Importance of social capitalSocial capital is a vital resource for individuals, groups, and society. Social capital has been described as a lubricant that facilitates getting things done. It allows people to work together and to access benefits from social relationships. Social capital allows modern economies to function efficiently. Our society, economy, institutions, and political system could not exist without social capital. Social capital refers to the internal social and cultural coherence of society. As such social capital has been described as a glue. Show
For individuals, social capital is important because it is an important source of power and influence that helps people to ‘get by’ and ‘get ahead’. The adage: “it’s not just what you know, but who you know” relates to the powerful effects and importance of social capital. For groups and organisations social capital is vital to their efficiency and even existence. Social capital enables people to work together and facilitates cooperation and innovation. Any organisation that doesn’t consider the importance of social capital is missing an opportunity for improvement, and risking inefficiencies and peril. For society, social capital is also important as it allows societal institutions to exist and maintains the coherence of society. It facilitates the cooperation and collaboration of different groups and organisations. It encourages people to be positively social towards one another with a wide range of benefits from reduced crime and corruption, to increased helpfulness and improved cooperation. Importance of social capital as a conceptSocial capital is a relatively new concept, but it does not represent new ideas. It is just a different way of thinking about the importance of sociability that has always been important to humans. In fact, from an evolutionary point of view humans could not have survived without what we now call social capital. The ability to work together and cooperate for mutual benefit was essential to survival and continues to be vital to the functioning of our society and economy. The concept of social capital frames social and cultural processes as beneficial, important, and valuable using the language of our dominant paradigm: capitalism. There can be no mistaking the value of the ‘social’ when it is attached to the label ‘capital’ and this can be readily appreciated by scholars from economics to accounting and all of the social sciences as well as people in politics, business and all other organisations.
Under a Creative Commons license Open access AbstractThe present work addresses how and to what extent the personal and professional relationship networks of small-scale local entrepreneurs help improve their scarce resource endowments. Adopting a mechanistic and functioning oriented view of social capital, the paper suggests the existence of two different mechanisms which may explain the enrichment and entrepreneurial exploitation processes of social capital's resources: (1) the resource mechanism, based on a network's size and diversity, providing quantity and variety of social capital resources, and (2) the exchange mechanism, based on a network's cohesion and relational quality, favouring the interchangeability of these resources among network members. The empirical study individually explores both the personal and professional networks of 958 Spanish entrepreneurs. Findings reveal how the two mechanisms are necessary and mutually complementary, although the resource mechanism proves more advantageous when exploiting personal networks, whereas the exchange mechanism prevails in the case of professional networks. JEL classificationL14 L26 M13 M14 KeywordsSocial capital mechanisms Relationship networks Small entrepreneur Resources Cited by (0)© 2019 ACEDE. Published by Elsevier España, S.L.U. They say every entrepreneur needs three kinds of capital: financial, human, and social. Financial capital is the funding you need to get off the ground, sustain growth, and develop operations. Human capital is the team that brings value to your organization. And while both are essential resources for your business, social capital — the connections and shared values that exist between people and enable cooperation — is the key to entrepreneurial success. You see, when you’ve developed a wealth of social capital, you can obtain any other resources you need — whether that means gaining investors, recruiting experts, or building your team with the best of the best. Even if you’re earning millions of dollars and have a great team, though, without a network of supporters, the first bump in the road may just send you careening into a ditch. Let’s look at this in terms of sales for a moment. Dr. Willy Bolander, assistant professor of marketing at Florida State University and his colleague, Dr. Cinthia Satornino, assistant professor of marketing at Northeastern University, have found that as much as 33 percent of the variance in sales performance is attributed to an individual’s social capital. Consider, for a moment, how that difference can empower your business. Here are four reasons social capital is the most important resource your business has: 1. It Establishes You as a Leader By offering advice or resources to others without expecting an immediate benefit, you cultivate social capital. Giving to and supporting others builds trust and establishes your reputation as an upstanding person who is skilled in your field — two qualities that are critical for buyers looking to engage. To build trust in your network, do the following:
2. It Fosters Reciprocity After you’ve provided wisdom, support, and connections to others in your network, you can begin to count on those people when you need support. When my company was hitting the growth trajectory we’d hoped for, we hired quite a few new staff members. In order to make sure we didn’t overcommit and collapse under our own success — and realizing that I knew absolutely nothing about compensation model design — I reached out to several people in my network who had designed compensation models for professional services firms in the past, and they helped me develop a model that was generous and sustainable. 3. It Creates Stronger Teams Social capital doesn’t simply exist external to your organization. You can also build strong, honest, and mutually beneficial relationships within the walls of your company. And by so doing, you make sure you can count on your people to have your back when the time comes. This internal social capital is nurtured within your walls every day, but it’s also fed by outside relationships. For example, providing quality internships for local graduate students has led to a tremendous increase in our quality of intern applicants. The universities want to send us their top people in return for offering these positions and providing quality experiences; it’s a win-win. 4. It’s Natural Networking Traditional networking can be uncomfortable at best and outright torturous at worst. Mark Schaefer is a great example of someone who has fun while building social capital. He used Twitter to completely bypass traditional networking while growing his network online. To enjoy all the benefits of social capital, though, you have to build it. Start by seeking expert advice in resources like the Social Capital Building Toolkit. Then, more importantly, be patient and let your relationships mature organically. Be honest and authentic, and show that you value others. We all have some built-in social capital in our natural networks. As a combat veteran and an entrepreneur, for example, I have an extensive network of people with similar backgrounds who tend to look out for me in ways that others can’t. This group assumes good intent from other members, and we step up to help each other in times of need. The secret is that the assistance goes both ways in a very organic and healthy way. So don’t limit these kinds of pleasant and supportive relationships to your personal life. Make the investment in building your social capital, and both you and your business will see the benefits. Chris Cancialosi, Ph.D., is managing partner and founder at gothamCulture. What is social capital in entrepreneurship?The social capital theory focuses on how interpersonal relationships cultivated over time can provide a valuable resource for the members of a network. Social capital is a collection of the most important resources for entrepreneurs including social capital at the individual and social levels.
Why social capital is important to enhancing our understanding of social entrepreneurship?Social capital is very important because it allows people to come together in groups for the development of their environment.
Why is it important to address social barriers in entrepreneurship?A systematic study of the barriers will lead to a proper understanding of the fields or areas in which they occur. Once the barriers are clearly identified, the society, government and other supporting agencies can develop effective programs to tackle the issues to create a conducive entrepreneurial climate.
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