How Social Capital Works

Every connected group of people forms relationships, both positive and negative, within the group. People who attend the same place of worship, club, bar, factory, or office, naturally form links with others who share the experience. You can use the connections you have developed in various ways, like asking for advice on buying a new car, finding a new job, getting a broken garage door fixed, or sharing opinions on local schools. The possibilities are endless and result from the basic fact that man is a social animal. These relationships, or social capital, are so fundamental that we accept them as a natural fact of life.

Members of a group who may be reluctant to contribute to a common purpose can often be persuaded to do so through peer pressure because membership of the group, and the social capital it represents, is more important than any doubts they may have. Unlike other forms of capital, you do not social capital is not exhausted by use and can be increased if properly nurtured and developed.

Example of Social Capital

Mega was a large company that manufactured components. It had invested heavily in the machinery necessary to meet the demand for its products and was focused on filling its orders as quickly and efficiently as possible. Its main factory, situated in an area of high unemployment, operated in the same field of business as many local factories that had closed or moved production overseas. There was, therefore, a large pool of labor available to fill any vacancies which might occur.

Mega's employees shared social capital by being employed by the company. However, this social capital concerning Mega was entirely negative. The employees felt that Mega focused entirely on production and profit and didn't care for its workers. As a result, the workers were concerned only with their earnings and had no interest in production quality. There were frequent disputes, high absenteeism, and complaints from customers about low-quality products.

A new management team realized that something had to change. The workplace was made brighter and more comfortable. Management asked workers to contribute their ideas and to air any complaints that they might have. They established a small daycare center, social clubs, and a new cafeteria. Management kept all staff members informed about the company's objectives and their role in achieving them. The social capital within Mega shifted from negative to positive, and, as a result, quality improved.

Significance of Social Capital

Any institution, be it a school, church, or business, has social capital, which consists of the relationships formed between the institution's members. Individuals have social capital derived from their membership in that institution. A person will belong to many different groups, each one providing social capital. The social capital shared by members of a single group, such as a family, results from bonding within that institution, implying that the group members share specific values and common goals.

Two or more different groups may discover that they share a common interest and may work together to further their aims; thus, they increase the possibility of achieving their common goal by bridging social capital from one group to another.