Social Capital - Meaning, Importance & Example

Published in Human Resources Terms by MBA Skool Team

What is Social Capital?

Social capital encompasses the networks, relationships and shared norms/beliefs of trust as well as reciprocity found within a society or community to work towards common goal(s). It represents the value derived from social connections and the extent to which individuals are integrated into a social network. Social capital is a critical concept for understanding how such networks and relationships contribute to the well-being of individuals and communities for the attainment of a common goal. By examining the factors that promote social capital and ways to harness it for positive outcomes, policymakers and researchers can develop approaches to building more robust and resilient communities.

Importance of Social Capital

The notion of social capital often explains why some communities are more successful than others in accomplishing collective objectives or tackling difficult tasks. For instance, a community with robust social capital can mobilize resources to deal with natural calamities or cooperate on joint projects. A community with weak social capital may encounter challenges in achieving these same objectives as individuals may lack trust in each other or the necessary social connections to work together efficiently.

Social capital can be classified based on different types, including the ties individuals have with family or friends as well as formal connections with civic organizations, religious groups or professional associations. It may also consist of informal networks that form through shared experiences or identities such as social clubs or neighborhood associations.

Example of Social Capital

One of the main benefits of social capital is its potential as a resource for individuals and groups.

For Example, people with strong social networks may leverage them to find jobs, acquire information or receive emotional support during trying times. Additionally, groups with strong social capital may utilize these networks to achieve collective objectives, such as influencing public policy or driving social change.

In certain scenarios, it may be employed to exclude particular individuals or groups from opportunities or resources. For example, a closed community may put entry barriers for outsiders into their social network resulting in limited opportunities for newcomers.

Hence, this concludes the definition of Social Capital along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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