How much should we invest in social capital building initiatives? Part of 2022 report "Exploring the limits of social capital"

How much would you invest if you were tasked with building social capital in a social grouping, such as an organisation? We know that building social capital can have significant benefits, but how much should we spend on improving social capital? Currently, we do not know enough to answer this question. For many other organisational matters we optimise benefits to the nth degree, however, when it comes to social capital, most organisations have little idea how to build social capital, much less how to maximise it. For a medium-sized organisation with a few thousand employees, would $100K be enough? That would be a good start, and I would have no difficulty designing an intervention that would make significant improvements. In most organisations, there are some fairly quick and easy ways to make considerable enhancements in social capital since most organisations currently do not deliberately pay attention to their social capital. But what if the budget was $1M? I could certainly work with that. But what if it was $100M? Can we still be confident the outcomes would justify the investment? And what would we do? Just more of the same initiatives we would implement if the budget was $100K?  This approach would be haphazard. This highlights how little we know about maximising social capital.

Figure 1. Different budgets for social capital building initiatives

The current approach to building social capital

Currently, most social capital building initiatives focus on social structures such as informal or formal networks, groups, or organisations. The approach pioneered by the World Bank in the 1990s was to establish community groups such as cooperatives, savings groups, micro-enterprises, or natural resource management groups. In developed countries, following the influence of Putnam’s work, common approaches focused on supporting informal associations such as sporting clubs and community organisations. The focus on social structures comes from their tangible, observable, and measurable nature. It is possible to observe that new groups have been established, that groups have more members, and that they meet more often. These tangible outcomes can be easily measured and communicated to decision-makers. It is less common for social capital building initiatives to focus on building trust, developing social norms, strengthening sense of belonging, or improving shared understandings. For many organisations that attempt to improve social capital, the approach is focused on increased social interaction. These approaches can be very effective. However, they are not always effective.

State-of-the-art approach to social capital building

A more systematic approach to building social capital would be to use the dimensions framework to identify initiatives across each dimension. This would ensure that not only are social structures established and strengthened, but the relational and cognitive dimensions are also improved. Since all three dimensions are interrelated, focusing on all three dimensions improves the building of social capital and decreases the likelihood that the efforts will be ineffective. For any given context, we could identify the strategies that could improve each of the aspects listed in Table 1.

Structural dimensionRelational dimensionCognitive dimension
Configuration and pattern of social relationships including structures of social organisationCharacteristics and qualities of social relationshipsShared understandings that provide systems of meaning
  • Network ties and configuration
  • Roles, rules, precedents, and procedures
  • Trust and trustworthiness
  • Norms and sanctions
  • Obligations and expectations
  • Identity and identification
  • Shared language, codes, and narratives
  • Shared values, attitudes, and beliefs
  • Shared goals, purpose, and vision

Table 1. Dimensions of social capital (adapted from Nahapiet and Ghosal 1998)

From this table, it would be easy to identify numerous strategies to build social capital. To illustrate a few of these ideas, we could build more relationships, strengthen existing relationships, establish roles that create productive patterns of interaction, and create or refine rules and procedures that encourage cooperation and positive social action. For the relational dimension, we could attempt to build trust and establish norms of trustworthiness, build and shape the nature of social norms and sanctions, develop positive obligations and expectations, and develop a strong sense of identity and belonging. And for the cognitive dimension, we could work to build shared language and narratives, develop a strong sense of shared values and attitudes, and establish shared purpose and buy-in to this vision.

Can we design better social capital building initiatives?

The ideas above may seem comprehensive, and they are excellent compared to most current initiatives to build social capital. However, to me, this approach is still haphazard. We do not have a good understanding of the interrelationships between these strategies, how their long-term implementation may result in diminishing benefits, trade-offs, and feedback loops, and the potential for them to create negative outcomes. Also, these are only some ways I would go about building social capital, suggesting that we are missing some important factors. We need to dig deeper to understand the factors that limit social capital. This approach will highlight the factors that can build social capital and include a range of factors that are not readily identifiable from the dimensions framework. This next section will explore the meaning of social capital to provide the foundation for exploring the limits in more detail.

Citing this article

This report was prepared for the Institute for Social Capital. You should reference this work as:

Claridge, T., 2022. Exploring the limits of social capital: Can social capital be continually improved or is there a maximum?. Report, Institute for Social Capital, Dunedin, New Zealand.

Download for reference software: BibTeX | EndNote | RefMan | Download the full PDF  [PDF 2.6MB]

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