Benefits and Importance of Social Capital

The importance of social capital theory is apparent from the literature with many empirical studies that purport to show the importance of social capital to a very wide-ranging set of socioeconomic phenomena (Durlauf 2002a[1] ; Krishna 2001[2] ). Adam and Roncevic (2003, p. 177[3] ) stated that:

‘despite problems with its definition as well as its operationalization, and despite its (almost) metaphorical character, social capital has facilitated a series of very important empirical investigations and theoretical debates which have stimulated reconsideration of the significance of human relations, of networks, of organizational forms for the quality of life and of developmental performance’.

The widespread interest in and application of the concept could suggest the theoretical importance of social capital theory. Existing studies have provided ample evidence of its pervasiveness and offered useful impressions of its political, economic and social influence (Fine 2001[4] ; Jack and Jordan 1999[5] ; Montgomery 2000[6] ). Aldridge, Halpern et al (2002)[7] cautioned that some of the empirical evidence on the importance of social capital for economic and social outcomes needs to be treated with caution because of the mis-specification or ambiguity of equations or models used to estimate its impact. Without a rigorous method for measurement it is unclear how the benefits are ascertained and tested. It is surprising that there is little skepticism in the literature over the validity of the purported benefits of social capital given the uncertainty of measurement techniques identified above. This is due to two factors: the intrinsic appeal of the concept; and the common misguided faith in measurement methodologies. The majority of benefits described in the literature have not been empirically tested at all but arise through theoretical extrapolation based on other concepts.

Requena (2003) suggested that the importance of social capital lies in that it brings together several important sociological concepts such as social support, integration and social cohesion. This view is supported by Rothstein (2003)[8] who stated that the real strength of social capital theory is the combination of macro-sociological historical structures with micro-level causal mechanisms, a rare feature in the social sciences.

The literature recognizes social capital as important to the efficient functioning of modern economies, and stable liberal democracy (Fukuyama 2001[9] ; Kenworthy 1997[10] ), as an important base for cooperation across sector and power differences, and an important product of such cooperation (Brown and Ashman 1996[11] ), and Lyon (2000)[12] described the importance of social capital in shaping regional development patterns. It is clear that social capital is of importance in societal wellbeing. Some aspects of the concept, such as inter-personal trust, are clearly desirable in themselves while other aspects are more instrumental (Bankston and Zhou 2002[13] ). Optimism, satisfaction with life, perceptions of government institutions and political involvement all stem from the fundamental dimensions of social capital (Narayan and Cassidy 2001).

Social capital is charged with a range of potential beneficial effects including: facilitation of higher levels of, and growth in, gross domestic product (GDP); facilitation of more efficient functioning of labor markets; lower levels of crime; and improvements in the effectiveness of institutions of government (Aldridge et al. 2002[14] ; Halpern 2001[15] ; Kawachi et al. 1999b[16] ; Putnam et al. 1993[17] ). Social capital is an important variable in educational attainment (Aldridge et al. 2002; Israel et al. 2001[18] ), public health (Coulthard et al. 2001[19] ; Subramanian et al. 2003[20] ), community governance, and economic problems (Bowles and Gintis 2002[21] ), and is also an important element in production (Day 2002[22] ). Economic and business performance at both the national and sub-national level is also affected by social capital (Aldridge et al. 2002). Others have emphasized the importance of social capital for problem solving and how only certain types of social capital contribute to this (Boyte, 1995[23] ; Sirianni & Friedland, 1997[24] ).


  1. Durlauf, Steven N. 2002a. ‘On the empirics of social capital.’ The Economic Journal 112: 459-479. ^
  2. Krishna, Anirudh. 2001. ‘Moving from the Stock of Social Capital to the Flow of Benefits: The Role of Agency.’ World Development 29: 925-943. ^
  3. Adam, Frane, and Borut Roncevic. 2003. ‘Social Capital: Recent Debates and Research Trends.’ Social Science Information 42: 155-183. ^
  4. Fine, Ben. 2001. Social capital versus social theory : political economy and social science at the turn of the millenium. London: Routledge ^
  5. Jack, Gordon, and Bill Jordan. 1999. ‘Social capital and chile welfare.’ Children and Society 13: 242-256. ^
  6. Montgomery, John D. 2000. “Social capital as a policy resource.” Policy Sciences 33: 227-243. ^
  7. Aldridge, Stephen, David Halpern, and Sarah Fitzpatrick. 2002. Social Capital: A Discussion Paper. London, England: Performance and Innovation Unit. ^
  8. Rothstein, Bo. 2003. “Social capital, economic growth and quality of government: The causal mechanism.” New Political Economy 8: 49-71. ^
  9. Fukuyama, Francis. 2001. ‘Social capital, civil society and development.’ Third World Quarterly 22: 7-20. ^
  10. Kenworthy, Lane. 1997. ‘Civic Engagement, Social Capital, and Economic Cooperation.’ American Behavioral Scientist 40: 645-656. ^
  11. Brown, L. David, and Darcy Ashman. 1996. ‘Participation, Social Capital, and Intersectoral Problem Solving: African and Asian Cases.’ World Development 24: 1467-1479. ^
  12. Lyons, Mark. 2000. ‘Non-profit organisations, social capital and social policy in Australia.” Pp. 165 – 191 in Social capital and public policy in Australia, edited by Ian Winter. Melbourne: National Library of Australia. ^
  13. Bankston, Carl L, and Min Zhou. 2002. ‘Social Capital as a Process: The Meanings and Problems of a Theoretical Metaphor.’ Sociological Inquiry 72: 285-317. ^
  14. Aldridge, Stephen, David Halpern, and Sarah Fitzpatrick. 2002. Social Capital: A Discussion Paper. London, England: Performance and Innovation Unit. ^
  15. Halpern, David. 2001. ‘Moral values, social trust and inequality: can values explain crime?’ British Journal of Criminology. ^
  16. Kawachi, Ichiro, Bruce P. Kennedy, and Roberta Glass. 1999b. ‘Social capital and self-rated health: a contextual analysis.’ American Journal of Public Health 89: 1187-1193. ^
  17. Putnam, Robert D. 1993. “The prosperous community: Social capital and public life.” The American Prospect 4. ^
  18. Israel, Glenn, Lionel Beaulieu, and Glen Hartless. 2001. ‘The influence of family and community social capital on educational achievement.” Rural Sociology 66: 43-68. ^
  19. Coulthard, M, A Walker, and A Morgan. 2001. ‘Assessing people’s perceptions of their neighbourhood and community involvement (Part 1’quot; London: Health Development Agency. ^
  20. Subramanian, S. V., Kimberly A. Lochner, and Ichiro Kawachi. 2003. “Neighborhood differences in social capital: a compositional artifact or a contextual construct?” Health & Place 9: 33-44. ^
  21. Bowles, Samuel, and Herbert Gintis. 2002. ‘Social Capital and Community Governance.’ The Economic Journal 112: 419-436. ^
  22. Day, Ronald E. 2002. ‘Social capital, value, and measure: Antonio Negri’s challenge to capitalism.’ Journal of the American Society for Information Science and Technology 53: 1074-1082. ^
  23. Boyte, H. 1995. ‘Beyond Deliberation: Citizenship as Public Work.’ in PEGS conference, edited by Civic Practices Network. ^
  24. Sirianni, C, and L Friedland. 1997. “Civic innovation and American democracy.” Civic Practices Network. ^
One comment on “Benefits and Importance of Social Capital
  1. Ashe2009 says:

    Real it’s is very important and interesting

1 Pings/Trackbacks for "Benefits and Importance of Social Capital"
  1. […] the stronger the individual’s social capital, the more likely they are to share true opinions. says that literature recognizes social capital as important to the efficient functioning of modern […]

Leave a Reply