (i.e.; size, quality, diversity of an organization’s network)– and beyond that ‘who’ it doesn’t know…

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Social capital enables an organization to– create value, get things done, achieve goals… An organization cannot be successful, or even survive, without social capital… According to Bourdieu and Wacquant; social capital is the sum of resources, actual or virtual, that accrue to an organization by virtue of possessing a durable network of more or less institutionalized relationships of mutual acquaintance and recognition

According to Chris Cancialosi; business needs three kinds of capital: financial, human, social… and of the three ‘social capital’ is the most important… when you’ve developed a wealth of social capital, you can obtain other resources, e.g.; investors, partners, suppliers, customers, managers, workers… Social capital is an engagement that establishes networks, norms, social trust that facilitates co-ordination, co-operation for mutual benefit…

In the article Investing in Social Capital by Ivan Misner writes: Most people have heard of financial capital, but many may not have heard of social capital. Social capital is, in fact, very similar to its monetary sibling… It too, is accumulated by organizations and used, or is available for use, in the production of wealth…

Put more simply, it’s the accumulation of resources developed through social networks such as; ideas, knowledge, information, opportunities, contacts, referrals… According to Wayne Baker; studies show that lucky people increase chances of being in the right place at the right time by building a ‘spider web structure’ of relationships…

Success in business is social: All the ingredients of success that most people customarily think of as individual, e.g.; talent, intelligence, education, effort, luck… are intertwined with social networks… Hence it’s not surprising that social capital is earned or acquired through networking, building, maintaining  relationships… Although developing social capital can be a daunting task, a balance of social engagement will have a profound impact on an organization’s ability to grow, prosper…

In the article Social Capital Matters In Business by Vanessa DiMauro writes: Social capital is ability to– retain customers, attract and keep staff, and win new business… And yet many organizations ignore the development of a social, networking footprint in growing business… Many organizations lack social development activities, and are ‘doing’  just the minimal social outreach tocustomers, partners, suppliers, stakeholder, and ignore the rich value in social capital Trading in social capital must be part of ‘doing’…

Social engagement is more than just a marketing campaigns or a portfolio of social media accounts. Rather it’s a representation of organization’s identity on how it relates to world… Organizations needs to stop thinking about social as– push content, or grub for followers, or searching for sensational images… Instead they need to go back to business basics; ask the hard questions and tap into the ways that social engagement can– begin and extend relationships to build social capital…

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In the article Social Capital by pwc writes: There is considerable debate and controversy over the– possibility, desirability, practicability of measuring social capital… yet without it, its potential remain unknown… There are many attempts at measuring social capital and they usually takes the form of a multi-dimensional analysis, which separates the various components and sets of indicators… A typical analysis is as follows:

  • Social Networks is associated with measures of– network size, diversity, density; this refers to the number and diversity of individuals or organizations that are connected in an organization’s network and closeness of the ties. It may also identify important gaps or ‘holes’ in networks and ‘bridging’ such holes can be cost-effective in building social capital…
  • Trust and Reciprocity are linked to three forms of ‘trust’, plus ‘reciprocity’… There is generalized trust’, which is the degree people trust strangers– the proverbial ‘man on the street’… and interpersonal trust’, which is trust among people who know each other, including employees working in particular teams, departments… and ‘institutional trust’, which is trust of authority structures, communities… and their perceptions of the organization… Then ‘reciprocity’ is respondents’ willingness to share resources or provide support… Reciprocity is the basic foundation for social capital…
  • Norms and Values is associated with whether employees or other stakeholders share some overlapping set of norms and values… If there is a high degree of diversity this will have implications for management strategies and tactics… It’s the general tendency or willingness to cooperate and act for common good…
  • Civic Engagement is about the degree and manner of participation in civic activities in support of the common good, e.g.; membership in professional and community organizations, associations… Civic participation, e.g.; volunteerism in community initiatives, corporate social investment initiatives…

Social capital is all about using the power of relationships and social networks to drive business growth and social transformation– and for recruiting and engaging highly talented teams, as well as; customers, partners, suppliers… Leaders/decision-makers needs to understand how to develop social capital… in order to compete in an age that is increasingly influenced by– social media, viral networks, tribalism, globalization…

The successful organizations will harness a highly relational model of leadership based on social capital– mutual trust, affirmation, collaboration, partnership… rather than fixed hierarchies, rigid command structures, top-down change methods…

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An organization can have the best ‘talent’ but if leaders and teams are isolated, they are in peril due to the lack of social capital… Social capital is about — engaging and building relationships with the goal of accumulating the critical assets required for growth and sustainability… Business cannot compete on what everyone already knows, it must find other advantages– relationships, partnerships, engagements…

According to Valdis Krebs; an advantage is understanding ‘context’ — how competitive issues are interpreted, combined, made sense of, converted to new products, services… Creating competitive context requires social capital ability to– find, utilize, and combine the skills, knowledge, experience of others…

Building social capital is more akin to investing for long-term accumulation than short-term profits. It requires investment of resources, time, insight, without the expectation of an immediate return…