Network Approach to Social Capital Theory

Woolcock and Narayan (2000) identified that the network approach takes into account both social capitals upside and its downside (see benefits and disadvantages section). This approach stresses the importance of vertical as well as horizontal associations between people and of relations within and among such organizational entities as community groups and firms' (Woolcock and Narayan 2000, p. 230). Sandefur and Laumann (1998, p. 484) provided a useful description of the network approach 'an individual's potential stock of social capital consists of the collection and pattern of relationships in which she is involved and to which she has access, and further to the location and patterning of her associations in larger social space'. Building on the work of Granovetter (1973) on network theories, authors such as Burt (1992, 1997, 1998); Lin (1999, 2001); Portes (1995, 1997, 1998); and Portes and Sensenbrenner (1993) have added to work taking this perspective. This approach focuses on the importance of what has been termed bonding and bridging social capital in recent literature. These terms are associated with the network theories of structural holes and network closure (Adler and Kwon 2002). The closure argument is that a network of strongly interconnected elements creates social capital. The structural hole argument is that social capital is created by a network in which people can broker connections between otherwise disconnected segments (Burt 2001). For Ronald Burt, the structural hole theory gives concrete meaning to the social capital metaphor as he believes that social capital is more a function of brokerage across structural holes than closure within a network (Burt 2000; Schmid 2003). The theory of network closure is important in understanding the impacts of social capital on tight-knit communities. Burt (2000, p. 351) identified that network closure facilitates sanctions that make it less risky for people in the network to trust one another'. Further discussion of these approaches is beyond the scope of this study however it is acknowledged that the approach has made a considerable contribution to our understanding of social capital.

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