Guide to Social Capital: The Concept, Theory, and its Research

The term “social capital” may seem like an almost non-sensical combination of words. How can ‘social’ be ‘capital’? The term does not fit well with the traditional meaning of capital (from an economic perspective) and is an over simplification of complex social phenomena (from a sociological perspective). Yet the term is an intriguing integration of sociology and economics so is a very important conceptual innovation for inter and transdisciplinary theoretical integration.

Social capital experts can make the concept sound almost mystical, and for many people approaching social capital for the first time it can be daunting. Social capital theory can seem like an ivory tower, impenetrable except by those who possess the keys. Yet the truth is that social capital is intuitively understood by all humans since we are fundamentally, to our core, social.

This guide provides answers to many of the important questions about social capital and includes links to our extensive resources on the concept and theory.

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A message from our founder

I have spent over 20 years working with social capital theory. I’ve compiled this guide, and the hundreds of articles on this website, to help people understand the concept and theory.

The theory has much promise, but often in the same sentence I talk about the problems with the concept. The term is often used with little understanding of what it means and even the peer-reviewed academic literature contains extensive ‘vulgar scholarship’ that would be incapable of withstanding even rudimentary scrutiny.

I hope you find this website, and the extensive resources it provides, helps to navigate the complex concept and theory of social capital.


Founder of Social Capital Research & Training

Social capital is the benefits derived from sociability. Social capital can be described most simply as the aspects of social context (the “social” bit) that have productive benefits (the “capital” bit). Social capital arises from the human capacity to consider others, to think and act generously and cooperatively. It relates to social relationships and social structures. It involves people knowing each other and having positive relationships based on trust, respect, kindness, and reciprocity. It involves supportive social structures that encourage prosocial actions and discourage exploitive behaviours.

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What is social capital?

It may seem ironic that a concept with the word ‘capital’ in it could have downsides, but social capital is not a universally beneficial resource. In fact, a stock of social capital can be simultaneously productive and perverse depending on your perspective.

For example, social capital can facilitate employee action to negotiate increased pay or improved working conditions, which is positive from the perspective of workers, but could be perceived as negative from the perspective or business owners and shareholders. The mafia is a commonly cited example of strong social capital that is used for negative outcomes, from the perspective of society.

Social capital emphasises social dimensions that have typically been marginalised by the dominant paradigm of individualism and economic rationalism. It helps to reverse the undersocialised view that assumes that humans are rational and self-interested, and largely beyond the influence of social factors.

By casting social factors as ‘capital’ it gives them footing in decision making along with other forms of capital. It allows sociologists to play in the same sandbox as economists. But it also allows economic intrusion into sociological phenomena and a reduction to economic thinking. I believe whether social capital theory has merit depends on how it is used.

Social capital is ill-defined, with different authors attributing different meanings to the concept. Social capital has been widely criticised, mostly for its ambiguity and variability. There are numerous definitions and conceptualisations of social capital – so much so that one needs to clarify what one means by the term social capital before continuing with its use.

Unfortunately, the social capital literature is marred by ‘vulgar scholarship’ where authors have used the concept without sufficient consideration of its theory and have failed to understand and account for its inherent complexity.

The main criticisms of social capital theory are that it is not social, not capital, and not a theory. This doesn’t leave the concept with much of substance, leading some authors to describe the concept as “fundamentally flawed”.

One of the greatest stumbling blocks for social capital is the lack of a clear and accepted definition. There are literally hundreds of different definitions of social capital in the literature. The result has been confusion, disagreement, and contradiction.

The commonalities of most definitions of social capital are that they focus on social structures that have productive benefits. Definitions generally have some combination of role-based or rule-based (structural) and mental or attitudinal (cognitive) origins.

In recent years, authors have increasingly cited one of two definitions of social capital. This suggests there is starting to be some agreement and I strongly encourage the use of one of these definitions.

They are the definitions from Adler and Kwon (2002 p.23) or Nahapiet and Ghoshal (1998 p.243).

“Social capital is the goodwill available to individuals or groups. Its source lies in the structure and content of the actor’s social relations. Its effects flow from the information, influence, and solidarity it makes available to the actor.”

Adler, Paul S. and Seok-Woo Kwon. 2002. “Social Capital: Prospects for a New Concept.” Academy of Management. The Academy of Management Review 27(1):17–40.

“the sum of the actual and potential resources embedded within, available through, and derived from the network of relationships possessed by an individual or social unit. Social capital thus comprises both the network and the assets that may be mobilized through that network”

Nahapiet, Janine and Sumantra Ghoshal. 1998. “Social Capital, Intellectual Capital, and the Organizational Advantage.” Academy of Management Review 23(2):242.

Social capital exists at the level of the individual, the informal social group, the formal organization, the community, the ethnic group and even the nation. The basis of social capital is individual actors and their relationships, but also the social structures within which they are embedded. This means that an individual may have some control over their social capital, but they do not own their social capital per se. Many aspects of social capital relate to shared values, attitudes and norms that exist within social groups. Social capital is identifiable at any level of social grouping, from the individual level to the level of the nation, and it exists at any level where there is identification and belonging, i.e. a social grouping.

It is important to be clear about what level of social capital is relevant to your discussion or analysis. Although the factors are different at each level, the levels are inseparably related.

The different types of social capital are typically defined as structural social capital, cognitive social capital, and relational social capital. Another common categorisation of social capital is the following types: bonding social capital, bridging social capital, and linking social capital.

These dimensions are conceptual distinctions that are useful for analytic convenience but in practice social capital involves complex interrelations between dimensions. In practice, the dimensions of social capital may be so intertwined that it is hard to dissect them. The dimensions are connected and mutually reinforcing.

Social capital is multi-dimensional, involving virtually every aspect of social structure and interaction. To aid analysis, these factors have been grouped into dimensions, the most common distinction being between structural, cognitive, and relational social capital. The structural/cognitive/relational distinction builds on Granovetter’s (1985) discussion of structural and relational embeddedness. It conforms to the prevailing view that social capital constitutes aspects of social structure, and the nature of social relationships, especially norms. Thus ‘structural’ and ‘relational’ social capital.

Structural social capital is tangible and can be readily observed by the existence of network ties (ie who knows who) as well as roles, rules, precedents, and procedures. The relational dimension however is intangible since it is what and how people think and feel. It is therefore ‘cognitive’ since it is a function of people’s cognition and has regularly been termed as such.

The difference between bonding and bridging social capital relates to the nature of the relationships or associations in the social group or community. Bonding social capital is within a group or community whereas bridging social capital is between social groups, social class, race, religion or other important sociodemographic or socioeconomic characteristics. The bonding/bridging distinction can be made in relation to a range of relationship and network characteristics.

This line to social capital theory is call the network approach and is most commonly used by researchers approaching social capital from economics. The concepts of bonding and bridging social capital are associated with the network theories of structural holes and network closure.

The sources of social capital are any factors that promote social interaction and exchange, that facilitate the development of norms for these interactions, and the factors that shape the individual and societal beliefs and values.

The literature often mentions social capital’s sources as a long list of factors that relate to virtually every aspect of human existence. This is not surprising considering a broad definition of social capital would suggest that any factor that relates to being ‘social’ is relevant for inclusion in the list. If being social brings about any potential benefits, or costs, then it could be reasonable to consider it a source of social capital.

The sources of social capital span the full breadth of the social sciences having links to sociology, psychology, political science, economics, theology, anthropology, and many more. These disciplines have all contributed to social capital theory, each approaching the concept from their discipline-relevant perspective, and each contributing to our overall understanding of the concept. To gain a thorough understanding of social capital we must take an interdisciplinary approach by gleaning relevant insights from across the social sciences.

There is almost universal agreement that social capital is difficult to measure with a high degree of validity. Demand for relevant empirical measures has continued to outstrip supply. Social capital cannot be measured directly but can be inferred from its outcomes. We measure social capital by using indicators or “proxies” that are theoretically linked to social capital.

Social capital can be measured in a specific context where interdependencies are given due credit and attention, but I think there is a strong case to suggest it cannot be measured in a general sense. There are no robust, widely applicable and consistent ways to measure social capital that allow for comparison between different contexts. The main reasons are: lack of consistent definition; differences between levels of analysis and context; problems of aggregation; uneven distribution and inequality; nonlinear relationships; and complex causality.

Social capital is complex, so there is no easy answer to this question. A decline in one aspect or factor may be associated with improvements in other aspects and there are complex interactions between these factors.

If we were to consider society level change in social capital in recent history, we may conclude that there has been a loss, as many commentators have suggested including most notably Robert Putnam. There is little doubt we have seen significant changes in the way in which people participate in society and the nature of their networks and relationships. Yet a decline in one aspect is generally replaced by increase in some other aspect. There may be less interaction with family, but this may be replaced by a wider and more varied social network, facilitated by digital technologies. For example, there may be less voluntary participation but is this somewhat countered by the rise of social media? We can debate the merit of digital networks and their effect on social relationships, but I don’t think we have the means to make the comparison.

The contemporary literature on social capital dates back to the 1980’s and flows primarily from the work of Pierre Bourdieu, James Coleman and Robert Putnam.

Bourdieu’s (1986) conceptualization of social capital is based on the recognition that capital is not only economic and that social exchanges are not purely self-interested and need to encompass ‘capital and profit in all their. Bourdieu’s conceptualization is grounded in theories of social reproduction and symbolic power.

Like Bourdieu, Coleman was interested in different types of capital and their interaction, namely human, physical and social capitals. The aim of Coleman’s concept of social capital was to import the economists’ principle of rational action for use in the analysis of social systems without discarding social organization in the process.

Putnam is generally credited with popularized the term social capital. He is most famous for his controversial publication Bowling Alone, which argues that the United States has undergone an unprecedented collapse in civic, social, associational, and political life (social capital) since the 1960s, with serious negative consequences.

Social capital has been described by some authors as lubricating the fabric of society and allowing modern economies to function efficiently. These may seem like lofty claims but without social capital, humans could not work together. Our society, economy, institutions, and political system could not exist without social capital. This is because social capital is the shared values, norms, trust, and belonging that make social exchange possible.

Throughout human history the importance and value of social relationships has been intuitively understood and nurtured. Being social allowed our early ancestors to survive and prosper in harsh environments. However, in the ego-driven, individualistic, self-interested, and radically rational 20th century the importance and value of social factors was consistently underestimated, undervalued, and underprioritized.

There is virtually no aspect of human endeavour that does not require social capital. It has been linked to educational attainment, public health, lower levels of crime, economic and business performance, career success, innovation, and many other benefits.

Some aspects of social capital change slowly over time since they are rooted in history and tradition. Other aspects are more dynamic and changeable, particularly on local spatial scales and at the level of the individual and small group.

In any social grouping there is always scope for social capital to change. Theoretically any social grouping could have more or stronger social capital, and it could have less or weaker social capital. For example, there could be more social connections, the nature of these social relationships could be more positive, there could be more shared understandings, stronger social norms of collaboration, reciprocity and trust, there could be more effective social structures, rules, and more effective and just enforcement of these rules.

Social capital can be very easily destroyed. It can take a long time to build social capital through repeat positive actions and interactions, but it can be destroyed by a single action.

Generally social capital is lost or damaged by anything that reduces feelings of goodwill or disrupts networks. Any action that is antisocial. Anything that makes people feel less social, sharing, giving, or caring towards their fellow humans. These actions could be things like a betrayal of trust, selfish acts, perceived indifference or exclusion, violence or threat of violence, or deceit or deception.

Social capital can be very easily destroyed. It can take a long time to build social capital through repeat positive actions and interactions, but it can be destroyed by a single action.

Generally social capital is lost or damaged by anything that reduces feelings of goodwill or disrupts networks. Any action that is antisocial. Anything that makes people feel less social, sharing, giving, or caring towards their fellow humans. These actions could be things like a betrayal of trust, selfish acts, perceived indifference or exclusion, violence or threat of violence, or deceit or deception.

You can increase your social capital by being prosocial: by being helpful and giving, by getting to know people, by strengthening your existing relationships, and by trusting and being trustworthy. An individual can build their social capital by being social and by being moral – being sharing, caring, and giving. There are numerous personal characteristics related to social capital, such as: duty, respect, loyalty, solidarity, service, compromise, restraint, patience, tolerance, understanding, self-discipline, compassion, responsibility, friendship, perseverance, honesty, trust, and faith.

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