Thursday, February 12, 2009

SOCIAL CAPITAL

SOCIAL CAPITAL

INTRODUCTION
Social capital has been given a number of different definitions, many of them refer to manifestations of social capital rather than to social capital itself. There are therefore numerous definitions of social capital found in the literature. 'Social capital can be defined simply as the existence of a certain set of informal values or norms shared among members of a group that permit cooperation among them' (Fukuyama 1997).Social capital is an instantiated informal norm that promotes cooperation between two or more individuals. The norms that constitute social capital can range from a norm of reciprocity between two friends, family members, all the way up to complex and elaborately articulated doctrines like Christianity, Muslim or Confucianism. They must be instantiated in an actual human relationship.
Social capital refers to the norms and networks that enable collective action. Increasing evidence shows that social cohesion is critical for poverty alleviation and sustainable human and economic development. The term social capital captures the idea that social bonds and social norms are important for sustainable livelihoods. Aspects of social structure and organization act as resources for individuals to use and realize their personal interests. Local institutions are effective because they permit the social group to carry on their daily lives with a minimum of repetition and costly negotiation (Bromley, 1993).
TYPES OF SOCIAL CAPITAL
Bonding Social Capital.
Bonding is horizontal, among equals within a community and localized, found among people who live in the same or adjacent communities. It is of thick trust (wider radius of trust)
Bridging Social Capital. Bridging social capital is vertical between communities, which extends to individuals and organizations that are more distant. It is of thin trust (a narrow radius of trust).,
IMPORTANCE OF SOCIAL CAPITAL
Social capital has facilitated a series of very important empirical investigations and theoretical debates which have stimulated reconsideration of the significance of human relations, of networks, of organizational forms for the quality of life and of developmental performance. As it lowers the costs of working together, social capital facilitates co-operation. People have the confidence to invest in collective activities, knowing that others will also do so. They are also less likely to engage in free private actions that result in negative impacts, such as resource degradation.
SOURCES OF SOCIAL CAPITAL
There are a number of key sources of social capital in the context of social and economic development.
1. Families: As the main source of economic and social welfare for its members, the family is the first building block in the generation of social capital for the larger society (Bubolz 1998, Hogan 1998). In addition to influencing the human capital development of children, the family's internal and external relationships model behaviors that are transmitted via children to future relationships.
Strong family systems are often found in places where the rule of law is weak, like Italy (Gambetta 1993) and India (Milner 1994). Communities: Social interactions among neighbors, friends and groups generate social capital and the ability to work together for a common good. This is especially important for the poor as social capital can be used as a substitute for human and physical capital.
2. Firms: Building and sustaining efficient organizations like firms demands trust and a common sense of purpose, i.e., social capital. Social capital benefits firms by reducing transactions costs, but can also have negative effects for a firm and society.
3. Civil Society: Social capital is crucial to the success of any non-governmental organization because it provides opportunities for participation and gives voice to those who may be locked out of more formal avenues to affect change.
4. Public Sector: That is the state and its institutions, is central to the functioning and welfare of any society. Good governance, a commitment to the welfare of citizens and the protection of their rights, fair and accountable institutions, well-established rule of law and citizen involvement all foster social and economic development. Considerable evidence links the type and effectiveness of a country’s public sector to society’s level of social cohesion, including the definition of civic duty and level of commitment to it (Esping-Andersen 1994, Putnam 1993).
5. Ethnicity: Ethnic relations come up frequently in discussions of social capital. Whether it is immigration, micro enterprise development, tribal favoritism or racial conflict, ethnic ties are a clear example of how actors who share common values and culture can band together for mutual benefit.
6. Gender: Social networks of impoverished women are important for women to obtain income and other necessities. Gender is a social construct placing cultural significance onto sexual identity. Since women are typically the primary care givers, they serve a critical role in the early development of social capital in a society. The individual’s capacity to trust has roots in the mother-child relationship (Picciotto 1998).
CENTRAL ASPECTS OF SOCIAL CAPITAL
Four central aspects have been identified (Pretty and Ward, 2001): i) relations of trust; ii) reciprocity and exchanges; iii) common rules, norms and sanctions; iv) connectedness, networks and groups.

i) Relations of trust
Trust lubricates co-operation. It reduces the transaction costs between people, and so liberates resources. Instead of having to invest in monitoring others, individuals are able to trust them to act as expected. This saves money and time. It can also create a social obligation - by trusting someone this engenders reciprocal trust. There are two types of trust: the trust we have in individuals whom we know; and the trust we have in those we do not know, but which arises because of our confidence in a known social structure. Trust takes time to build, but is easily broken (Gambetta, 1988; Fukuyama, 1995), and when a society is pervaded by distrust, cooperative arrangements are unlikely to emerge (Baland and Platteau, 1998).
ii) Reciprocity and exchanges
Reciprocity and exchanges also increase trust. There are two types of reciprocity (Coleman, 1990; Putnam, 1993). Specific reciprocity refers to simultaneous exchanges of items of roughly equal value; and diffuse reciprocity refers to a continuing relationship of exchange that at any given time may be unrequited, but over time is repaid and balanced. Again, this contributes to the development of long-term obligations between people, which can be an important part of achieving positive environmental outcomes (Platteau, 1997).
iii) Common rules, norms and sanctions
Common rules, norms and sanctions are the mutually agreed or handed-down norms of behaviour that place group interests above those of individuals. They give individuals the confidence to invest in collective or group activities, knowing that others will do so too. Individuals can take responsibility and ensure their rights are not infringed. Mutually-agreed sanctions ensure that those who break the rules know they will be punished.
These are sometimes called the rules of the game (Taylor, 1982), or the internal morality of a social system (Coleman, 1990), the cement of society (Elster, 1989), or the basic values that shape beliefs (Collins and Chippendale, 1991). They reflect the degree to which individuals agree to mediate or control their own behaviour. Formal rules are those set out by authorities, such as laws and regulations, while informal ones are those individuals use to shape their own everyday behaviour. Norms are, by contrast, preferences and indicate how individuals should act; rules are stipulations of behaviour with positive and/or negative sanctions. A high social capital implies high `internal morality’, with individuals balancing individual rights with collective responsibilities (Etzioni, 1995).
iv) Connectedness (networks and groups)
Connectedness, networks, and groups and the nature of relationships are a vital aspect of social capital. There may be many different types of connection between groups (trading of goods, exchange of information, mutual help, provision of loans, common celebrations, such as prayer, marriages, funerals). They may be one-way or two-way, and may be long-established (and so not responsive to current conditions), or subject to regular update.
High social capital implies a likelihood of multiple membership of organisations and links between groups. It is possible to imagine a context with large numbers of organisations, but each protecting its own interests with little cross-contact. Organisational density may be high, but inter-group connectedness low (Cernea, 1993). A better form of social capital implies high organisational density and cross-organisational links.
Connectedness, therefore, has five elements:
1) Local connections – strong connections between individuals and within local groups and communities.
2) Local-local connections – horizontal connections between groups within communities or between communities, which sometimes become platforms and new higher-level institutional structures.
3) Local-external connections – vertical connections between local groups and external agencies or organizations, being one-way (usually top-down) or two-way.
4) External-external connections – horizontal connections between external agencies, leading to integrated approaches for collaborative partnerships.
5) External connections–strong connections between individuals within external agencies.
CIVIL SOCIETY AND SOCIAL CAPITAL
Social Capital within a Non-Governmental Organization (NGO). Trust and willingness to cooperate allows people to form groups and associations, which facilitate the realization of shared goals.
Social Capital and Civil Society Can Promote Welfare and Economic Development. When the state is weak or not interested, civil society and the social capital it engenders can be a crucial provider of informal social insurance and can facilitate economic development.
Social Capital Across Sectors. State, market and civil society can increase their effectiveness by contributing jointly to the provision of welfare and economic development. The success of this synergy is based on complementary rather than substitutable inputs, trust, freedom of choice and incentives of parties to cooperate (Evans 1996, Ostrom 1996).
ADVANTAGES OF SOCIAL CAPITAL (BENEFITS FIRMS)
Social Capital reduces transaction costs. Firms benefit from social capital because it facilitates cooperation and coordination which minimize transaction costs, such as negotiation and enforcement, imperfect information and layers of unnecessary bureaucracy. Reciprocal, interdependent relationships--models of social capital--embody enforcement.
Social Capital provides a competitive edge. Efficiency gains in time and information allow more resources to be devoted to producing and marketing a better product at a higher volume. Trust based relations between economic agents have been seen as part of the competitive advantage of manufacturing enterprises.
Social capital promotes greater coordination among individuals and between departments. Teamwork can enhance efficiency and quality in small companies as well as multinational corporations. Social capital within and beyond the firm improve morale and enhance productivity (Smith 1994).
Trust is the foundation for cooperation between enterprises. Businesses banding together in a joint effort are able to establish deeper relationships with one another, which can be accessed in the future for other business projects beyond the scope of the original group.
Social capital enhances the importance of cross-sectoral partnerships for sustainable business as well as sustainable development.
Social capital affects the types of firms that are successful within a society (Fukuyama 1995, La Porta et al. 1997) and creates an enabling environment for private sector development.
DISADVANTAGE OF SOCIAL CAPITAL
Social capital can exclude outsiders. The same social ties which enable community members to work together can exclude outsiders.
Community pressure may be harmful to individuals. Enforceable group norms are not necessarily good for community members. Traditions can stifle individual growth and creativity, members who do not comply with norms and their families can be ridiculed or ousted from the community
Social ties may be harmful to communities and beyond. Communities with a lot of social capital, particularly if organized along ethnic lines or religious lines, can be harmful to each other and to society.
CONLUSION
Social capital, qualifies as capital because require some investment of time and effort and sometimes money. Social capital is similar to other forms of capital in that it can be invested with the expectation of future returns. The consequences of social capital are capital in nature because capital suggests something that is durable or long lasting and suggests something that retains its identity even after repeated use, something that can be used up, destroyed, maintained, or improved. Social capital is different from other forms of capital in that it resides in social relationships whereas other forms of capital can reside in the individual. Further, social capital cannot be traded by individuals on an open market like other forms of capital, but is instead embedded within a group. It is clear from the literature that social capital has both similarities and dissimilarities with neocapital theories and is certainly quite dissimilar from classical theory of capital.
REFERENCES:
Adler and Kwon. 1999 “Is Social Capital Really Capital. The Capital Debate
Bourdieu. 1986 “The Social Construction of Literacy”
Gant, John, Casey Ichniowski, and Kathryn Shaw. 2002. 'Social capital and organisational change in high-involvement and traditional work organisations." Journal of Economics and Management 11: 289-328Gant et al. 2002; Glaeser
Glaeser, Edward L, David Laibson, and Bruce Sacerdote. 2002. 'An economic approach to social capital.' The Economic Journal 112: 437-458.
Robinson, David. 2000. "Social Capital in Action." Social Policy Journal of New Zealand: 185.
Robison, Lindon J., A. Allan Schmid, and Marcelo E. Siles. 2002. "Is social capital really capital?" Review of Social Economy 60: 1-24.

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