measuring and
valuing social capital
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A Systematic Review
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Kwasi Amoako-Gyampah
Nceku Q. Nyathi
measuring and valuing
social capital
A Systematic Review
Prepared by Moses Acquaah, Kwasi Amoako-Gyampah and Nceku Q. Nyathi
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Measuring and Valuing Social Capital: A Systematic Review
2
table of contents
4
EXECUTIVE SUMMARY
8
CHAPTER 1: INTRODUCTION
10
Overview of the Systematic Review
11
Definition, Forms and Dimensions of Social Capital
18
Why Managers Should Care About Definitions, Forms and Dimensions of Social Capital
20
Content and Organisation of Report
21
CHAPTER 2: MEASUREMENT OF SOCIAL CAPITAL
22
Approaches to Measuring Social Capital
23
Individual Level Measures
27
Group and Organisational Level Measures
28
Community and National (Country) Level Measures
35
Summary of Social Capital Measures
37
A Model to Measure Social Capital
41
CHAPTER 3: THE VALUE OF SOCIAL CAPITAL
42
Overview of the Value of Social Capital
47
Value of Social Capital by Dimension
50
Value of Social Capital Level by Analysis
57
Social Capital Value by Discipline
57
Unfavourable Consequences of Social Capital
60
Why Business Leaders Should Care About Social Capital - Additional Cases
65
CHAPTER 4: RECOMMENDATIONS AND CONCLUSION
66
Recommendation for Measuring Social Capital at Different Levels
69
Recommendations for Determining Value and Impact of Social Capital
71Conclusion
73Bibliography
90
Appendix A: Detailed Methodology
93
Appendix B: Summary of Studies Used for Review
93
Appendix C: Definitions of Social Capital Terms
Measuring and Valuing Social Capital: A Systematic Review
3
Executive Summary
Researchers and practitioners have long recognised
the importance of social capital in mobilising resources
for the creation of value for individuals, companies
and communities. Companies, in particular those
in South Africa, are increasingly being required to
examine the impact of social capital as part of their
overall sustainability efforts. This review provides a
comprehensive research-based guide on the definition,
measurement, and the value that social capital
provides to individuals, businesses and communities. It
addresses the following questions:
• What is social capital? What constitutes the forms
and dimensions of social capital?
• How has social capital been measured in the
management literature, as well as in other
disciplines?
• How has social capital been valued in the
management literature? How does the value of
social capital differ for individuals, organisations,
and communities?
• What should business leaders and organisations
bear in mind when making investments in social
capital?
Social capital is important to managers and
practitioners because:
•
•
•
•
•
•
It is ‘the glue that binds society together’’, and
provides the opportunity for businesses to be
purposefully involved in creating a sustainable
future for their operations, communities, and
society at large.
It allows companies to demonstrate the impact
of their business activities on communities, the
economy, and the environment through their
stakeholder engagements and the social value
created.
It provides value to businesses in the form of
improved performance, market opportunities,
innovation and new product development, and
enhanced reputation.
It fosters economic development and growth for
communities which are part of the ecosystems in
which businesses are embedded.
Companies with higher levels of social capital gain
competitive advantage as a result of access to
valuable resources, knowledge and information
that are not easily traded.
It provides businesses with the opportunity to gain
license to operate through the social legitimacy
they gain and maintain in communities.
Measuring and Valuing Social Capital: A Systematic Review
4
To infuse and leverage social capital engagements:
•
•
•
Businesses should make a conscious effort to build
social capital internally and externally.
As a catalyst for altering behaviour within
companies (e.g. eliminating fraud and corruption
through corporate codes of conduct and values,
encouraging workforce diversity, etc.), creating
competitive advantage, and transforming
communities through corporate social investments
(e.g. education and health services).
Businesses should measure the social capital
they build by utilising questionnaire surveys,
interviews, focus groups, and personal stories
from employees, members of communities, or
stakeholders to:
¡¡ Examine company codes of conduct,
social relationships, structural network
characteristics.
¡¡ Implement measurement tools developed such
as the World Bank’s Integrated Questionnaire
for the Measurement of Social Capital (SC-IQ);
Putnam’s Instrument, World Values Survey
Association’s Social Capital Index.
We examined 314 articles published from 1990 to 2013
in academic and practitioner journals as well as other
sources, such as reports from the World Bank. The
report has four sections: (1) An introduction focusing on
the definitions and forms of social capital, (2) measures
of social capital, (3) the value or impact of social capital,
and (4) recommendations and conclusions. Each
section addresses implications for business leaders.
The report also has three appendices: Appendix A
provides a full report on the methods used for the
search; Appendix B provides a table of all the studies
generated for inclusion in the review; and Appendix C
lists the major social network structure terms used in the
studies.
The introduction focuses on the definitions, forms, and
dimensions of social capital. Social capital refers to the
resources, knowledge, and information that accrue to
an individual, a company or a collective as a result of
the network of social relationships within and between
companies, institutions, and communities. Social capital
is created when individuals and companies:
•
•
•
•
Establish connections and networking relationships
with key stakeholders such as customers, suppliers,
competitors, business partners, local communities,
and government officials and policy makers.
Foster trust with their key stakeholders.
Develop shared norms, common values, and goals
to influence attitudes and behaviour.
Obtain and maintain a social license to operate to
demonstrate their commitment to key stakeholders
such as communities and government.
Social capital has two forms – internal and external.
Internal social capital comes from social networking
relationships and connections among individual
members within a company, a community (e.g.
members of a neighbourhood) or a system (e.g.
members of an association). External social capital,
on the other hand, derives from the social networking
relationships and connections between an individual,
a company, or a community and its key external
stakeholders, as well as among other stakeholders such
as mining communities.
Measuring and Valuing Social Capital: A Systematic Review
5
Both internal and external social capital are categorised
according to three key dimensions – structural,
relational and cognitive. Structural social capital refers
to the structure or pattern of personal and social
networking relationships and connections people
develop with one another. It focuses on whom an
individual reaches, how the individual reaches them,
and the frequency with which the individual shares
resources and information with them. Relational social
capital refers to the personal and social networking
relationships and connections people develop with one
another through a history of interactions. It focuses on
the quality of the relationships and interactions and the
resources or information that are leveraged through
those interactions. Cognitive social capital refers to the
values and perceptions of individuals as they interact
with one another as a collective. It represents the
resources obtained from a common set of goals, a
shared vision and values, and shared representations,
interpretations, and systems of meanings among
individuals.
Chapter 2 outlines the different ways in which social
capital has been measured. Social capital measures
belong to one of four main groups: (i) social networks
(social relationships, interactions, ties and connections);
(ii) trust and reciprocity (trust extended to strangers or
people in general, trust in organisations, and formal
institutions, and trust in people who are familiar to an
individual such as family and friends); (iii) norms and
shared values; and (iv) civic engagement (membership
in professional, ethnic and religious associations,
and participation in civic and political activities).
Social capital has been measured at the levels of
individuals, groups/organisations, and communities.
Thus managers can evaluate their efforts in building
social capital at those levels. The review distinguishes
indicators that have been used effectively to measure
social capital by researchers and international
organisations from those that can potentially be used
by companies. We provide suggestions on how to use
the different indicators. The report further includes a
table of the different indices that have been used to
measure social capital and draws particular attention to
the components of each of the measures so as to guide
decision makers and researchers in their application.
Chapter 3 first presents an overview of social capital
value. The general conclusions from the research
indicate that social capital has value and that this value
persists. Unlike human or financial capital, social capital
cannot be easily traded since the value resides in the
relationships among actors. Detailed examples of how
social capital provides value to individuals, organisations,
and communities are presented here. Although there
are unique benefits from social capital that pertain to
individuals, organisations and communities, the value
of social capital overlaps. For example, the networking
relationships developed by employees of a company
with others outside the organisation might enhance
the skills of those individuals and also contribute to
the human capital within the organisation. A challenge
for decision makers is how to justify investments in
social capital. Investments by a company in building
social capital such as hours spent in engagements with
community associations might lead to reduction in crime
in those communities. This benefits the community. The
company also benefits in terms of its employees feeling
safe in those communities. However, the challenge is
how to assign value to the improved safety felt by the
Measuring and Valuing Social Capital: A Systematic Review
6
company’s employees. This report suggests managerial
actions that might help translate some of the intangible
value propositions into tangible components, to help
with the justification process.
The last chapter presents specific recommendations
aimed at helping decision makers understand the
components, measures and value of social capital.
These recommendations include:
• Use different measures for distinct dimensions
of social capital (structural, relational, and
cognitive). This will enable the impact of the
various dimensions of social capital on individuals,
organisations, or communities to be clearly
identified so as not to mask their value.
• When measuring social capital, distinguish
between the sources or inputs into social capital
and the outcomes from social capital.
• Social capital value persists over time and thus
investments in social capital should recognise the
long-term benefits flowing from them.
• Recognise the importance of context when
measuring social capital. The value of social capital
depends on the context in which the social capital
actions occur. A company might encourage its
employees to participate in civic activities in their
communities and this might enhance the reputation
of the company within the locality. However, in
another community the same engagements might
yield different outcomes.
•
Social capital sometimes leads to the generation of
unfavourable consequences or outcomes and these
have to be recognised. For example, the amount of
effort required to build network ties for employees
within a company can lead to exchange of
knowledge needed for say project implementation.
However, the full benefits of such knowledge
generation and exchange might not be realised if the
ties are such that other members of the company
are denied access to that knowledge.
This report sheds light on what social capital is, how it
is measured and what value it provides to individuals,
organisations and communities. The report is designed
to help managers make the business case to continue
their efforts in building social capital within their
companies and to explore new opportunities for building
social capital.
Measuring and Valuing Social Capital: A Systematic Review
7
chapter 1: introduction
Measuring and Valuing Social Capital: A Systematic Review
8
Social scientists and practitioners have long recognised
the importance of social relationships in organising
and mobilising individuals and communities, and
contributing to the success of organisations and
community projects and initiatives. In recent decades,
the concept of social capital has become one of the
most popular topics in the social sciences, and in
disciplines such as business, sociology, economics,
geography, political science, education, development
studies, and public health (e.g. Acquaah, 2007;
Coleman, 1988; Fukuyama, 1995; Leanna and Pil,
2006; Lee and Kim, 2013; Nahapiet and Ghoshal,
1998; Putnam, 1995). Moreover, the International
Integrated Reporting Council (IIRC) in its reports on
Capitals: Background Report for and The International
Framework, is requiring businesses to prepare
integrated reports which include the need to measure
a company’s social capital initiatives and its value
for the company and society. As a result, business
practitioners who are concerned with assessing the
quality of their relationships with stakeholders, and
those who are increasingly required to report on their
company’s social capital as an input and an output
to the creation of value, are interested in how to
measure and determine the value from social capital.
The interest in social capital from both social scientists
and business practitioners has resulted in a vast
body of literature on definitions, forms, dimensions,
measurement and the value or impact of social capital.
Companies in South Africa are increasingly being
required to examine the impact of social capital as part
of their overall sustainability and integrated reporting
efforts. Thus, organisations, businesses and policy
makers in South Africa and the southern African
community need to understand how to assess the
value of social capital for individuals, companies and
the societies they operate in. Understanding and
measuring social capital will:
•
•
•
Provide opportunities for businesses to explore
the benefits of both formal relationships (e.g.
established relationships between a business
and its suppliers or the government) and informal
relationships (e.g. relationships or engagement
between a business and community leaders.
Enable communities to identify the benefits that
can be derived from the trust, norms and value
systems that exist within communities, and the
relationships they develop with businesses,
non-governmental organisations (NGOs) and
government departments involved in community
development.
Provide opportunities for businesses to use the
connections and relationships they develop with
communities to create social change, inculcate the
idea of sustainability, and address the social needs
of communities.
Measuring and Valuing Social Capital: A Systematic Review
9
Overview of the
Systematic Review
•
•
This Network for Business Sustainability South Africa
(NBS-SA) review provides a synthesis of the literature
on social capital over a 24-year period, from 1990
to 2013. The review focuses on the question: How
can we measure and value social capital for business
decision-making and reporting? More specifically, the
review addresses these questions:
•
•
What is social capital? What are the forms (internal
and external) and dimensions (structural, relational
and cognitive) of social capital?
How has social capital been measured in the
management literature? What can we learn about
the measurement of social capital from disciplines
such as economics, sociology, political science,
education, development studies, etc.?
How has the value of social capital been determined
in the management literature?
How are businesses in South Africa measuring
and evaluating the impact of social capital on their
productive activities and on their communities?
We searched the literature for relevant studies on
social capital through two iterations. First we searched
for studies on social capital in emerging economies
(including Africa, Asia, Latin America, and the Middle
East); then we searched for global studies of social
capital. The studies were then analysed and the various
definitions of social capital, the measurement of social
capital, and the value or impact of social capital were
documented. Overall, a total of 314 studies were
entered into our database. Table 1.1, Studies Generated
by Systematic Review by Disciplinary Area, shows the
number of studies initially identified and the number
retained for the review. Appendix A reports the methods
used for the search, while Appendix B includes a table
Table 1.1
STUDIES GENERATED BY SYSTEMATIC REVIEW BY DISCIPLINARY AREA
TOTAL # ARTICLES/
REPORTS RELEVANT
# NOT
RELEVANT
TOTAL # ARTICLES/
REPORTS
Business (includes management,
marketing, human resources, information
systems, supply chain, operations
management, entrepreneurship, etc.)
156
9
165
Economics
40
6
46
Public Policy (includes political science,
sociology, education, etc.)
61
3
64
Health
18
4
22
Others
39
12
51
TOTAL
314
34
348
DISCIPLINE
Measuring and Valuing Social Capital: A Systematic Review
10
of all the studies that focused on the definition of
social capital, measurement of social capital, and
value/impact of social capital, with a brief summary.
Appendix C includes definitions of the major social
network structure terms used in the studies.
Definitions, Forms and
Dimensions of Social Capital
DEFINITIONS
Social capital has been described as ‘‘the glue that
binds society together’ (Serageldin, 1996: 196).
Although the phenomena underlying social capital,
including social cohesion, solidarity or sense of
community, have been discussed by sociologists for
a long time (Ferlander, 2007), recent interest in the
concept of social capital was kindled by the work
of Bourdieu (1986), Coleman (1988, 1990), Putnam
(1993, 2000), and recently by business practitioner
organisations such as the IIRC, the World Business
Council for Sustainable Development (WBCSD), and
the Global Reporting Initiative (GRI). Bourdieu (1986:
248) defined social capital as “the sum of resources,
actual and virtual, that accrue to an individual or a
group by virtue of possessing a durable network of
institutionalised relationships of mutual acquaintance
and recognition”. Bourdieu’s definition focuses on the
individual and suggests that social capital consists
of the social networks that enable individuals to gain
access to resources possessed by other actors, and
the quantity and quality of those resources.
According to Coleman (1988:S98), social capital “is not
a single entity but a variety of different entities, with two
elements in common: they all consist of some aspect
of social structures, and they facilitate certain actions of
actors-whether persons or corporate actors-within the
structure. Like other forms of capital, social capital is
productive, making possible the achievement of certain
ends that in its absence would not be possible. Like
physical capital and human capital, social capital is
not completely fungible but may be specific to certain
activities. A given form of social capital that is valuable
in facilitating certain actions may be useless or even
harmful for others”. Thus, Coleman sees social capital
as a set of elements that facilitate collective action and
form part of the social structure.
Putnam (1993:7) defined social capital as “the
characteristics of a social organisation, such as trust,
the norms and the networks that may make society
more efficient by facilitating a coordinated form of
action”. He expanded this definition by saying that
social capital is ‘‘a set of horizontal associations among
those who have an effect on a community, and these
can take the form of networks of civic engagement’’
(Putnam, 1993: 35). Putnam’s definition focused on the
collective (or community), and so have the definitions
of social capital provided by institutions such as
the World Bank and the Organisation for Economic
Cooperation and Development (OECD). According to
the World Bank: “Social capital refers to the institutions,
relationships, and norms that shape the quality and
quantity of a society’s social interactions”. The OECD
defines social capital as “networks together with shared
norms, values and understandings that facilitate cooperation within or among groups” (Cote and Healy,
2001: 41).
Measuring and Valuing Social Capital: A Systematic Review
11
However, business practitioner organisations, while
recognising the importance of relationships, networks,
trust, and norms and values also include the ability of
an organisation to obtain and maintain a social license
to operate and the creation of social value or impact
(IIRC, 2013c & d; WBCSD, 2008). Clearly, to conduct
their business activities, companies need the support
and social legitimacy of the constituencies upon which
they depend. The IIRC (2013d: 10) states that “social
and relationship capital may include relationships
within an organisation, as well as those between an
organisation and its external stakeholders”. The IIRC
(2013d) further elaborates its social and relationship
capital definition by stating that it includes the strength
or efficacy of supply chain relationships, community
acceptance, government relations, relationships with
competitors, and the development of customer loyalty.
The building of relationships enables an organisation to
obtain and maintain its social license to operate. Some
of the proxies for the social license to operate include
regulatory compliance and approvals, reputation,
acceptance by customers and cultural groups in
diverse markets with strong environmental, social, and
governance priorities.
While Bourdieu (1986) saw social capital as an
individual (and organisational) resource, Coleman
(1988, 1990), Putnam (1993, 2000), the World Bank
and even the OECD (2001) see it as a collective
(community) resource. So the question is: “Is social
capital an individual or a collective societal resource?”
As Inkeles (2000:247; italics in original) said: “To wit:
whose capital is at issue: that of the individual or
the community?” According to Newton (2001:207),
“If social capital is anything, it is a societal not an
individual property, and should be studied as a social
or collective phenomenon, not at the individual level as
if it were a property of isolated citizens”. Distinguishing
between social capital as an individual or collective
property is important because different indicators would
need to be used to measure it depending on which it is,
and also its impact on society would be different. Both
the UK government (Office of National Statistics [ONS],
2001) and the Australian Bureau of Statistics [ABS]
(2004) have adopted the OECD definition for purposes
of international comparison.
Some definitional preferences are based on disciplinary
areas of interest. Adler and Kwon (2002) define social
capital broadly as the goodwill available to individuals
or groups that is derived from the structure and
content of an actor’s social relations, while Nahapiet
and Ghoshal (1998, p. 243) define social capital as
“the sum of actual and potential resources embedded
within, available through, and derived from the
network of relationships possessed by individuals
or social units”. Both these definitions borrow from
the ones from Bourdeiu (1986) and Putnam (1993).
Business disciplines usually prefer these definitions
provided by Alder and Kwon (2002) and Nahapiet
and Ghoshal (1998). Sociologists prefer Coleman
(1988), while those in economics, political science,
public health and various government agencies and
international organisations usually use the one by
Putnam (1993, 2000). It should also be noted that
business practitioners prefer a broader definition which
includes the individual, organisation and community
with a focus on the social license to operate. Despite
the multiple definitions of social capital, most involve
social networks (structure and connections), trust,
norms (of reciprocity) and values, and the social license
to operate in a community. It has been suggested by
Measuring and Valuing Social Capital: A Systematic Review
12
Narayan and Cassidy (2001) that, in general, there is a high level of consistency in the definitions of social capital:
social capital is broadly seen as the resources, knowledge and information that accrue to an individual, organisation
or a collective as a result of a network of social relationships within and between organisations, institutions and
communities (Lin, 2001). The definition and determinants of social capital are illustrated in Figure 1.1.
Figure 1.1
DETERMINANTS AND DEFINITION OF SOCIAL CAPITAL
Determinants
Definition
Social Networks
(relationships, ties and
connections)
Obtain and maintain
social license to operate
Shared norms, values and
social structures
Social capital: Ability to
secure or obtain assets
or resources, knowledge,
and information by
an individual, group,
organisation or community
for its benefit through
social networks, trust,
shared norms, and license
to operate.
Trust and
Reciprocity
Measuring and Valuing Social Capital: A Systematic Review
13
Thus, social capital could be differentiated from other sources of capital such as
human capital, natural capital, manufactured capital and financial capital, but also
share some similarities with those capital forms. Figure 1.2 shows social capital’s
relationship with the other forms of capital (see insert for the definitions of the
other forms of capital). The relationship between social capital and the other
forms of capital are detailed below. Social capital:
• Is closely linked to natural capital, because it is based on relationships
between people and groups, who in turn rely on the natural environment.
• Facilitates the development of intellectual capital by influencing the
conditions necessary for relationship building, and the exchange and
combination of ideas and knowledge.
• Is instrumental in the development of human capital in companies through
educational experiences and social interactions with other employees.
• Influences the creation of financial capital by increasing profitability, market
share, sales growth, operational efficiency, etc.
• Assists in the acquisition, management and use of manufactured capital
through the shared norms, value systems, goals, and social relationships
with external stakeholders.
Figure 1.2
RELATIONSHIP AMONG THE CAPITALS
Natural Capital
Social Capital
Financial Capital and
Manufactured Capital
Human
Capital
Intellectual
Capital
Measuring and Valuing Social Capital: A Systematic Review
Other Forms of Capital
In addition to social capital, companies
depend on other forms of capital to create
value, according to the International
Integrated Reporting Framework. The
capital forms are natural, financial,
manufactured, intellectual, and human.
• Natural capital refers to all the
renewable and non-renewable
resources in the natural environment
that are used to support the business
activities and create value for a
company. It includes; land, minerals,
water, air, and forest resources.
• Financial capital refers to the
available pool of monetary resources
used for the production of goods
and the provision of services in a
company’s value creation process. It
includes funds obtained from retained
earnings, in addition to debt and
equity financing.
• Manufactured capital refers to the
manufactured physical objects that a
company uses for the production of
goods and the provision of services in
its value creation process. It includes
physical assets such as; buildings,
machinery and equipment.
• Intellectual capital refers to intangible
knowledge-based capabilities of a
company that are used to create
value. It includes; intellectual property
(e.g. patents and copyright), and
company and brand reputation.
• Human capital refers to the
competencies, capabilities, skills,
expertise and experiences of
employees in a company that are
used to create value for the company.
14
The similarities and differences between social capital and other forms of capital are summarised in Table 1.2.
Table 1.2
SOCIAL CAPITAL AND OTHER FORMS OF CAPITAL
HOW SOCIAL CAPITAL IS THE SAME AS OTHER
FORMS OF CAPITAL
HOW IS SOCIAL CAPITAL DIFFERENT FROM OTHER
FORMS OF CAPITAL
•
•
•
•
•
Social Capital:
• Requires relationships between and among individuals and
groups
• Depends on the interaction of social, political, cultural and
economic factors
• Cannot be sold or traded
• Is not easily alienable from organisations or groups
• Is not subject to market exchanges
• Is not tangible
• Is characterised by unspecified obligations and an uncertain
time horizon
• Does not diminish or depreciate with use, but appreciates
with use
It is a resource or an asset
It is not costless to produce, it requires an investment
It provides value
The value persists
Can be reduced to economic capital in the long run
FORMS AND DIMENSIONS OF SOCIAL CAPITAL
Social capital is divided into the two categories of
internal social capital and external social capital
based on where actors obtain their social capital
resources. Internal social capital comes from social
network structures and connections or ties among
individual members of an organisation (e.g. employees
in a company), a community (e.g. members of a
neighbourhood) or a system (e.g. members of an
association) (Acquaah, 2011; Adler and Kwon, 2002;
Leana and Pil, 2006). External social capital, on the
other hand, derives from the social network structures
and connections between an actor, organisation, or
a community and its important external stakeholders
(e.g. an organisation’s relationship with its customers,
suppliers, competitors. A community’s relationship with
government officials, or a community’s relationship with
other communities).
There is also a general consensus that both internal
and external social capital can be classified in three
dimensions – structural, relational, and cognitive.
Structural social capital refers to “what people
do (associational links, networks) which could be
objectively verified (by observation or records)”
(Harpham, 2008: 51). Structural social capital thus
refers to the structure or pattern of connections
between actors – whom you reach, how you reach
them, and how frequently you share resources
and information (Nahapiet and Ghoshal, 1998).
Relational social capital “describes the kind of
personal relationships people have developed
with each other through a history of interactions”
Measuring and Valuing Social Capital: A Systematic Review
15
(Nahapiet and Ghoshal, 1998: 244). Relational social
capital focuses on the quality of the relationship or
interactions and the resources that are created or
leveraged through the relationships. Its attributes
include trust, trustworthiness, respect and friendship.
Cognitive social capital refers to “what people feel
(values and perceptions)” (Harpham 2008: 51). It
represents resources obtained from a common set of
goals, a shared vision, and shared representations,
interpretations, and systems of meaning among
parties. The dimensions of social capital are depicted in
Figure 1.3.
The social networks and ties embedded in the
structural and relational dimensions of social capital
have been further classified based on the strength and
diversity of the ties (bonding, bridging and linking), the
direction of the ties (horizontal and vertical) and the
formality of the ties (formal and informal). Bonding social
capital refers to horizontal, tightly cohesive ties between
individuals or groups sharing similar demographic
characteristics. It is characterised by homogeneous
networks, which tend to be inward-looking (e.g.
attending the same church or educational institution).
Bridging social capital, on the other hand, refers to ties
Figure 1.3
DIMENSIONS OF SOCIAL CAPITAL
Social
Capital
Structural:
Pattern of
connections
and networks
among actors
Relational:
Relationships
and interactions
due to trust
among actors
Cognitive:
Shared goals
and values
among actors
Measuring and Valuing Social Capital: A Systematic Review
16
that cut across different individuals and communities.
This type of social capital is based on heterogeneous
and outward-looking connections with individuals
from different social groups (e.g. relationship between
managers in two organisations) (Ferlander, 2007).
Linking social capital refers to vertical ties that span
different power relationships, connecting individuals
across different vertical social strata (e.g. relationships
between the subordinate employees in a company and
the top executives of that company) (Woolcock, 2001).
Linking social capital is commonly associated with
external connections and ties rather than internal ties.
Examples of bonding, bridging and linking social capital
with strong and weak ties are shown in Table 1.3, while
examples of formal and informal ties are presented in
Table 1.4.
Table 1.3
SOCIAL CAPITAL AND OTHER FORMS OF CAPITAL
WEAK TIES
LEVEL OF STRENGTH AND
DIVERSITY
STRONG TIES
Bonding (horizontal) ties
Close friends or immediate family with similar Members with similar interests or social
social characteristics, e.g. social class or characteristics within voluntary associations
religion
Bridging (horizontal) ties
Close friends or immediate family with Acquaintances and members with different
different social characteristics, e.g. age, social characteristics within voluntary
gender or ethnicity
associations
Linking (Vertical) ties
Close work colleagues
hierarchical positions
with
different Distant colleagues with different hierarchical
positions and ties between citizens and civil
servants
Source: Ferlander (2007)
Table 1.4
EXAMPLES OF LEVELS OF FORMALITY AND DIRECTION OF NETWORK TIES
LEVEL OF FORMALITY AND
DIRECTION OF TIES
FORMAL TIES
INFORMAL TIES
Horizontal ties
Voluntary associations
Family, relatives, friends, neighbors and
colleagues
Vertical ties
The church, work hierarchies and Criminal networks, clan relations and street
network ties between citizens and civil gangs
servants
Source: Ferlander (2007)
Measuring and Valuing Social Capital: A Systematic Review
17
Why Managers Should Care
about the Definitions, Forms
and Dimensions of Social
Capital
Understanding the definitions, forms and dimensions
of social capital can help managers decide where
to concentrate when developing social capital. First,
managers need to know whether a particular form
of social capital is individual (and organisational) or
collective and community-based. Collective Social
capital can be used to engage communities in activities
of the organisation such as marketing campaigns,
social responsibility and/or social investment initiatives.
Social capital which is individual (and organisational)
can be used within an organisation to develop the skills
and capabilities of employees and for this information
to be shared among employees. Managers also need
to know whether to focus on internal or external
social capital, or both. For example, by focusing on
internal social capital, managers can emphasise to
employees the importance of the norms, values and
culture of the organisation, develop social cohesiveness
among employees, and facilitate employee buy-in and
commitment to corporate goals and objectives. Looking
at external social capital, on the other hand, managers
can decide where to source the resources, knowledge,
and information they do not have but require for their
success, for example, from their relationships with
stakeholders such as suppliers, government officials
and/or community leaders. Finally, understanding the
different dimensions of social capital enables managers
to recognise their relationships or impact on employees,
the organisation’s activities or the organisation’s
relationship with its community.
Measuring and Valuing Social Capital: A Systematic Review
18
Case Study 1: Labour Unrest in South Africa’s Platinum Industry
The labour unrest in the South African platinum industry that led to the tragic killing of 34 people at
Marikana in August 2012, and subsequently contributed to the longest strike in South Africa’s history in
2014, may be interpreted through a social capital lens. This is based on analyses of mining managements’
relations with workers, surrounding communities and other stakeholders, as described in company public
reports and public analyses that have been endorsed by mining companies. In particular, there are at least
two kinds of relationships that deteriorated systematically in the lead-up to the recent unrests, which may
have been identified and addressed earlier by applying a systematic approach to social capital.
First, mining managements’ relationship with workers, particularly the rock drillers, had become less and
less direct because of a reliance on intermediaries in the form of union representatives or contractors.
As a result, middle and senior managers became increasingly isolated from the grievances and growing
distrust among these workers. This includes managers’ general lack of knowledge of workers increasingly
precarious financial situation, premised in large part on their exposure to unsecured loan providers
and emolument orders. A social capital analysis might have indicated earlier on that there are ‘holes’ in
managers’ network relationships with workers and that these holes contributed to a lack of pertinent
knowledge and necessary trust.
Second, managers arguably paid insufficient attention to the relationship between workers and the
dominant union, the National Union of Mineworkers. As this relationship deteriorated, rivalry between the
incumbent and a new contender created crucial challenges for management. That is, not just relationships
of employees or the organisation are vital for effective management, but also of third parties. The
challenges faced by mining companies with regard to conflicts between rival factions within communities,
or between municipalities and traditional authorities, provide further examples of this. As noted above with
regard to measures of network shape, a social capital analysis would focus attention on these third party
relationships and ways in which the company could seek to support more conducive network dynamics.
Source: Prepared for this report by Ralph Hamann (NBS:SA; UCT GSB)
Measuring and Valuing Social Capital: A Systematic Review
19
Content and Organisation of
the Report
The rest of the report is organized as follows:
• Chapter 2 discusses the measures of social
capital that have been used in the literature at the
various methods of analysis and concludes with a
proposed model for measuring social capital at the
various levels.
• Chapter 3 explores value and/or impact of social
capital activities of organisations and communities
at the various levels. We conclude with a model to
classify the literature reviewed into different levels of
analysis with regard to value and impact of social
capital.
• Chapter 4 presents the recommendations for
measuring social capital and how to identify
the value and/or impact of social capital. The
conclusion of the report is also presented in this
chapter.
• Appendix A provides greater detail on the
methodology used for the systematic review.
• Appendix B provides a table summarising the
studies used for the systematic review, with a focus
on the definition of social capital, the measure used
and the value or impact identified.
• Appendix C provides the definitions of the major
social network structure terms.
Measuring and Valuing Social Capital: A Systematic Review
20
chapter 2: the measurement
of social capital
Measuring and Valuing Social Capital: A Systematic Review
21
Approaches to Measuring
Social Capital
The abstract nature of social capital and difficulty in
agreeing on its definition poses a challenge to universal
means of measurement. Measurement of social capital
depends in part on the way in which it is defined,
conceptualised and applied to social phenomena.
The approaches used to measure social capital also
depend on the disciplinary focus of the measurement
(e.g. economics, sociology, management, health, etc.),
the dimensions of social capital (structural, relational,
and cognitive), and the level of analysis (individual,
group and organisational, community and national).
Measurement of social capital also varies depending
on the interests of researchers and “whether they focus
on the substance, the sources, or the effects of social
capital” (Adler and Kwon 2002: 19).
Generally, measures of the structural dimension of
social capital have emphasised the pattern of the
connections between an individual and his or her
network of acquaintances, while measures of the
relational dimension of social capital emphasise
the nature and quality of the interactions and
relationships among individuals. Measures of the
cognitive dimension of social capital focus on shared
representations, goals, norms, values and reciprocity.
Social capital has been described and measured
with so many items such that many researchers have
argued for the separation of items that indicate the
sources or determinants from those that represent
outcomes. Woolcock (1998) stated that social capital
should be identified by its source or determinants (e.g.
social ties or social networks) rather than its effects or
outcomes (e.g. resources). Laursen et al. (2007) noted
that there are several problems in measuring social
capital because of a lack of clear distinctions between
the sources (or determinants) and the consequences
(or outcomes) of social capital. For example, Narayan
and Cassidy (2001) argue that some of the proxies
that have been used to measure social capital such as
political engagement, safety and security, and social
cohesion are actually outcomes of social capital.
In empirical studies, social capital quantitative measures
of social capital have primarily been applied. For
instance many researchers have relied on surveys
and resulting social capital indexes developed by
individual researchers, international organisations
such as the World Bank and Organisation for
Economic Co-operation and Development, and thinkthanks such as the World Values Survey Association
(www.worldvaluessurvey.org) for the purpose of
measurement and comparison. Specific approaches
to measuring social capital have ranged from simply
using one indicator (e.g. social networks) to using
complicated groups of indexes. Research suggests
that the measurement of social capital reflects a multidimensional nature, and the various components could
be summarised into four broad categories:
•
•
•
•
Networks, relationships and connections
Trust
Civic engagement and voluntary activities
(including cooperation, political participation,
social participation, associational memberships,
community volunteerism, etc.)
Civic norms, shared norms and values
Measuring and Valuing Social Capital: A Systematic Review
22
Table 2.1 summarises the studies by level of analysis
(i.e. focusing on individuals, group and organisations,
and community or nation) and how social capital was
measured. Most of the studies were conducted at the
group and organisation level, although both individual
and community/national level studies have also
received considerable attention. Networks, relationships
and connections were used about twice as often as the
next most common indicator, trust. The four categories
with details of items used to measure them are shown
in Table 2.1.
Individual Level Measures
At the individual level, social capital is usually measured
by questionnaire surveys using indicators that tap
into social connections, social networks and social
support. The structural dimension of social capital has
been measured using degree of trust, social network
structure and position (e.g. network centrality, network
size, network density, betweenness centrality, network
homogeneity/heterogeneity, homophily/heterophily,
network constraint, tie strength, structural holes,
etc.), number of network memberships, association
memberships and social participation, social connections
and relationships (e.g. bonding ties, bridging ties, linking
ties, connectivity, etc.), and the quantity or volume of
social resources (Bourdieu, 1986). Measurement of the
relational dimension of social capital has focused on
social networking and relationships, and on trust. The
aspects assessed have included; social interactions,
social relationships, social networking, social support,
social cohesion, and associability. Cognitive social
capital has been measured using indicators focusing
on general and interpersonal trust, shared goals,
shared culture, reciprocity, feelings of safety, and
Table 2.1
STUDIES BY LEVEL OF ANALYSIS AND THE WAY SOCIAL CAPITAL WAS MEASURED
FOCUS OF STUDY/LEVEL
OF ANALYSIS
NUMBER OF STUDIES
THE WAY SOCIAL CAPITAL
WAS MEASURED
NUMBER OF STUDIES*
Community and national
71
Network, relationships and
connections
274
Groups and organisations
160
Trust
136
Individual
83
Civic engagement and
voluntary activities
79
Civic norms, shared norms and
values
59
Others (e.g. resources)
14
TOTAL
314
562
* Several studies have used multiple indicators to measure social capital.
Measuring and Valuing Social Capital: A Systematic Review
23
Figure 2.1
COMPONENTS OF MEASURES OF SOCIAL CAPITAL
Measurement of Social Capital
Structural Dimension
Network
Structure
•
•
•
Network
diversity
Network
density
Network
size, etc.
Relational Dimension
Cognitive Dimension
Civic Engagement
Social Cohesion
Norms and Values
•
•
•
•
•
Assoc.
Member
Volunteerism
Civic and
political
participation
•
•
Social
interaction
Neighborhood
cohesion
Togetherness
•
•
•
•
Trust
Social Networks
Trust
•
•
•
•
•
•
•
•
General
Institutional
Interpersonal
views of multiculturalism to gauge the individual’s
tolerance of diversity. Measurement of social capital
is less problematic at the individual level given greater
specificity of the indicators, which are derived from
social network research. Table 2.2 presents the
indicators that have been used to measure social
capital at the various levels of analysis. The definitions
Bonding relationships
Bridging relationships
Linking relationships
Shared emotional
connection
Social support
Collective goals
Affective bonds
Civic norms
Interpersonal
Reciprocity
of the major measures of social capital are provided in
Appendix C.
A study undertaken at the individual level using data
from Africa illustrates how social capital is measured
at this level. The study examined the associations
between social capital and several health variables:
Measuring and Valuing Social Capital: A Systematic Review
24
Table 2.2
MAJOR MEASURES OF SOCIAL CAPITAL AT DIFFERENT LEVELS OF ANALYSIS
LEVEL OF
ANALYSIS
DATA COLLECTION
METHOD
TYPE OF SOCIAL CAPITAL
STRUCTURAL
Individual
Group and
Organisation
Questionnaire
Surveys
Trust and solidarity (general and institutional)
Network structure (number of links, position, network centrality,
network size, network density, betweenness centrality, network
homogeneity/heterogeneity, homophily/heterophily, network constraint,
tie strength, structural holes)
Network ties (bonding, bridging, & linking, connectivity, etc.)
Association membership and volunteer activities (social
participation, civic engagement, political participation, etc.)
Statistical Indicators/
Archival Data and
Surveys (e.g. World
Values Survey, World
Bank Surveys, etc.)
Trust (general and institutional)
Questionnaire
Surveys
RELATIONAL
COGNITIVE
Trust in relationship (confidence level)
Sociability or social interaction
Social relationship
Social networks and interactions
(bonding, bridging, linking)
Social support
Social cohesion
Associability
Trust (general and inter-personal)
Reciprocity
Feeling of safety
Shared goals
Shared culture
Views on multiculturalism
(tolerance of diversity)
Association membership & Institutional links (trade group
memberships, network links)
Network characteristics (network links, centrality, number of links,
density)
Network ties (bonding ties, bridging ties , linking ties, strength of ties)
Social relationships (relationship quality,
closeness, communication frequency,
bonding ties, bridging ties and linking
ties, etc.)
Social connections and ties (networking
relationships, social networks & links,
interpersonal relationships, network ties,
and connections with formal & informal
leaders, etc.)
Relational trust
Trust
Integrity
Attitudes & beliefs
Emotional intensity & reciprocity
Shared cognition (common goals,
values and alignment)
Shared norms, values and
obligations
Shared goals
Shared knowledge
Shared vision
Shared purpose
Collective goals and mission
Questionnaire
Surveys
Trust (general and Institutional)
Association membership and volunteer activities (social
participation, civic engagement, political participation)
Civic norms and values (norms of reciprocity, obligations)
Social relationship Index (Access to
emotional support, access to rational
support, and access to material support)
Social cohesion (social interaction)
Informal social control
Neighborhood cohesion (social
interaction)
Togetherness
Social networks
Statistical Indicators/
Archival Data and
Surveys (e.g. World
Values Survey, World
Bank Surveys, etc.)
Trust (general , specialized, social, institutional)
Trustworthiness
Network characteristics (density, intra-community ties or strong ties,
bonding, bridging and linking, and inter-community ties or weak ties)
Association membership, community engagement and voluntary
activities (community volunteerism, informal sociability, community
organisational life, engagement in public affairs, civic engagement,
political participation, social participation, safety, neighborhood
connections, family & friend connections, tolerance of diversity, value
of life, work connections)
Trust
Association membership (informal
sociability, neighborhood connections,
family and friend connections, work
connections)
Togetherness
Statistical Indicators/
Archival Data and
Surveys (e.g. World
Values Survey, World
Bank Surveys, etc.)
Community
and Nation
Measuring and Valuing Social Capital: A Systematic Review
Civic norms and reciprocity
Perceptions of inter-personal trust
Trust
Views on multiculturalism
(tolerance of diversity) Perceptions
of safety after dark
Shared emotional connection
Social support (emotional,
instrumental, informational)
Affective bonds
Collective goals
25
self-rated health, depressive symptoms, cognitive
functioning and physical inactivity, in a sample of 3840
older South Africans (aged 50+) in 2008 (Ramlagan,
Peltzer, and Phaswana-Mafuya, 2013). The study
assessed social capital using six measures, which
were mostly structural measures derived from an index
created by Putnam (2000):
•
•
•
•
Marital status – Married or cohabiting vs. never
married, divorced, separated, widowed;
Social action – Four items (questions): “How
often in the last 12 months have you (a) worked
with other people in your neighbourhood to fix
or improve something? (b) attended any public
meeting in which there was discussion of local or
school affairs? (c) met personally with someone you
consider to be a community leader? (d) attended
any group, club, society, union or organisational
meeting?” Response options ranged from 1 =
never to 5 = daily.
Sociability – Four items (questions): “How often in
the last 12 months have you (a) been in the home
of someone who lives in a different neighbourhood
than you do or had them in your home? (b) had
friends over to your home? (c) socialised with coworkers outside working hours? (d) left the house/
your dwelling to attend social meetings, activities,
programs or events or to visit friends or relatives?”
Response options ranged from 1 = never to 5 =
daily.
Trust and solidarity – Five items (questions), used
to create a trust and solidarity index: “(a) Generally
speaking, would you say that most people can be
trusted or that you can’t be too careful in dealing
•
•
with people? (Yes or No); (b) Do you have someone
you can trust and confide in? (Yes or No); (c)
First, think about people in your neighbourhood;
generally speaking, would you say that you can
trust them…? (d) Now, think about people with
whom you work with; generally speaking, would
you say that you can trust them …? (e) And how
about strangers? Generally speaking, would you
say that you can trust them …?” Questions (c) to (e)
response options were: 1 = to a very great extent
to 5 = to a very small extent.
Safety – Three items (questions) used to create a
safety index: “(a) In general, how safe from crime
and violence do you feel when you are alone at
home? (b) How safe do you feel when walking
down your street alone after dark? (c) In the last
12 months, have you or anyone in your household
been the victim of a violent crime, such as assault
or mugging?” (Yes or No). Response options for (a)
and (b) ranged from 1 = completely safe to 5 not
safe at all.
Civic engagement – Three items (questions) used
to create a civic engagement index: “(a) How
much say do you have in getting the government
to address issues that interest you?” Response
options were 1 = unlimited say to 5 = no say at
all; (b)” How interested would you say you are in
politics and national affairs? Would you say you are
…..?” (1 = Very interested to 5 =Very uninterested);
(c) “A lot of people find it difficult to get out and
vote; did you vote in the last state/national/
presidential election?” (Yes or No).
Measuring and Valuing Social Capital: A Systematic Review
26
Group and Organisation Level
Measures
The indicators used to measure social capital at the
group and organisation level are similar to those used
at the individual level. However, the emphasis here
is on the role of executive leadership in developing
relationships for the group or organisation. Most of
these measures have involved questionnaire surveys;
however, a few studies have relied on objective data.
The measures have looked primarily at the structural
and relational dimensions of social capital. The
structural dimensions that have been examined include
network structural characteristics (e.g. network links,
network centrality, network density, network diversity,
network size, network frequency, network redundancy,
institutional network, etc.); network ties (strong ties,
weak ties, government officials ties, tie strength,
bonding ties, bridging ties, linking ties, structural holes,
etc.); association membership and institutional links;
and trust. The relational dimension of social capital
has been examined by measures that focus on social
networking relationships and trust. They include
social connections and ties with close acquaintances
(e.g. family members, and colleagues at work), and
various external stakeholders (e.g. executives from
other businesses, board members, political leaders,
government bureaucratic officials, and community
leaders); interpersonal trust and trust. The distinction
between structural networks and relational networks
is not very clear: the same measures may be labeled
structural or relational depending on the researcher. For
example, bonding, bridging and linking relationships
are measured as both structural and relational social
capital. The indicators used to measure cognitive
social capital are mostly attitudinal and value-based
and include shared norms, values and obligations;
reciprocity; shared goals and mission; and attitudes and
beliefs.
A study conducted at the firm-level using data from
Africa illustrates how social capital is measured
at the organisational level. The study examined
the relationship between managerial social capital
and organisational performance using data from
organisations in Ghana (Acquaah, 2007). Social capital
was assessed by questionnaire using three items to
measure relational social capital. The items focused on
the extent to which they were used by top management
to access resources, information and knowledge for
their companies (response options ranged from 1 =
“Very little” to 7 = “Very extensive”):
(1) Personal and social networking relationships with
top managers at other firms (social capital from top
managers at other firms)
• Relationships with suppliers
• Relationships with buyers
• Relationships with customers
(2) Personal and social networking relationships with
government officials (social capital from government
officials)
• Relationships with city council executives
• Relationships with district council executives
• Relationships with regional government politicians
and executives
• Relationships with national government politicians
and executives
Measuring and Valuing Social Capital: A Systematic Review
27
•
Relationships with officials in regulatory and
supporting institutions (e.g. Standards Board,
Internal Revenue Service, Central Bank,
Environmental Protection Agency)
• Relationships with officials in investment and
industrial institutions (e.g. Investment Board, Export
Promotion Council, Stock Exchange)
(3) Personal and social networking relationships with
community leaders (social capital from community
leaders)
• Relationships with local kings, chiefs and/or their
representatives
• Relationships with leaders of religious organisations
(e.g. pastors, priests, imams)
These indicators of relational social capital were mostly
external.
Community and National
(Country) Level Measures
Studies on community and national or country level
measures of social capital view it as a multidimensional
and ‘collectivity-owned capital’ (Bourdieu, 1986: 249)
or as a community level resource (Putnam, 1993) that
is embedded in networks of mutual acquaintance and
recognition in communities. Social capital measures
in community or national level studies have not
generally examined the dimensions of social capital
separately but have used indexes incorporating
many or all dimensions of social capital. However,
the items in the indexes have been primarily from the
structural dimension and have included trust (general
and institutional), trustworthiness, network structural
characteristics (e.g. network density, strong ties,
weak ties, intra-community ties, etc.), association
membership and community engagement, and
voluntary activities (e.g. community volunteerism, civic
engagement, social and political participation, etc.).
Measures used to describe relational social capital have
focused on social relationships, social cohesion, and
social interactions. Measures used for cognitive social
capital have emphasised civic norms, reciprocity, trust,
social support, affective bonds and collective goals.
Measurement of social capital at the community or
national level has relied both on survey questionnaires
and the use of “secondary analysis of individual level
survey datasets not collected specifically to measure
social capital, aggregated to community, state, or even
national level” (Baum and Ziersch, 2003: 322). Some
of the datasets are from the World Values Survey, the
European Values Survey, the General Social Survey, and
the Index of National Civic Health in the US. There have
been other surveys designed specifically to measure
social capital by creating indexes such as Putnam’s
Social Capital Index, the New South Wales Study in
Australia, World Bank’s Social Capital Assessment
Tool, etc. Table 2.3 presents some of the indexes that
have been created to measure social capital at the
community or national level, with the components of
the indexes.
One of the most popular indexes used in measuring
social capital at the community or national level is
Putnam’s Social Capital Instrument (Putnam, 2000).
Putnam’s index was designed to measure social capital
at state and national levels in the US using social
surveys (e.g. General Social Surveys) and administrative
data (US Statistical Abstract, US Commerce
Department) for the period 1974-1994. The index
Measuring and Valuing Social Capital: A Systematic Review
28
Table 2.3
INDEXES USED TO MEASURE SOCIAL CAPITAL
INDEX
SOURCE AND YEAR
COMPONENTS
World Values Survey (WVS) (Includes
the European Values Survey)
TInglehart (1997);
http://www.
worldvaluessurvey.org
Social capital index (SCI)
•
General trust
•
Institutionalised trust
•
Membership in associations
•
Civic norms
Putnam’s Social Capital Index
Instrument
Putnam (2000)
•
•
•
•
•
Community organisational life
Engagement in public affairs
Community volunteerism
Informal sociability
Social trust
General Social Survey (GSS)
National Opinion Research
Center, University of Chicago
(Biennial Survey)
•
Trust (“Generally speaking, would you say that most people can be trusted or that
you can’t be too careful in dealing with people?”)
Fairness (“Do you think most people would try to take advantage of you if they got
a chance, or would they try to be fair?”)
Helpfulness (“Would you say that most of the time people try to be helpful, or that
they are mostly just looking out for themselves?”)
•
•
Global Social Capital Survey
Narayan and Cassidy (2001)
•
•
•
•
•
•
•
Group characteristics (including association membership)
Generalized norms
Togetherness
Everyday sociability
Neighborhood connections and community participation
Volunteerism
Trust (including institutional trust)
New South Wales Study
Onyx and Bullen (2000)
•
•
•
•
•
•
•
•
Participation in local community
Proactivity in social context
Feelings of trust and safety
Neighborhood connections
Family and friends connections
Tolerance of diversity
Value of life
Work connections
The Barometer of Social Capital
Sudarsky (1999)
•
•
•
•
•
•
•
•
Institutional trust
Civic participation
Mutuality and reciprocity
Horizontal relationships
Hierarchy
Social control
Civic republicanism
Political participation
Index of National Civic Health in
the US
National Commission on
Civic Renewal (1996)
•
•
•
•
•
•
•
•
Participation in local community
Proactivity in social context
Feelings of trust and safety
Neighborhood connections
Family and friends connections
Tolerance of diversity
Value of life
Work connections
Aspects of Social Capital
Harpham (2003)
•
•
•
•
Extent of and participation in formal and informal organisations
Information, emotional and instrumental support from networks
Perceived trust and reciprocity
Shared norms
Measuring and Valuing Social Capital: A Systematic Review
29
University of Minnesota Scale
Scheffert, Horntvedt, and
Chazdon (2009)
•
•
•
•
•
•
•
Bonding engagement
Bonding trust
Bridging engagement
Bridging trust
Linking engagement
Linking trust
Efficacy
World Bank’s Social Capital
Assessment Tool (SOCAT)
Grootaert and Van Bastelaer
(2002)
Structural social capital
•
Membership in local associations (number of association memberships, internal
heterogeneity, extent of democratic decision-making)
•
networks (scope of networks, internal diversity of network membership)
Cognitive social capital
•
Indicators of trust (expectations of trust; behavior requiring trust)
•
Adherence to norms
Social cohesion
•
Indicator of collective action (voluntary co-operation)
Adapted Social Capital Assessment
Tool (A-SCAT)
Harpham, Grant and Thomas
(2002)
Structural (Connectedness)
•
Participation in organisations
•
Institutional linkages (connection to services, facilities and organisations)
•
Frequency of general collective action
•
Specific collective actions (whether people get together to address named
hypothetical situations)
•
Degree of citizenship (whether respondent has voted/campaigned/taken part in
other neighborhood or city-wide activity)
•
Links to groups with resources (such as local government or aid agencies)
•
Links to parallel groups (namely other communities)
Cognitive (Reciprocity, sharing, trust)
•
General social support
•
Emotional support (enabling people to ‘feel’ things)
•
Instrumental support (enabling people to ‘do’ things)
•
Informational support (enabling people to ‘know’ things)
•
Trust
•
Fellow feeling
•
Reciprocity and co-operation
•
Social harmony
•
Sense of belonging
•
Perceived fairness (would people in the community take advantage of others)
•
Perceived social responsibility (would others in the community return lost items)
World Bank Integrated Questionnaire
for the Measurement of Social
Capital (SC-IQ)
Grootaert, Narayan, Jones,
and Woolcock (2004)
•
•
•
•
•
•
Social Capital Measurement Tool
(SCMT)
Kitchen, Williams and Simone
(2012)
Social capital perceptions
•
Safety after dark
•
Inter-personal trust
•
Accessibility to help
•
Views of multiculturalism
Social capital actions
•
Volunteering
•
Municipal voting
Social Relationship Index
Wilson (2006)
•
•
•
Access to emotional support
Access to rational support
Access to material support
The UK Social Capital Measurement
Framework
Harper and Kelly (2003)
•
•
•
•
•
Social participation
Civic participation
Social networks and social support
Reciprocity and trust
Views of the local area
Groups and networks
Trust and solidarity
Collective action and co-operation
Social cohesion and inclusion
Information and communication
Empowerment and political action
Measuring and Valuing Social Capital: A Systematic Review
30
was based on Putnam’s five principal components
of social capital (Putnam, 1993): (1) community
networks, voluntary, state, personal networks, and
density; (2) civic engagement, participation, and use
of civic networks; (3) local civic identity—sense of
belonging, solidarity, and equality with other members;
(4) reciprocity and norms of cooperation – a sense of
obligation to help others and confidence for assistance
in return; and (5) trust in the community. The index
components were as follows:
(5) Social trust
• Agree that “Most people can be trusted”
• Agree that “Most people are honest”
(1) Community organisational life
• Percentage serving on committee of local
organisation in the last year
• Percentage serving as officer of some club or
organisation in the last year
• Mean number of club meetings attended in last
year
• Mean number of group memberships
• Civic and social organisation per 1000 population
(2) Engagement in public affairs
• Turnout in presidential elections, 1988 and 1992
• Percentage attending public meeting on town or
school affairs in last year
(3) Community volunteerism
• Number of nonprofit organisations per 1000
population
• Mean number of times worked on community
projects last year
• Mean number of times did volunteer work in last
year
(4) Informal sociability
• Agree that “I spend a lot of time visiting friends”
• Mean number of times entertained in home last
year
A second popular index was developed by the World
Bank. It has led the effort to understand the role of
social capital in community and economic development
in developing countries. The World Bank views social
capital as a tool which can be used to understand the
causes, manifestations, and consequences of poverty
and enhance development in these countries. It has,
therefore, been developing ways to measure social
capital, including the Global Social Capital Survey
(GSCS) (Narayan and Cassidy, 2001), the Social
Capital Assessment Tool (SOCAT) (Grootaert and Van
Bastelaer, 2002), and the Integrated Questionnaire for
the Measurement of Social Capital (SC-IQ) (Grootaert et
al., 2004). SC-IQ integrates the information in GSCS and
SOCAT and is designed to “provide a core set of survey
questions for those interested in generating quantitative
data on various dimensions of social capital as part of a
larger household survey” (Grootaert et al., 2004: 1). The
World Bank pilot-tested the SC-IQ in Albania and Nigeria
and identified six key dimensions of social capital:
groups and networks; trust and solidarity; collective
action and cooperation; information and communication;
social cohesion and inclusion; and empowerment and
political action. Not all of the dimensions are clearly
The community/national level measures were obtained
either by aggregating individual or household responses
to form a collective response or by using archival
information. Thus Putnam’s (2000) index of social capital
has been called a hybrid measure of community-level
social capital (Lee and Kim, 2013).
Measuring and Valuing Social Capital: A Systematic Review
31
sources of social capital; rather, some transcend
social capital. For instance, Grootaert et al. (2004:14)
suggest that “empowerment is thus a broader concept
than social capital, and political action is only one of
many activities that can be undertaken to increase
empowerment”. The contents of the SC-IQ dimensions
are:
(1) Group and networks (measure of structural social
capital):
• Group – groups and organisations are measured by
four items:
¡¡ The density of membership (the average
number of memberships of each household in
existing groups or organisations)
¡¡ The diversity of membership (kinship, religion,
gender, age, ethnicity/linguistic group,
occupation, education, political affiliation and
income level)
¡¡ The extent of democratic functioning
¡¡ The extent of connections to other groups.
• Networks – represented by three items:
¡¡ The size of the network (the number of close
friends)
¡¡ The network’s internal diversity (whether or not
the network consists of people with different
economic statuses)
¡¡ The extent to which the network would provide
assistance in case of need
(2) Trust and solidarity (measure of cognitive social
capital)
• Generalized trust (the extent to which the individual
trusts people overall)
• Specific trust (the extent of trust in specific types
of people, agencies, environment, businesses
community, etc.)
(3) Collective action and co-operation
• The extent of collective action
• The type of activities undertaken collectively
• An overall assessment of the extent of willingness to
cooperate and participate in collective action
(4) Information and communication
• Sources of information and means of
communication
• Sources of information on government activities
• Sources of market information
(5) Social cohesion and inclusion (structural social
capital)
• Inclusion (general perceptions of social unity
and togetherness of the community and specific
experiences with exclusion)
• Sociability
¡¡ Frequency of every-day social interactions
¡¡ Daily social interactions with people of the
same or a different ethnic or linguistic group,
economic status, social status, or religious
group
• Conflict and violence
¡¡ The extent and trend of violence
¡¡ The contribution made by internal divisiveness in
the community
¡¡ The feelings of insecurity stemming from fear of
crime and violence
(6) Empowerment and political action
• Empowerment – the ability to make decisions
that affect everyday activities and may change the
course of one’s life
¡¡ Control in making decisions that affect one’s
everyday activities
¡¡ Power to make important decisions that change
the course of one’s life
¡¡ Impact in making this village/neighborhood a
better place to live
Measuring and Valuing Social Capital: A Systematic Review
32
•
Political action
¡¡ Filing petitions
¡¡ Attending public meetings
¡¡ Meeting with politicians
¡¡ Participating in demonstrations and campaigns
¡¡ Voting in elections
A study that explored the associations between
different forms of social capital and innovation in
agriculture in African countries (van Rijn, Bulte and
Adekunle, 2012) used some of the ideas from Putman
(2000) and the World Bank. The study measured the
structural and cognitive dimensions of social capital
with the following items:
Structural bonding social capital:
• Village members joining together for a social
function
• Village members joining together to carry out a
community project
• Villagers coming together for a village meeting
• Participation in community activities
• Mean village participation in community
development projects
• Mean village visiting of other farmers within the
community to learn about agriculture
Structural bridging social capital:
• Villagers made a field trip or sent a representative to
an agricultural R&D activity
• Villagers organized and went to another village to
see development, research project
• People from another village came to the village to
see R&D project
• Training by an outside organisation or field
extension staff
•
•
Visits by researchers, staff from NGOs or extension
Mean village visiting of other farmers outside the
community to learn about agriculture
• Mean village visiting of a research station to learn
about agriculture
• Mean village visiting of an extension office to learn
about agriculture
Cognitive social capital:
• Financial contributions to help a member in the
village
• Extent of trust among people
• Cooperation among people
• Extent of giving or exchanging gifts
• Extent of financial contribution to community
activities/problems
• Extent of financial contribution to group activities
• Spirit of helping others, especially the poor
• Extent of settling conflicts or disputes among people
• Extent of abiding by norms and bylaws
• Women’s confidence to speak in public
• Men’s respect and consideration of women
• Mean village financial contributions to community
activities or actions
• Mean village involvement in settling conflicts or
disputes among people
The items other than ‘Mean village’ were included in a
household survey, with response options that ranged
from 0 = ‘never happens’ to 4 = ‘happens more than 5
times a month, on average, or happens very often’. The
items with ‘Mean village’ reflected the village average
of households’ involvement in the events and aspects
covered in a village survey and were converted to a 0–1
scale, indicating the share of households in the village
involved in these actions.
Measuring and Valuing Social Capital: A Systematic Review
33
Case Study 2: Social Capital as a Tool for Community and Economic Development
in the Ozarks
In 2008, Springfield/Greene County in Missouri, US studied the state of social capital in the area. The
findings were reported in February 2009. The study found that Ozark residents had higher levels of social
capital (measured as generalised and local trust, and social connections) than the national average levels.
However, the study also found that the residents had lower levels of civic participation and institutional trust
(in local government) than the national average. They were faced with the question: How could high levels
of social capital be associated with political alienation and low civic engagement? Previous social capital
studies suggested that high levels of social capital would generate high levels of civic engagement and
political participation. The findings were presented to several community groups in the region, which led
to identification of civic engagement as a community problem. Then, in 2010, The Ozarks Regional Social
Capital Survey (ORSCS) was designed to study the issue. The survey focused on how bonding social
capital and bridging social capital affect the types of trust and civic engagement. The assumption was that
bridging social networks (reflecting diversity) sustain generalised trust and reciprocity among individuals and
communities, while bonding social networks bring individuals together with others like them and sustain
particularised, in-group trust and reciprocity. Civic engagement and political participation require working with
different people and diverse groups; thus the relative lack of bridging social capital in the Ozarks was part of
the public policy dialogue. The study focused on how bridging social capital could solve the problem of low
civic participation. To measure bridging social capital, the study created four measures of network diversity:
(a) total number of connections to different occupations; (b) range of occupational prestige connections; (c)
highest occupational prestige connection; and (d) number of high prestige occupational connections. The
study found that higher levels of social network diversity (bridging social capital) were positively associated
with trust, membership in voluntary associations, and civic participation: individuals with greater social
network diversity had more trust, more membership in voluntary associations and greater civic engagement.
Source: Stout, Harms, & Knapp (2012). Social capital and civic participation in the Ozarks: Summary of Findings from the Ozarks
Regional Social Capital Survey. Department of Sociology and Anthropology, Missouri State University. Available at http://sociology.
missouristate.edu/assets/sociology/Social_Capital_and_Civic_Participation_in_the_Ozarks1.pdf. Retrieved on July 14, 2014.
Implications for Leaders
Measuring social capital in the Ozarks allowed the region to identify where social capital is strong and
where it is weak. Social capital was measured with three of the measurement categories discussed
above – networking (bridging social capital); civic engagement (association membership, civic participation
and political participation); and trust. Relating bridging social capital to civic engagement also led to the
mobilisation of existing groups and organisations, and the development of targeted programmes in the
region in an effort to increase citizenship participation. As this example shows, regional civic leaders’ ability
to measure different categories of social capital and relate them to one another enabled them to focus
on providing citizens in the county with more opportunities to participate in diverse civic groups, and thus
enhance community social and economic development.
Measuring and Valuing Social Capital: A Systematic Review
34
While social capital has been measured by academic
researchers at various levels of analysis, there have
been fewer measurements by practitioners of the social
value creation or impact of an organisation’s social
activities. However, the box below shows how social
capital was measured and used in a county (district) in
the US to solve the problem of low civic engagement by
citizens.
Summary of Social Capital
Measures
•
In sum, the measurement of social capital could be
summarised as follows:
1. Social capital is measured as an individual, group
or organisation and a collective (community-level)
attribute.
2. The indicators or elements used to measure social
capital fall into four categories: social networks
(relationships, interactions and connections); trust
and reciprocity; norms and values (including civic
norms); and civic engagement (e.g. associational
memberships and civic participation).
3. Uneven emphasis on the dimensions of social
capital at individual and collective levels.
•
Individual and organisation versus collective
measures: The indicators that are used to measure
social capital at the individual and organisation
levels are grouped together because the research
shows that individual managers or executives’
social networking relationships are generally used
as a proxy for the social networking relationships
that create social capital for an organisation.
Individual- and organisation-level measurements
•
are done through questionnaire surveys focusing
on social connections and social support. Thus the
measures primarily include social network indicators
(see Table 2.2). At the collective level, measures
are more varied, focusing on networks and social
connections, as well as cognitive indicators (trust,
solidarity, norms and values, and the ability to
participate in civic life). However, some indicators
could be considered as outcomes of social capital
instead of inputs to social capital (e.g. collective
action, empowerment and political action).
Categories of social capital: Measures of trust
(generalised, interpersonal and institutional)
and networks and connections are used at all
levels of analysis and for all dimensions of social
capital. While measures of trust at individual and
organisational levels focus on interpersonal trust
(or informal trust), measures at the collective or
community-level focus on trust in strangers and trust
in institutions. Social network measures at individual
and organisational levels focus primarily on structural
characteristics (e.g. size, density, heterogeneity
or diversity, etc.), though recently there has been
more emphasis on bonding, bridging and linking
ties. Measures of norms (including civic norms,
shared norms and values) are common at all levels.
However, the focus at individual and organisational
levels is on shared values, norms and goals in a
community or an organisation, while the focus at the
collective goes beyond shared norms and values to
include how individuals in a community co-operate
or act for societal benefit.
Uneven emphasis on the dimensions of social
capital at different levels: There is a general
consensus that there are three dimensions of
social capital: structural, relational and cognitive
(Nahapiet and Ghoshal, 1998). While individual and
Measuring and Valuing Social Capital: A Systematic Review
35
organisational level studies have used measures
capturing all three dimensions, community-level
measures have emphasised only the structural and
cognitive dimensions of social capital. This may be
due to the problem of separating the indicators used
to measure structural and relational dimensions.
For example, several studies at individual and
organisational levels have used similar measures
that are classified as structural by some studies and
relational by other studies (e.g. bonding, bridging
and linking). While the structural dimension is
measured typically through social network analysis,
the relational dimension focuses on the quality of
interactions or what Leana and Pil (2006: 354) call
Figure 2.2
DETERMINANTS, DEFINITION AND MEASUREMENT OF SOCIAL CAPITAL
Determinants
Definition
Social Networks
Trust and
Reciprocity
Shared norms,
values and social
structures
Obtain and
maintain
social license to
operate
Ability to secure
or obtain assets
or resources,
knowledge, and
information by
an individual,
group,
organisation
or community
for its benefit
through social
networks, trust,
shared norms,
and license to
operate.
Measurement
Social Networks
• Network
structure
• Relationships,
ties and
connections
• Social cohesion
Trust and Reciprocity
• Generalised
• Interpersonal
• Institutional
• Reciprocity
Norms
• Shared norms
• Civic norms
• Values
• Goals
Civic Engagement
• Association
membership
• Civic participation
• Volunteerism
• Political
participation
• Social support
Measuring and Valuing Social Capital: A Systematic Review
Tools
Use surveys,
interviews, focus
groups, and
personal stories from
employees, members
of a community,
or stakeholders to
implement
• World’s Values
Survey’s Social
Capital Index
• Network structural
characteristics
(e.g. density,
diversity, size, etc.)
• Social
relationships and
ties
• Company codes
of conducts and
values
• Putnam’s Social
Capital Index
Survey Instrument
• World Bank
Integrated
Questionnaire for
the Measurement
of Social Capital
(SC-IQ)
36
the ‘character and content of those relationships’,
and it is measured usually through the extent and
closeness of interactions, and the resources and
information leveraged from such interactions.
COMMONLY USED MEASURES OF SOCIAL
CAPITAL
A Model to Measure Social
Capital
Figure 2.2, Determinants, Definition and Measurement
of Social Capital, includes the indicators that have been
used to measure social capital and the tools that could
be used by practitioners and managers to measure
social capital in their organisations. The top three
indicators (social networks, trust and reciprocity, and
norms) have been used at individual and organisational
levels, while all four indicators are used at the collective
or community level. Table 2.4 presents a summary
of the items used to measure social capital in Figure
2.2. The items in bold font are the measures that are
commonly used in social capital studies by researchers
and international organisations.
These are measures that have been used effectively to
measure social capital by researchers and international
organisations interested in assessing the role of social
capital in the creation of value for companies, institutions
and communities. These measures could easily be
adopted by a company to assess the extent and quality
of its social capital.
• Network structure
¡¡ Examine the diversity of the networks of
employees of the company. Diversity refers to
differences in ethnicity, gender, age, educational
background etc.
¡¡ Examine the size of the networks of the
employees of the company. Size is the number
of people who are connected to the employee.
• Relationships, ties and connections
¡¡ Examine the closeness and quality of the social
relationships, connections and network ties
individual employees have with their colleagues.
Table 2.4
SUMMARY MEASUREMENT OF SOCIAL CAPITAL
SOCIAL NETWORKS
TRUST AND
RECIPROCITY
NORMS
CIVIC ENGAGEMENT
•
•
•
•
•
•
•
•
•
•
Network Structure
(e.g. density, diversity,
size, centrality,
heterogeneity)
Relationships, ties and
connections
Social cohesion
•
•
Generalised trust
Institutionalised
trust
Interpersonal trust
Reciprocity
Shared norms
Civic norms
Values
Goals
Measuring and Valuing Social Capital: A Systematic Review
•
•
•
•
Associational
membership
Civic participation
Political participation
Volunteerism
Social support
37
•
•
¡¡ Examine the closeness and quality of the
social relationships, connections and network
ties managers and employees have with the
company’s key external stakeholders such
as customers, business partners, suppliers,
community leaders, and government officials.
Institutionalised and Interpersonal trust
¡¡ Examine the degree to which employees in the
company trust what the company stands for.
¡¡ Examine the degree to which employees
trust government agencies, the business
environment, communities, etc.
¡¡ Examine the extent to which employees trust
company executives and other employees.
Associational membership
¡¡ Assess the degree to which individual
employees are members of professional and
community organisations and associations.
¡¡ Assess the number of associations/
organisations in which individual employees are
members.
¡¡ Assess the number of times individual
employees get involved in associational
activities in a specific time period (e.g. monthly).
SOCIAL CAPITAL MEASURES WITH POTENTIAL
The following measures have been suggested and used
by researchers and international institutions interested
in the measurement of social capital. They have been
tested at the community level but have rarely been used
at the organisational level. These measures should be
tried as they may be relevant to assessing the social
license to operate by companies, but it is important to
evaluate their effectiveness in achieving the objectives of
the company.
• Generalised trust
¡¡ Examine the extent to which employees trust
people in their community .
¡¡ Examine the extent to which employees can
confide in other people or employees.
¡¡ Examine the extent to which employees believe
that people in their community try to be fair
most of the time.
¡¡ Examine the extent to which employees believe
that people in their community try to be helpful
most of the time.
• Civic participation
¡¡ Examine the extent to which employees are
involved in social causes in their community.
¡¡ Examine the extent to which employees support
educational initiatives in their community.
• Volunteerism
¡¡ Examine the number of times employees
volunteer in the community.
¡¡ Examine the number of times employees
volunteer their time for the company.
Measuring and Valuing Social Capital: A Systematic Review
38
Figure 2.3, Model of Social Capital Measurement at
Different Levels of Analysis and Figure 2.4, Summary
Model of Social Capital Measurement, incorporate
the three key issues in the measurement of social
capital: form of social capital (internal versus external);
type of social capital (structural, relational, and
cognitive), and levels of analysis (individual, group/
organisational, or community/nations (or collective)).
There are subtle differences in the indicators that
should be emphasised when measuring internal
or external social capital at different levels of
analysis. For example, when the focus is external,
the measures to use at individual and organisation
levels of analyses should be network structure,
network ties and connections (with emphasis on
bridging and linking ties), and trust (interpersonal and
institutional). However, when the focus is external at
the community/national level, the measures to use are
network ties and connections (using bonding, bridging
and linking ties), trust (general and Institutional), civic
norms, and association membership and community
engagement. Network structure indicators are no
Figure 2.3
MODEL OF SOCIAL CAPITAL MEASUREMENT AT DIFFERENT LEVELS
NATURE OF SOCIAL
CAPITAL
Individual and
Communiy/
Organisation
Nation
•
•
•
•
•
•
•
•
Network ties and
connections (bonding and
linking)
Trust (interpersonal and
institutional)
Civic norms
Association membership and
community engagement
•
Network structure
Network ties and
connections (bonding and
linking)
Trust (interpersonal)
Shared norms, values and
goals
•
•
•
•
•
•
Network ties and
connections (bonding,
bridging and linking)
Trust (general and
institutional)
Civic norms
Association membership and
community engagement
Network structure
Network ties and
connections (bridging and
linking)
Trust (interpersonal &
institutional)
Internal
External
LEVEL OF ANALYSIS
Measuring and Valuing Social Capital: A Systematic Review
39
Figure 2.4
SUMMARY MODEL OF SOCIAL CAPITAL MEASUREMENT
•
•
•
•
•
•
Network
structure
Network ties
and connections
(bonding &
linking)
Trust
(interpersonal)
Shared norms,
values and goals
Community/National
•
•
Organisation Level
Individual
longer important at the community/national level.
Figure 2.4 also shows the sources of information for
the measurement of social capital at the individual,
organisation and community/national levels from the
systematic review. It starts from individual responses
within a group, an organisation, or a community at the
EXTERNAL SOCIAL
•
Network ties
and connections
(bonding and
linking)
Trust
(interpersonal
and institutional)
Civic norms
Association
membership
and community
engagement
INTERNAL SOCIAL
•
•
•
•
•
•
Network ties
and connections
(bonding,
bridging and
linking ties)
Trust (general
and institutional)
Civic norms
Association
membership
and community
engagement
Network
structure
Network ties
and connections
(bridging and
linking ties)
Trust
(interpersonal
and institutional)
Measurement Source
Aggregate of
group member
responses
Top executive or
aggregate top
management
team responses
Individual
responses
individual level, to an individual top executive/manager
response or an aggregate of the top management
responses at the organisational level to an aggregate
response of individuals in a community or nation at
the community level.
Measuring and Valuing Social Capital: A Systematic Review
40
chapter 3: the value of
social capital
Measuring and Valuing Social Capital: A Systematic Review
41
Overview of the Value of
Social Capital
The general assumption is that social capital is good for
individuals, organisations and communities. However,
determining the value of social capital is not an easy
task. Valuation is often thought of from a monetary
perspective, but few studies have directly addressed
the monetary value of social capital. One of the few
is a study by Kim (2007) who examined the effects
of outside directors and their social capital on firm
value in a sample of 473 large, publicly traded South
Korean companies from 1998 through to 2003. The
study found that three indicators of social capital,
membership in external economic associations,
affiliation with government institutions, and elite school
network, were significant and positively associated with
firm value as measured by Tobin’s Q (the ratio of market
value to the book value of the firm).
Generally, however, the value of social capital has been
assessed based on its potential impact on individuals,
organisations, communities, nations and regions.
One challenge with regard to the assessment of the
value of social capital is the difficulty in separating the
indicators of social capital from the outcomes of social
capital. Of course, in economic terms, every impact or
outcome could be eventually translated into monetary
value. For example, the acquisition of skills by an
individual through memberships in a social network
could lead the individual to get a new job which might
translate to higher income for the individual. However,
the inability to attribute direct economic benefits to
social capital has led some researchers to question
the ‘capital’ component of social capital. Nevertheless,
social capital shares some similarities with other forms
of capital such as human and physical capital, in
that social capital has the ability to generate external
benefits that persist (Agenor & Dinh, 2013). Specifically,
“these externalities and benefits include information
sharing among individuals and firms, and the matching
of people to economic opportunities, mutual aid and
insurance, which may affect expectations and individual
behaviour, as well as effective collective action” (Agenor
& Dinh, 2013: 4). In addition, social capital is productive
in that certain achievements or outcomes might not
be possible in the absence of social capital (Inkeles,
2000). For example, a school child in a deprived
neighbourhood could be brilliant academically but might
be unaware of the educational opportunities available
to him/her. The pairing of such a child with a mentor
from a local company and the relationships developed
could lead to the child gaining admission to prestigious
institutions.
We propose an integrative model (Figure 3.1) that
looks at the relationships between the indicators and
outcomes of social capital. The model connects the
indicators, outputs and value of social capital. To gain
a good understanding of the value of social capital, it
is necessary to distinguish between outputs and the
outcomes of social capital. Outputs such as gaining
access to knowledge from an organisation’s members
as a result of network relationships are important, but
these eventually need to be translated into outcomes
such as improved financial performance, increased
market share, and innovation. Social capital value
includes the value that it provides to companies, to
individuals, to other companies and to communities.
Measuring and Valuing Social Capital: A Systematic Review
42
Some impacts might pertain uniquely to each
constituent group (i.e. individuals, organisations, and
communities), but others cut across boundaries. To
illustrate, an employee’s network of relationships might
enable him/her to build his/her skills. The application
of those skills on the job results in cost efficiencies
that improve the performance of the company (i.e.
profitability) which the company then uses to increase
the capabilities of its workforce and enhance the stock
of human capital in the organisations. Civic engagement
of the employees including sharing their expertise with
community organisations, translates into better health
outcomes for people in the community and eventually
results in economic development in the area. In the
process, the company also benefits from its corporate
social responsibility, which might translate into greater
acceptance of its products and services or increased
access to a larger labour pool or gain the license to
operate in the community.
Finally, social capital outcomes (value) might serve as
motivations for business leaders to make additional
investments in social capital activities that further
translate into additional outputs and outcomes.
In addition, the model suggests that the personal
benefits that accrue to individuals might encourage
them to further invest in social capital activities such
as expanding their network ties. Communities can use
the gains from improved well-being as a result of the
social capital engagements to leverage government
officials for additional resources, such as infrastructure
development in their localities.
In the social capital literature, the central proposition
is that networks of relationships constitute a valuable
resource for the conduct of social affairs. The value of
social capital stems from the access to resources that
it engenders through an actor’s social relationships.
It is important to understand, particularly in the case
of business organisations, that because of social
capital’s unique features such as its durability and the
interconnectedness of human relationships (Bourdieu,
1986; Coleman, 1988), social capital is not as easily
alienable from the firm as physical or financial capital,
nor is it as mobile as human capital (Moran 2005).
This means that the value that companies can obtain,
detailed later in this report, will persist over time within
those companies.
Value creation is the essence of effective company
strategies and the primary source of their competitive
advantage. It has been argued that the source of
this advantage is the ability to develop intense social
capital, which facilitates the creation of intellectual and
other forms of capital and, from that, new value. Social
capital can contribute to economic growth through
the accumulation of human capital. Further, it can
assist economic growth through financial development
resulting from, for example, collective trust between a
company and its suppliers that leads to reduction in
transaction costs (less monitoring of supplier quality)
or from adherence to shared norms and values within
the company that leads to efficiencies. And finally,
social capital contributes through the networking and
collaborative activities of firms that lead to the creation
and diffusion of innovations (Chou, 2006).
While social capital shares many attributes with other
forms of capital (e.g. human and physical), social capital
differs from these in that its creation requires interaction
between at least two people and usually among a
larger group of people. For example, social capital
Measuring and Valuing Social Capital: A Systematic Review
43
Figure 3.1
AN INPUT-OUTPUT-OUTCOME MODEL OF SOCIAL CAPITAL VALUE
(WITH ILLUSTRATIVE EXAMPLES)
Social Capital
Determinants
•
•
•
•
•
Social Networks
Trust and
reciprocity
Norms, values
and goals
Civic
engagement
License to
operate
Outputs
•
•
•
•
•
•
Information
sharing
Access to
knowledge
Access to
resources
Social cohesion
Increased
communication
Empowerment
Outcomes/Impact
Community
increase household income.
Reduce crime
Improve health
outcomes
Less
Bankruptcy
Individual
Gain a job/
promotion.
Enhance skills
Economic
Growth
CSR or
CSI
Higher Human
Capital
Organisation
Efficiences.
Improve performance
Market share.
Innovation.
is not subject to the same person-to-person market
exchanges through which, for example, physical capital
can be acquired or sold. The creation of social capital is
a complex process heavily influenced by social, political
and cultural factors as well as by the dominant types
of economic activities in the environments of actors
(Grootaert, 2004).
The impact of social capital on economic activities
might be direct or indirect. A direct impact might be
the impact on outcome variables such as household
welfare, poverty reduction, health, access to
services, or educational attainment. Assessment of
impact in this manner considers social capital as an
input (independent variable) with outputs such as
organisational performance or the welfare of individuals
and communities as dependent variables. However,
the impact of social capital might not occur directly but
might be moderated or mediated by factors such as
governments, cultures (organisational and national) and
regions. For example, a company, in partnership with
an NGO provides the youth in a deprived community
Measuring and Valuing Social Capital: A Systematic Review
44
of social capital on economic growth. At the firm level,
results are unambiguous: there is strong evidence
of the impact of social capital on firm performance.
Details of the value provided to companies and reasons
for why companies need to continue their efforts in
building social capital are provided later in this report.
The results become less clear at national and regional
levels. The inconclusive results at national and regional
levels can be explained in part by the inadequacy of
measures used to assess the impact of social capital
and also on the fact that at the regional and national
levels, the impact of social capital might be difficult to
isolate from the impact of other contributory factors.
with business management and time management
skills so as to enhance the employability of the youth.
The impact of those social capital activities in reducing
the level of unemployment among the youth might
be dependent on the willingness of employers in the
locality to employ the youth or even on the partnering
ability of the NGO. Similarly, the value of social capital
in the form of knowledge transfer within a company
might be dependent on whether the company has a
flat organisational structure or a very vertical structure
(Andrews, 2010).
While most of the literature suggests a positive
impact of social capital on various organisational
performance outcomes, empirical results on the social
capital–organisational performance link are not always
conclusive (Muarer, Bartsch & Ebers, 2011). Table 3.1
shows the results of a meta-analysis of 65 studies
that sheds light on the mixed findings on the impact
Any discussion of the value of social capital has to
take into account both investments in and returns on
social capital (Raub, Buskens, and Frey, 2013). This
is because social capital is the result of purposeful
efforts of individuals, organisations and communities
Table 3.1
QUANTITATIVE FIGURES ON THE STUDIES’ DIVISIONS AT SPATIAL LEVELS, MEASURES OF SOCIAL
CAPITAL AND ITS IMPACT ON ECONOMIC GROWTH
SPATIAL LEVEL
NUMBER OF STUDIES
SOCIAL CAPITAL
MEASURE
NUMBER
POSITIVE
NEGATIVE
MIXED,
AMBIVALENT
Nations
23
Trust
15
9
5
1
Associations
8
3
4
1
Trust
7
3
2
2
Associations
11
6
2
3
Trust
6
4
2
Associations
5
3
1
Various
21
18
Regions/states/
communities in one
country
14
Regions/states in
several countries
7
Firms and
households
21
1
3
Source: Westlund & Adam (2010)
Measuring and Valuing Social Capital: A Systematic Review
45
(or nations). It is an accumulated stock from which
individuals, companies, and communities derive a
stream of benefits. Social capital is therefore more than
simply a set of social organisations or social values;
it enhances output by increasing the productivity of
other resources, especially labor. The factors that
influence the creation and development of social
capital are sometimes referred to as indicators of
social capital. Examples of such indicators might be
the networks and associational activities of individuals,
companies and communities (or nations). For example,
an organisation’s social capital can be enhanced by
the selection of individuals with learning potential and
interpersonal skills, as well as by their involvement in
decision-making processes; and their willingness to
engage in social exchange and cooperative interaction,
and the sharing of information, knowledge and
resources. Although the distinction between value
indicators and the outcomes of social capital is not
easy to make, it is still important for business leaders
to consider both when assessing the value of social
capital as will be explained later in this report.
Figure 3.2 shows the focus of 285 studies on the
potential impact of social capital. The impact of
social capital has been addressed primarily from
the perspective of organisations (or firms), followed
by communities and then individuals. Most studies
have focused on only one constituent group at a
time. Very few studies examine the impact of social
capital on individuals, organisations and communities
simultaneously. Table 3.2 provides examples of the
different impacts found in the 285 articles. One caveat
is important here. To the extent that individuals belong
to organisations and communities or organisations
are a part of communities and nations, some of the
distinctions here might be artificial.
Figure 3.2
DISTRIBUTION OF REVIEWED STUDIES THAT FOCUSED ON VALUE OF SOCIAL CAPITAL
Measuring and Valuing Social Capital: A Systematic Review
46
Table 3.2
IMPACT OF SOCIAL CAPITAL BASED ON LEVEL OF ANALYSIS
IMPACT ON
# OF STUDIES
EXAMPLES OF IMPACT AS REPORTED IN THE LITERATURE
Individuals
55
•
•
•
Improves the professional productivity of individuals.
Advances the career of individuals.
Increases income potential.
Organisations
103
•
•
Contributes to the development of human capital and intellectual capital within companies from the
networking, information sharing and knowledge exchanges among employees.
Network ties in the form of good relationships with government offices can help companies get
access to valuable information on government policy on future economic development, taxation,
and import and export regulations.
Partnerships with financial institutions can provide firms with a competitive edge in obtaining benefits
such as easier access to loans and other financial resources.
Obtain license to operate.
Communities/
regions/nations
58
•
•
•
•
Contribute to economic development.
Gain resources such as electricity, water and roads.
Improve sanitation, health care, and educational.
Social capital reduces crime and deviant behaviours.
Individuals and
organisations
5
•
Social capital enhances the job seeking and career attainment of individuals, and individuals who
join an organisation bring their structural social capital to the organisation and provide firms access
to their extended social networks, which can then be leveraged by the firms.
Individuals and
communities
6
•
•
•
Gain access to expertise from companies and other institutions.
Access to financial credit and loans.
Job opportunities.
Individuals,
organisations
and
communities/
regions
12
•
•
At the individual level, social capital can influence career success and the creation of human capital.
At the inter- and intra-firm level, social capital can facilitate inter-unit resource (including information)
exchange and product innovation, reduce transaction costs, enhance cooperation, facilitate
entrepreneurship and formation of start-up companies, and strengthen supplier relations, regional
production networks, and inter-firm learning.
At the national level, social capital is one of the important factors affecting economic development
and growth.
•
•
•
Value of Social Capital by
Dimensions
The literature suggests that different components of
social capital exert different impacts on individuals,
organisations, and communities. At the broadest level,
social capital has three major dimensions: structural
relational and cognitive. Although the components of
these dimensions such as trust sometimes overlap, the
impact of social capital is best assessed by looking at
the impact of specific dimensions rather than looking
globally at social capital. For example, Andrews
(2010), who explored the independent and combined
effects of organisational social capital and structure
on the performance of over 100 organisations in the
United Kingdom between 2002 and 2005, concluded
that the cognitive and relational dimensions of social
Measuring and Valuing Social Capital: A Systematic Review
47
capital were positively related to performance, but
the structural dimension was unrelated to education,
social care, and housing outcomes. Social networks
provide the basis for trust and cooperation, which
can lead to knowledge transfer and eventually higher
organisational performance (Weber & Weber 2010). Yet
while bridging social capital and linking social capital are
important for the improvement of health of individuals
and communities in terms of control of deviance
and reinforcement of positive health norms, strong
bonding ties may also create demands for conformity
and restrict access to contacts and information
from other sources, thus negatively impacting health
care. At the same time, strong bonding ties tend
to provide emotional support, which has positive
impacts on health, especially mental health, mainly
via psychological mechanisms such as increased
personal control and reduced stress. Table 3.3 provides
a summary of some of the impacts of social capital
classified by the different indicators of social capital.
The focus here is to present the evidence of the impact
of social capital as noted in the literature. The details
on the impact of internal and external social capital on
companies are provided under the section “the impact
of social capital on organisations”.
The lesson for managers and decision makers is not to
expect the same impact on individuals, organisations
and communities from implementing different
components of social capital. Also, even among the
social capital components that have an impact on
different beneficiaries, the extent of the impact is not
uniform.
Table 3.3
SOCIAL CAPITAL IMPACT BY INDICATOR
SOCIAL
CAPITAL
INDICATOR
COMPONENTS
EXAMPLES OF SOCIAL CAPITAL VALUE
Networks
•
Family ties, friends and
acquaintances
Workplace contacts
Voluntary association
memberships
•
•
•
•
•
Interpersonal trust
Generalised trust
Confidence
Reciprocity
•
•
•
•
•
Democratic orientations
Identity and solidarity
Obligations
Tolerance
•
•
Trust
•
•
•
•
Norms and
values
•
•
Offer a rich source of explicit and implicit knowledge, experience and access to physical
resources.
Can lead to increased job opportunities, promotions on the job.
Improve organisational performance by promoting resource exchanges and coordination.
High levels of collaboration and goodwill among organisation members (or with
outsiders) reduce reliance on cumbersome monitoring procedures, thereby lowering
transaction costs associated with accumulating knowledge and stimulating innovation.
High levels of trust between organisational leaders and members permit the transfer of
sensitive information that is unavailable to those beyond the boundaries of trust.
Trust can diminish resistance to change.
Norms and values lead to self-sustaining solutions that are less dependent on
governmental institutions.
Value of social capital to individual employees is greater in loosely structured settings
where rules and procedures are few, and the prospect of defining one’s social role is
correspondingly greater.
Measuring and Valuing Social Capital: A Systematic Review
48
Figure 3.3 summarises the relationships between the
sources of social capital, definitions, measures and
value. The first three components of the model were
described earlier in this report. The addition here is
the way in which measures are linked to the value
of social capital. We present a few examples here.
Research suggests that social capital measures in the
form of networks leads to social capital value in the
form of access to privileged information, enhanced job
opportunities and improved firm performance. Trust
and reciprocity contribute to lower transactions costs
and diminished resistance to change within companies.
Adherence to norms and values leads to efficiencies
and self-sustaining solutions while civic engagement
by a company leads to reduced crime within the
communities in which the company operates.
Figure 3.3
AN INTEGRATIVE MODEL OF SOCIAL CAPITAL SOURCES, DEFINITIONS, MEASURES AND VALUE
Determinants
Definition
Social networks
Trust and
reciprocity
Shared norms,
values and social
structures
Obtain and
maintain
social license to
operate
Ability to secure
or obtain assets
or resources,
knowledge, and
information by
an individual,
group,
organisation
or community
for its benefit
through social
networks, trust,
shared norms,
and license to
operate.
Measurement
Benefits/Value
Social Networks
• Network
structure
• Relationships,
ties and
connections
• Social cohesion
•
Trust and Reciprocity
• Generalised
• Interpersonal
• Institutional
• Reciprocity
•
Norms
• Shared norms
• Civic norms
• Values
• Goals
Civic Engagement
• Association
membership
• Civic participation
• Volunteerism
• Political
participation
• Social support
Measuring and Valuing Social Capital: A Systematic Review
•
•
•
•
•
•
•
•
•
Source of
privileged
knowledge
Job opportunities
Organisational
performance
Sharing of sensitive
information
Lower transaction
costs
Diminished
resistance
Self-sustaining
solutions
Higher social role
definition
Improved health
outcomes
Reduced crime
Higher
corporate social
responsibility
49
Value of Social Capital by Level
of Analysis
To be consistent with other sections of this integrated
report, we present in this section the impact or value of
social capital on individuals, organisations (companies)
and communities (localities, regions and nations).
IMPACT OF SOCIAL CAPITAL ON INDIVIDUALS
Conceived as social interactions and connections,
social capital is an asset that is possessed by
individuals and can be used to advance their personal
economic standing (e.g. using connections to obtain
a job). Social capital can influence career success and
the creation of human capital. Knowledge is a form of
human capital. High levels of social capital in the form
of relationships that an individual has with colleagues
within a company or interactions with outsiders within
his/her field of expertise can enhance the skills and
capabilities of the individual and facilitate access to
broader sources of information. It can enhance the
information quality, its relevance and timeliness that is
available to the individual. Thus individuals can enhance
their knowledge through everyday interactions with
colleagues, family members, friends, peers and others
within their community. This was illustrated by Coleman
(1988), who showed how access to social capital could
help a teenager secure a high school diploma. Social
capital enhances the bargaining power of employees
by (1) granting access to strategic information, (2)
increasing their replacement cost, and (3) increasing
their desirability by other companies and thereby
represents a credible threat to leave the firm (Blyer and
Coff, 2003).
Agénor and Dinh (2013) noted that the impact of social
capital built at the individual level depends not only
on already existing networks and the average stock
of social capital available in the economy, but also
on access to infrastructure. Greater access to roads,
electricity, and telecommunications facilitates social
networking; thus, social capital and infrastructure are
complementary. A study that examined how Internet
users may enhance their social capital by investing
in online social activities concluded that a rich social
capital environment fosters Internet use by individuals
to maintain their social capital (Pénard and Poussing,
2010).
In a rare study that looked at social capital and mental
health, social capital, as measured by (1) safety after
dark, (2) inter-personal trust, (3) access to help, and (4)
views on multiculturalism, was found to have a strong
association with mental health and life stress. Social
capital actions such as volunteering and municipal
voting were associated with both overall health and
mental health (Kitchen, Williams, & Simone, 2012). Chiu
et al (2008), who examined the relationship between
social capital and HIV-related stigma in South Africa,
found that individuals who felt trust and safety in their
community (high social capital) were less likely to
attribute HIV stigma to members of their community.
In a related study on social capital and health among
older adults in South Africa, Ramlagan, Peltzer and
Phaswana-Mafuya (2013) found that self-reported good
health was related to higher levels of social capital (e.g.
being married or cohabiting, high trust and solidarity,
and high levels of psychological resources); depressive
symptoms were associated with lower social capital
(not being married or cohabiting, lacking high trust and
solidarity and having low psychological resources).
Measuring and Valuing Social Capital: A Systematic Review
50
Also, better cognitive functioning was associated with
greater social capital (being married or cohabiting, with
high trust and solidarity, high civic engagement and
high levels of psychological resources); and physical
inactivity was associated with lower social capital (lower
social action, lack of safety, lower civic engagement
and poorer psychological resources). In general social
capital was perceived as being ‘good’ for health among
elderly people in South Africa.
A study that examined the effects of social capital on
the repayment behaviour of individual borrowers in
the rural credit market in Thailand found that bonding
capital facilitated loan repayment by individuals
(Dufhues, Buchenrieder, Euler, and Munkung, 2011).
Higher loan repayment rates should in turn lead to
increased access to credit to individuals as well as
others in the community, thus providing economic
value.
Social capital can also contribute to the lifelong
learning of individuals. It has been observed that 60%
of physicians who used social media as an element
of their lifelong learning felt that their social media
engagement improved their professional productivity
and the care they provided to their patients. Further, a
well-structured social network has the potential to not
only improve healthcare quality but also to decrease
healthcare costs.
IMPACT OF SOCIAL CAPITAL ON ORGANISATIONS
(COMPANIES)
The value of social capital to organisations (companies)
will be broken down into two groups, based on whether
the value arises from internal or external social capital.
We present a framework, based on the literature
review, which shows the different types of value that
businesses can gain from social capital. The benefits
represent the resources that accrue to the company
from the determinants of social capital. The value
represents the impact obtained from the social capital
benefits.
A. Value from Internal Social Capital: Businesses
should expect investments in building their internal
social capital such as providing an environment where
norms and values are adhered to or encouraging
networking relationships among employees in the
company to provide:
• Improved Financial/Strategic Performance. Social
capital in the form of structural, relational and
cognitive, either independently or jointly provide
value to organisations in the form of increased
profitability, sales growth, and increases in
market share. These are achieved by way of
cost reductions, and improved awareness of the
organisation’s products from social capital actions
as explained in detail in other portions of this report.
• Efficiencies. The efforts that a business expends
in building trust, goodwill, and high levels of formal
and informal collaborations among members of the
company will reduce the reliance on cumbersome
monitoring procedures, thereby lowering the
transaction costs associated with accumulating
knowledge from internal transactions.
• Enhanced Innovation. The trustful relationships
between employees in a company can speed
up information flows and knowledge exchanges
because of the decreased need for controls. This
can increase the innovativeness of the organisation
and lead to product development, process
Measuring and Valuing Social Capital: A Systematic Review
51
Figure 3.4
INTERNAL SOCIAL CAPITAL AND VALUE
Determinants of
Internal Social Capital
• Social networks
• Trust
• Shared norms,
values and goals
•
•
Benefits
• Increased information
sharing
• Access to knowledge
• Access to resources
• Buy-in and commitment
to company goals
• Retention of employees
• Committed employees
innovations, and technology adoption, which the
organisation can use to differentiate itself from other
competitors.
Enhanced Competitiveness. Social capital helps
to combine human and intellectual capital in
organisations into human capital bundles that
competitors might find difficult to imitate, by
creating the friendship and professional ties
between talented individuals that bind knowledge
workers to the company and enhance information
sharing and knowledge creation. These can
be exploited to increase the implementation of
strategic initiatives within the firm and enhance the
company’s competitiveness.
Improved Operational Performance. Workers who
exhibit great loyalties to their colleagues are less
likely to leave because the social connections
with co-workers are firm-specific and relatively
immobile. Ties are typically much stronger between
employees than between employees and the
•
•
Value
• Improved financial performance
• Improved operational
performance
• Efficiencies
• Enhanced Innovation
• Project success
• Change management success
• Enhanced Reputation from
supporting social capital
activities of employees
employing company. Thus, a firm that is able
to create social ties among its key knowledge
workers may be able to reduce employee turnover
significantly and thus enhance quality and also
reduce costs.
Project success. Social capital contributes to
knowledge integration among teams within a
project implementation environment. The historical
relationships and the ties developed among team
members facilitate access to broader sources of
information, and information’s quality, relevance
and timeliness, and thus enhance the level of
coordination and interactions with colleagues and
contribute to project success.
Facilitate change management. High levels of trust
between leaders in a firm and other members of the
firm will permit the transfer of sensitive information
which will then enhance collaborative action within
the organisation, thereby diminishing resistance to
change.
Measuring and Valuing Social Capital: A Systematic Review
52
Figure 3.5
EXTERNAL SOCIAL CAPITAL AND VALUE
eDeterminants of
External Social Capital
• Social networks
• Trust
• Civic norms
• Civic engagement
Benefits
• Increased information
sharing
• Gain access to valuable
knowledge
• Access to resources
• Gain valuable
employees
B. Value of External social capital. Businesses should
expect investments in building their external social
capital to provide:
• Cost Reductions. The relationships a firm develops
with its suppliers, customers, and even competitors
can lead to reductions in transactions costs such
as unnecessary documentation, cumbersome
monitoring procedures or reductions in contract
enforcing mechanisms, leading to cost savings for
the firm.
• Sales Growth. Social capital in the form of networks
will allow businesses to identify new market
opportunities, obtain strategic resources and gain
legitimacy from external stakeholders, which leads
to market share advantages and growth in sales.
• Reputation. Organisations might encourage their
workers to collectively engage in volunteer activities
within the communities in which they operate such
as leveraging the resources of an organisation like
Habitat for Humanity to build a house for a needy
family. Such goodwill within the community might
•
Value
• Cost reduction
• Growth of the company
• Enhanced reputation
• Employment growth within
communities
• Obtain new customers
• Achieve sustainability
• Mitigate effects of poor strategic
decisions
• Increase shared value
• Socio-economic development
provide benefits to the organisation in the form of
enhanced reputation, ‘license to operate within the
community’, and protection of the organisation’s
property in the event of civic unrest within the
community.
Contribute toward employment growth and
gain valuable employees. A firm might, through
its relationships with the community, provide
educational opportunities to groups in the locality
using the expertise of its workers. The educational
activities might be in the form of developing
entrepreneurial know-how, formulating business
plans, basic accounting, financial management, or
time management. While these skills might help the
communities increase the level of entrepreneurial
activities and the establishment of self-sustaining
businesses, the skills gained will enhance the pool
of talented individuals within the community. The
firm can draw from this talent pool in building its
own human capital level. It can also lead to the
development of new suppliers (local) for the firm’s
Measuring and Valuing Social Capital: A Systematic Review
53
•
•
operations and new customers for products/
services.
Gain access to important third parties. Social
capital facilitates access to important third
parties in the market place by way of principal/
agent relationships. Networking relationships
provide value through the opportunity to tap into
each other’s informational resources as well as
assets and thereby increase the depth of mutual
knowledge exchange which can be exploited for
new product introductions or expansion of markets.
Harness government resources for economic
development. Through partnerships with nongovernmental organisations (NGOs), community
associations, and collaborative engagements
with other suppliers and allied businesses, a
company can influence government’s choices
around infrastructure and other resource
provision improvements (e.g. sanitation, waste
management) within the communities they operate.
Such improvements in community well-being
can contribute to an improved ‘social license to
operate,’ and reduce risks of civic unrest, protest,
and sabotage. It could also lead to new customers
for the organisation because of improved economic
growth within the community.
Access to government officials. Research has
shown that social capital developed from managerial
networking and social relationships with top managers
at other firms as well as government officials can
enhance organisational performance through increased
access to privileged information on upcoming policies,
regulative changes, or changes in tax codes, for
instance. This can be exploited by the company to
achieve sales growth, return on assets and profitability.
•
•
•
•
Mitigate effects of poor strategic/operational
decisions. A poor location decision by a firm such
as in the case of a hotel can be mitigated through
networking relationships (e.g. closeness, local
efficiencies, linkages with agencies, commercial
agreements) with other companies in the same
geographical area to increase occupancy and
revenues.
Increased shared value. A thriving community
contributes to a successful company. The
mobilisation of a company’s resources and the
leveraging of those resources with other community
resources to improve the overall health, well-being,
and improvement of socio-economic welfare of
the community, which reduces risks of protests
and pilfering. Empowered community members
may then choose to become consumers of the
company’s products and services. The company
also benefits from reduced crime, safety for its
employees and their families, and protection of its
property.
Improved sustainability of the company as a
member of the ecosystem. A company has
practices, procedures, guidelines that enable
them to comply with laws, standards, and even
minimise the use of natural resources (e.g. water,
energy, materials). The sharing of this know-how
with community groups and associations by
way of networks and relationships can enable
a community to thrive, improve the company’s
operations and contribute to the sustainability.
Improve socio-economic development. A company
can use its resources such as expertise to engage
members of the larger community to educate the
general populace on social dilemmas such as
participation in awareness programmes in order to
address major health concerns.
Measuring and Valuing Social Capital: A Systematic Review
54
HOW CAN BUSINESSES ASSESS THE VALUE
OF SOCIAL CAPITAL?
The value of social capital is not easy to assess
because the benefits are not always tangible. This
often requires that proxies be used in assessing the
impact of social capital. Furthermore, the impact of any
social capital investment such as fostering trust, civic
engagement activities, networking relationships are
not always direct but occur through other intervening
mechanisms such as human capital development or
the strategic orientation of the company. This is even
truer when a company tries to assess the societal value
of its social capital activities given that that social value
might be dependent on numerous other underlying
factors.
Case Study 3: Transnet’s Mapping of Stakeholder Relationships
Transnet sought a better understanding of the quality of their relationships with stakeholders. Existing
approaches, including customer and reputation surveys and interviews with stakeholders, did not provide
enough information about this. After conducting a review of possible approaches, they chose to pilot
the ‘Relational Proximity Model.’ In this approach, an independent researcher interviews each party
to a relationship, called ‘relationship owners,’ The interviews focus not on service or specific issues or
aspects of formal agreements, but on the relationship between the two parties, including questions about
communication, knowledge, commonality of purpose, power, continuity, trust and reciprocity, and a shared
sense of purpose and values.
The company recently completed the pilot project, focusing on the relationships between a number of line
managers and representatives of key stakeholders they engage with, including some customers and some
regulators. The results showed that in areas where commonly beneficial outcomes are being achieved, this
was reflected in a close proximity score for the quality of the relationship between the parties. The results
also showed that there can be misalignment between people’s perceptions of their relationships. In some
instances, the company’s managers were positive about the relationship and their counterpart was less so,
while in other instances, it was the other way around.
Particularly valuable was the feedback that was then provided to each of the relationship owners. While review
committees received aggregated information about the relationship indicators, the actual relationship owners
received more detailed and nuanced feedback. This provided the platform for fruitful conversations between
the managers and their counterparts, to address unfulfilled expectations or communication barriers.
The pilot study was considered a success, and a larger project involving a broader array of company
managers and stakeholder groups is planned. A key outcome of the process has been seeing stakeholder
relationships as an important site for value creation.
Measuring and Valuing Social Capital: A Systematic Review
55
According the IIRC Basics for Conclusion report, value
for the purposes of integrated reporting should include:
1. The total of all the capitals.
2. The benefit ‘captured’ by the organisation.
3. The market value/cash flows of the organisation.
4. The successful achievement of the organisation’s
objectives.
A company interested in assessing the value of its
social capital efforts should focus on items 2 to 4
above. It is suggested that value should be evaluated
from multiple perspectives. The assessment and
reporting of the value that social capital provides to
the company will help make the business case for the
continuation of existing social capital investments and
the addition of new initiatives.
IMPACT OF SOCIAL CAPITAL ON COMMUNITIES
In addition to its impact on individuals and
organisations, social capital has helped to explain
phenomena at aggregated levels, such as regions or
nations, with regard to economic development and
growth (Zhang and Fung, 2006). For example, village
social capital stocks have been found to contribute
more to household income than individual stocks of
social capital. Social capital affects the probability of
receiving a loan, and the willingness to share risk by
individuals within communities or regions.
Empirical work on social capital attributes differences
between regions and countries in the level and rate of
economic and social development to differences in the
available stock of social capital. Regions or countries
with relatively higher stocks of social capital, in terms
of generalised trust and widespread civic engagement,
seem to achieve higher levels of growth than societies
with low trust and low levels of civic activity (e.g. Brown
and Ashman, 1996; Heller, 1996; Knack and Keefer,
1997).
Examples of the relationships between social capital
and community/region development range from
developed to less developed regions. Social capital
often acts as a substitute for formal institutions that
if they existed, would sustain a region and make it
prosperous. This phenomenon has, in part, explained
the growth and success of development strategies
in some rural regions of the US (Castle, 1998; Rainey
et al. 2003). Rainey et al. (2013) argue that social
capital encourages economies of scale and other
efficiencies that make rural places more competitive in
a global economy. This view might be useful for African
countries as they seek to develop their economies
in the face of growing global competitive challenges.
The development of social capital may help to explain
increased growth rates, declines in poverty rates,
and general economic performance (Shideler and
Kraybill, 2009). According to the literature, social capital
contributes to efficiency and growth by facilitating
collaboration between those with conflicting interests
towards the achievement of increased output and
equitable distribution of resources.
However, as with relationships at individual or
organisation levels, the findings here are often mixed. In
a study of social capital and economic performance of
states in the US, Casey and Christ (2005) observed that
social capital, measured as networks (social interactions
and connections), norms, and membership in civic and
social organisations, created generalised bonds of trust
within a community but had no discernible influence on
Measuring and Valuing Social Capital: A Systematic Review
56
aggregate measures of output and employment.
A range of social problems—crime, health, poverty,
unemployment—have been linked to a community’s
endowment of social capital (or lack thereof). Thus,
despite the mixed findings from studies, it is imperative
that citizens and policymakers alike think about
new forms of social capital and how they might be
constructed as other or older forms decline (as a result
of technological or demographic change) (Grootaert
et al., 2004). For example, based on the nature and
engagement of informal networks and formal civic
organisations, it is possible to conduct a map of a
community’s associational life, and thus gain a sense of
the state of its civic health.
A community is not limited to a region or population
block. Community extends to cooperatives and
loosely organized associations, for example, tenants
in incubator arrangements (hub organisations). An
incubation program serves as a learning context
in which tenants are socially embedded. As a vital
part of a community concerned with entrepreneurial
development and innovation, incubation programmes
provide opportunities for tenant organisations to form
relationships, gain access to resources and increase
their resource mobilisation and knowledge flow. Social
capital is effective in raising motivation and ability
for both individuals and organisations to engage in
proactive work at the collective level, such as resource
exchanges and knowledge activities. For example, the
ability of tenants to proactively utilise tenant-incubator
social capital can lead to inter-organisational learning
mechanisms, which in turn may transform social
relationships into tenants’ performance, in terms of
technological capability, managerial competence and
satisfaction with (the) incubation programme. Highquality relationships help to construct an environment
for knowledge learning and creation that attracts both
incubators and tenants to participate in collective
activities and share what they know (Fang, Tsai, & Lin,
2010).
The Value of Social Capital by
Discipline
The effects of social capital cut across disciplines.
For example, the achievement of efficiencies and
growth within organisations might lead to more job
opportunities for the individuals within the community,
which translates into reduced crime and improved
health. We summarise in Table 3.4 social capital’s
impact (or value) from the perspective of different
disciplines. As in other classifications, of course, the
classification in Table 3.4 is not exact since some of the
examples could be placed in multiple categories. Also,
the number of disciplines listed is not exhaustive and
others (e.g. geography) could be added.
Unfavourable Consequences of
Social Capital
The fundamental question about social capital is the
benefits and costs of co-operation. As we noted earlier,
there are some mixed findings on whether the value
of social capital is always positive for all constituent
groups. The amount of effort (or cost) required to build
network ties (both internal and external) might take
away resources from other organisational activities and
Measuring and Valuing Social Capital: A Systematic Review
57
Table 3.4
SOCIAL CAPITAL IMPACT BY DISCIPLINE
EXAMPLES OF POTENTIAL IMPACT (OR VALUE) OF
SOCIAL CAPITAL
EXAMPLES OF MECHANISMS
Economics
•
•
•
•
•
•
•
•
Leads to efficiency and growth
Minimises free-rider phenomenon in economic exchanges
Promotes economic growth
Leads to higher standard of living
Increases household income
Leads to early adoption of innovations
Minimises losses from exchanges
Obtains referrals that can increase business opportunities
•
•
•
•
•
•
•
•
Leads to efficiency and growth
Minimises free-rider phenomenon in economic exchanges
Promotes economic growth
Leads to higher standard of living
Increases household income
Leads to early adoption of innovations
Minimises losses from exchanges
Obtains referrals that can increase business opportunities
Health
•
Social capital elements such as trust, reciprocity and
membership in voluntary associations, are significantly
associated with higher life expectancy
Reduces obesity rates
Reduces mortality rates from heart disease, stroke,
unintentional injury
Group memberships are associated with lower overall
mortality
Good health and better cognitive function are associated
with higher social capital
•
Diffusion of knowledge about health promotion,
maintenance of healthy behavioral norms through informal
social control
Promotion of access to local services and amenities, and
psychosocial processes which provide affective support
and mutual respect
High levels of trust and solidarity
Feelings of security
Access to institutions which reduce the negative impacts
of life events
Increases efficiency of transactions
Reduces costs
Enhances entrepreneurship
Bridging and bonding social capital facilitates the start of
entrepreneurship activities and achievement of first profit
Increases access to credit bank loans
Enhances competitiveness
Increases access to financial resources
Creates knowledge
•
•
•
Provides explanations of social class differences
Helps explain racial, ethnic and cultural disparities in health
and mental health
Increases achievement in mathematics and reading in public
schools (i.e. organisational performance), especially where
school boards have high level of external and internal social
capital
Promotes the well-being of individuals as well as
organisations
Is essential to the reproduction of society’s members
•
•
•
Less opportunisms and pursuit of sectional interests
Formation of structurally strong autonomous groups
Development of creative assessments of valuable
projects, who to involve, and how to work together to
make it happen.
Increases civic engagement and citizenship
Facilitates stable democracies,
Increases confidence in government systems
Contributes to poverty reduction; helps resolve disputes and
crises
•
Subsidised neighborhood associations to promote civic
and social participation
Networks and norms that contribute to enhanced
productivity of communities
Civic associations that allow the poor to gain access to
resources that might be enjoyed only by the rich
Trust among people
DISCIPLINE
•
•
•
•
Business
•
•
•
•
•
•
•
•
Sociology
•
•
•
•
•
Governance/
Political
Science
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Trustful relations needing less monitoring of compliance
Knowledge sharing
Access to useful, reliable, exclusive, less redundant
information
Membership in associations such as Rotary Clubs or
Chambers of Commerce
Development of human capital
Trustful relations between different stakeholders
Measuring and Valuing Social Capital: A Systematic Review
58
provide a negative outcome for the organisation. Also,
while generating benefits, social relationships between
organisations can sometimes become a liability. For
example, if an inter-organisational tie is developed but
not utilised in terms of any meaningful activities, the
investments in relationship quality and maintenance are
wasted (Adler and Kwon, 2002).
Cooperation within a particular group will often have
multiple effects. Welfare in the group generally will
be enhanced, in the sense that the collective gains
to group members are positive. Indeed, this is the
standard hypothesis concerning social capital’s impact
(Knack 2002). However, within-group collective action
often imposes costs on non-members. Thus, scholars
have gradually recognised the potential importance of
‘negative’ as well as ‘positive’ social capital in terms
of exclusion of outsiders, excess claims on group
members, and restrictions on individual freedom Portes
(1998).
Social capital can be readily perverted to undermine
social cohesion and fragment society for individual
and group gain, and potentially can result in violent
conflict. For example, the Angka, under the guise of the
Cambodian government, employed inclusionary social
capital within the group to strengthen its resolve and
weaken those excluded from the group. The Rwanda
conflict shows how the political and economic elite
often use identity to mobilise and pervert social capital
as a means of achieving their own ends (Colletta and
Cullen, 2000). Thus, social capital can be constructive
and support societal cohesion and mitigation of conflict,
but it can also hasten social fragmentation and the
onslaught of violent conflict.
To illustrate, suppose that social ties within a village raise
the rate of return to a public project, making all residents
of the village better off. If these same social ties were
responsible for the village’s success in lobbying for outside
funds to finance the project, a second village with weaker
social ties which lost out in the competition for funds is
made worse off. Thus, if the funds would have been more
productively spent in the second village (which might be
much poorer), the first village’s high social capital can
actually reduce social welfare at the aggregate level.
Relatively high income inequality within societies, as
well as high poverty rates, appears to weaken individual
incentives to co-operate and act collectively (Knack,
1999). Such circumstances can exert a negative impact
on social capital, not only because of absolute poverty,
with its adverse effects on the physical ability of individuals
to respond to their role as social actors in groups, but
also because relative poverty creates sentiments of
discrimination and injustice, leading to distrust towards
people, collective action and society as a whole.
Clearly, not all social capital produces positive benefits.
The control of free-riding by clubs and hierarchies can
produce rent-seeking behaviour like the Mafia, while
simultaneously increasing the supply of public goods.
Copying of copyrighted material may spread criminality. At
the same time sharing of knowledge with regard to new
agricultural technologies among co-operative associations
in deprived farming communities may alleviate poverty
and improve community well-being (Collier, 1998).
Measuring and Valuing Social Capital: A Systematic Review
59
Why Business Leaders Should
Care about Social Capital Additional Cases
The questions here are: what should drive business
investments in social capital and how should these be
prioritised? The literature clearly shows that businesses,
through the decisions of their leaders, can contribute
to the attainment of multiple benefits of social capital
through purposeful social capital initiatives within
their organisations. However, given that the value of
social capital is not easily measurable, there might be
reluctance on the part of decision makers to make
these decisions. The point is that business leaders
need to recognise that not only does investment in
social capital provide value but neglecting to invest has
effects that transcend the organisation’s boundaries.
The cases below are illustrative of how social capital
contributes to value for both organisations and
communities as well as how failing to invest in social
capital can lead to unfavourable consequences for a
company.
Case Study 4: Newmont Ghana Gold Limited (NGGL)
Newmont Ghana Gold Limited (NGGL) is a subsidiary of the Newmont Mining Corporation, a global mining company.
NGGL began operations in Ghana in 2006. One of its operations is the Ahafo Mine located in the Brong Ahafo region.
In addition to providing jobs for the people in the region, the company’s operations have led to improvements in the
infrastructure of the area, including an improved road network, mobile phone coverage, power supply and access to
electricity. Other community improvement and welfare projects undertaken by the company include provision of water,
sanitation, and healthcare education, including HIV/AIDS prevention, etc.
The project most directly relevant here is the Ahafo Linkages Programme, in particular the Business Linkages Program.
There were two major community engagement activities of interest: local supplier development, and the formation of a
local business association.
Local Supplier Development:
In 2006, prior to the implementation of the program, the company conducted business with 25 local micro, small- and
medium-sized enterprises (MSMEs), and the total value of this procurement was US$1.7 million. In 2007, 106 local
MSMEs listed in the company’s database were screened by consultants implementing the Ahafo Linkages Program to
determine which MSMEs had the greatest potential for moving from informal business practices (lack of records, lack of
financial statements, weak human resource practices, weak statutory practices, and weak cost management) to formal
business practices. Based on the results of the assessment, 27 companies were selected for relationship building through
mentoring and training. The selected businesses also developed trust and relationships among themselves to pool
resources in order to gain access to commercial opportunities with Newmont. At the end of the first year of intervention
(2007), the number of local MSMEs engaged in business with Newmont had increased to 52, and the value of goods and
services procured from these MSMEs was US$4.2 million. In 2008, the total number of local MSMEs jumped to 125 and
the local procurement reached US$4.7 million. The engagement with the supplier community included mentoring and
training in the use of standard business practices such as documentation of transactions, tracking of costs, and proper
Measuring and Valuing Social Capital: A Systematic Review
60
invoicing. These efforts by the company contributed to the following benefits for some members of the community:
•
•
•
•
•
•
All of the MSMEs adopted new business practices, and 51% formalised their business practices and improved their
financial management.
Over half (52%) of the MSMEs were able to obtain bank credit, with an average of 75 000 Ghana Cedis per loan; over
70% of MSMEs that took loans continue to service their loans.
There was a 40% increase in MSMEs meeting tax obligations to local government.
Twenty-one new permanent jobs were created, 10% of which were held by women.
A total of 78% of the MSMEs reinvested at least US$1,348 into their businesses.
The company gained knowledgeable local suppliers.
The Ahafo Local Business Association
The Ahafo Linkages Programme used local consultants to offer training programs to the Ahafo Local Business Association
on the development of business plans and adoption of proven business practices. Institutional strengthening for the
association included the definition of a realistic mission, vision and objectives. In addition to the 72 members from the
association who received training, over 180 new members joined the association and adopted a formal business plan
along with the other members. Although survey results revealed that 87% of association members surveyed believed
business practices had changed for the better, about one-quarter of respondents were not satisfied with the services of
the association. This sense of dissatisfaction could be attributed to initial misconceptions that members would be able to
obtain contracts with Newmont by virtue of the fact that they were members of the business association. They failed to
accept the fact that the association’s aim was to help build the formal business skills and practices of its members.
Sources: The case was extracted from the World Business Council for Sustainable Development (WBSCD, 2009) report titled “Newmont:
Supporting local economic growth in Ghana. Measuring Impact Framework Case Study, WBCSD”.
Implications for Leaders
This case demonstrates the Newmont Mining Company’s community engagement activities in the form of building the
capacity of the community in which it operates and its efforts at fostering community level associations for the purposes of
improving their business capabilities. It illustrates the economic impact of social capital programs within a community and
the associated benefits for the company and the community. Several lessons are important here:
• It can be inferred that the contributions of the company toward infrastructure development in the form of roads,
electricity, telephony, water, and sanitation enhanced its reputation that facilitated the success of the social capital
engagements.
• The community benefited from the resultant economic development in the form of job creation, access to loans/bank
credits and improved performance of local businesses.
• It shows that membership in the association allowed members to gain access to the training offered by the NGGL
program and the training led to improvements in business practices that contributed to the sustainability of the
businesses as evidenced by the increased number of MSMEs, the reinvestments in the businesses, and the loan
repayment success.
• The company benefited from an expanded local supplier source. The supply chain literature attests to significant
benefits for firms who use nearby suppliers.
• The company also benefited from improved knowledge about how to enhance the associational life of businesses
within a community.
Measuring and Valuing Social Capital: A Systematic Review
61
Case Study 5: Agricultural Extension and the Building of Social Capital in Mali
This case study shows the building of social capital through the development of trust relations between agricultural agents
and farming communities in Mali. Agricultural agents are used extensively by governments, banks, and NGOs to help
farming communities in Africa improve yields and farming practices that contribute to the sustainability of the ecosystem.
The case is extracted from a World Bank research project on social capital. The overall objective of the project was to gain
an operationally useful understanding of trust in relation to the use of contact groups for communication in the training and
visit system of agricultural extension in Mali.
Three particular aspects of trust were the focus of the inquiry. The first was trust between the technician (agricultural
extension agent) and farmer, which may be necessary for the latter to follow the counsel of the former. The second was
the trust that binds the members of the contact group into a cohesive whole. The third was trust that transcends the
group and allows it to act for and serve the interest of the larger community of which the group is a part.
The engagement between the agent and the farmers and their groups included the following:
• The extension agent, known as the Agent de Vulgarisation de Base in Mali, met with the village members during
a general assembly to explain the training and visit approach. Those interested in the programme were asked to
organise themselves into small working groups (contact groups).
• Each contact group acted as a conduit for passing technical information to the rest of the village.
• The extension agent visited each contact group every two weeks to work on technical themes and demonstrate new
techniques.
• Specific agricultural techniques were taught during hands-on demonstrations in a contact group member’s fields.
• Technical themes addressed specific agricultural problems that were common in the area or that the village
highlighted during a yearly diagnostic exercise.
• The annual diagnostic exercise brought together the community, the extension agent, his direct and regional
supervisors and various technical specialists. Information from the diagnostic was then centralised and the upcoming
year’s themes were chosen at the regional level.
• Extension agents attended monthly training sessions to receive information about the technical subjects and themes
chosen for the year.
The interventions were applied to different groups at multiple villages in Mali. The performance of the groups evaluated
to gain an operationally useful understanding of trust in relation to the use of contact groups for communication in the
training and visit agricultural extension system.
One of the factors found to influence the success or failure of agricultural extension and other development efforts was the
cohesiveness of the village (i.e. interpersonal trust). While the calibre of the extension agent was also important in bringing
about grassroots development, the community cohesion was the foundation on which sound, lasting development was
built, leading to the sharing of information. Development agencies have traditionally placed primary attention on technical
matters and the agents who transmit them and devoted little or no time and resources to a) gaining an operationally
relevant understanding of the social and institutional fabric in the places where they work, and b) training agents to
enhance the local context so that villagers would be more receptive to technical themes.
Measuring and Valuing Social Capital: A Systematic Review
62
The results suggest that social cohesion, which is internal to the community, is the primary pre-condition for development.
If the community has both social cohesion and a qualified, dynamic external agent, there is significant success in
agriculture and other development endeavors. Social cohesion with regard to unity among community groups, agreement
on goals and values, treatment and acceptance of public goods, contributed to create the conditions in which an effective
external agent could induce change in rural Mali. The presence or absence of social cohesion had a recurring effect on
the ability to mobilise for group activities and share information among members of the communities. This social capital is
present in communities based on historical and cultural factors that are not subject to the control of external development
agencies.
Trust between an external agent, such as an agricultural extension worker, and the community is important. However, it is
also important that trust be established and reinforced between the agent and the central government agency for which
he or she works. In the absence of such trust, the agent becomes demoralised and less effective in communicating with
the target population. Low trust between the government worker and the national organisation can thus reduce trust
between the worker and the population served.
Source: The materials presented here were extracted from Reid, C., and Salmen, L. F. (2000). Understanding social capital: agricultural
extension in Mali: trust and social cohesion. Washington, D.C.: World Bank, Social Development Family, Environmentally and Socially
Sustainable Development Network.
Implications for Business Leaders
This case study illustrates the fundamental importance of trust and social cohesion for achieving community goals. It
shows that an institution’s efforts to help people realise their aspirations becomes more effective when the community
members have close relationships with each other and exhibit a high level of trust for the institution.
Measuring and Valuing Social Capital: A Systematic Review
63
Case Study 6: Refinor
Refinor was a company in Argentina that operated oil refineries. The company was doing very well between 1996
and 1998. However, the “region’s social and economic problems were worsening, with high unemployment rates and
social turmoil, depressing the consumer market and making the three cities where the company operated inhospitable
for Refinor’s employees and their families. Riots, fuel pilferage, gang activities, and drug trafficking were on the rise,
menacing businesses and residents alike”. Refinor sought to turn around the decline in social capital in parts of the region
and thus invested in helping unemployed residents start agricultural businesses, creating school boards for focusing
education on the required competencies, and supporting health and rehabilitation programmes and improving healthcare,
infrastructure, and waste management. Social indicators started to improve: in three years, people who had previously
been unemployed started 120 new small farms with the help of their own children who were attending local agro-technical
schools. Crime and social unrest fell significantly as the unemployment rate was reduced by half as a result of the new
jobs created in the process. Farming activity in the region went up and the demand for diesel and gasoline increased.
Refinor’s brand of diesel and gasoline become the brand of choice and the company’s market share went up. In 1998,
Refinor was sold to a Brazilian state company, Petrobras, which decided not to continue with the investments in social
capital, thereby reducing significantly the hours of social work the company was devoting to social capital activities in the
community. Between 1998 and 2002, unemployment and social conflict rose, riots increased, and Refinor’s market share
and revenue declined significantly. It is difficult to attribute the economic downturn directly to Petrobras’ disinvestment in
social capital within the community. However, after an assessment of the impact of the variations in unemployment, riots,
strikes, and damage to property within the communities and on Refinor’s business, the company was able to make the
business case for the social investments and reinstated the programmes.
Source: This case was extracted from Bernardez, M. L. and Kaufman, R. (2013), Turning Social Capital into Social Performance: Three
Case Studies and a New Framework for Value Creation. Performance Improvement, 52: 5–18.
Implications for Business Leaders
The above case illustrates the impact of making investments in social capital and the possible consequences of ignoring
social capital if the community expects that of companies operating within the locality. The point is that business
leaders need to recognise that not only does investment in social capital provide value (both tangible and intangible),
but neglecting to invest has effects that also transcend the company’s boundaries such as; increases in crime rates,
destruction of property and incarceration rates.
Measuring and Valuing Social Capital: A Systematic Review
64
chapter 4: recommendations
and conclusion
Measuring and Valuing Social Capital: A Systematic Review
65
Our review has shown that although researchers and
practitioners have diverse definitions and interpretations
of social capital, they broadly agree on its core
meaning: Social capital consists of networks of
relationships and resources inherent in these networks.
The difficulty is the consistency between the definition
of social capital and the indicators used to measure
it. Therefore, when deciding how to measure social
capital, it is important to identify the specific indicators
that best correlate with the construct (See pages
39-40 for suggested measures for social capital). We
thus present recommendations for measuring social
capital and identifying its value or impact. Further,
since social capital offers benefits to individuals,
groups and organisations, and communities, we offer
recommendations for clarifying the impact of social
capital for these different groups.
Recommendations for
Measuring Social Capital
Recommendation #1: Distinguish between social
capital measures for individuals, organisations and
communities.
Our review clearly indicated that social capital is a
multi-level construct. While some researchers see it
as an individual (and organisational) level resource,
others conceive of it as a community level resource and
therefore a public good. Social capital can be defined
as capturing individual, organisational and community
(collective) level assets and resources. Therefore,
researchers and practitioners should indicate whether
they are measuring social capital at the individual
(and organisation) level or at the community level.
Organisation level and individual level are grouped
together since individual managers or executives’
networking relationships are generally used as a proxy
for the networking relationships that create social
capital for an organisation. The individual level measures
should focus on indicators obtained from social network
analysis and social network ties or relationships they
forge, while an organisation’s social capital should look
at indicators of network structure and social network
relationships developed by top managers, executives,
and even supervisors or middle-level managers
within and outside the organisation. However, at the
community (collective) level, the measurement of
social capital should focus on indicators that allow
resources to be generated for the community through
participation in civic life, including civic engagement
and associational memberships, in addition to social
networking relationships and interactions. Trust and
cognitive measures seem to be universally applicable
at both levels, but the emphasis should be different.
Interpersonal trust or trust in close acquaintances,
friends, family and co-workers is important at the
individual and organisational levels, while general
trust and institutional trust are key at the community
(collective) level.
Recommendation #2: Recognise the multidimensional nature of social capital.
Discussions of social capital in the literature recognise
that it is multi-dimensional – structural, relational, and
cognitive (Nahapiet and Ghoshal, 1998; Payne et al.,
2011; Grootaert et al., 2004). However, several of
the existing social capital measurement tools (e.g.
European Values Study Survey; World Values Survey;
World Bank’s Social Capital Assessment Tool [SOCAT];
Measuring and Valuing Social Capital: A Systematic Review
66
Global Social Capital Survey; New South Wales Study;
etc.) use general social capital indexes by aggregating
indicators from the various dimensions instead of
conceptualising the various dimensions independently.
Therefore, the index measures of social capital usually
mask the real impact of the various dimensions of social
capital by individuals and organisations on communities
and national economies. The various dimensions should
be measured independently so that the impact of the
individual dimensions on society can be identified. This
would allow managers to focus on indicators that are
relevant to their social capital activities. This suggests
that separate indicators, or if need be, indexes should
be created for the various dimensions of social capital –
structural, relational, and cognitive.
Recommendation # 3: Distinguish between
measures used for social networking relationships
and social network structure.
Our review revealed that it is difficult to distinguish
between the indicators used to measure the
structural dimension of social capital (which focuses
on social network structure and position) and the
relational dimension of social capital (which focuses
on the content and quality of the social networking
relationships). While several studies at individual and
organisational levels have used indicators such as
bonding social capital, bridging social capital and linking
social capital as structural measures, others have used
the same indicators as relational measures. However,
bonding, bridging and linking social capital are relational
measures as they tap into the closeness of relationships
or connections. Thus, distinguishing between structural
and relational social capital measures would allow
practitioners to apply the right indicators to assess the
social capital within or outside an organisation so as to
ascertain its social impact.
Recommendation #4: Distinguish between ‘sources’
or determinants or inputs into social capital and the
outcomes of social capital.
Commenting on how social capital has been measured,
Baum and Ziersch (2003:320) noted that “It is important
to keep the ‘sources’ and ‘outcomes’ distinct— that is,
the networks and values, from the types of resources
available through these.” Social capital is a relational
construct which is dependent on interactions and
sharing among actors; thus any indicator of social
capital must tap into the issues of relationships,
interactions and sharing. This was succinctly captured
by Portes (1998:7): “Whereas economic capital is in
people’s bank accounts and human capital is inside
their heads, social capital inheres in the structure of
their relationships. To possess social capital, a person
must be related to others, and it is these others,
not himself, who are the actual sources of his or her
advantage”. Therefore, indicators that emphasise
relationships, interactions, and the ability to share
should be used in measuring social capital. Some of the
indicators emphasising relationships and interactions
include social networks, trust, shared norms, and social
cohesion. This would help managers to easily know the
indicators that can be used to measure social capital
and separate them from those that social capital can
provide a company or a community, thus finding out the
impact of their activities.
Measuring and Valuing Social Capital: A Systematic Review
67
Recommendation #5: Context is important in the
measurement of social capital.
The relational nature of social capital implies that the
interactions among actors that lead to its formation
take place in a particular context. The context could
be the society in which an organisation does business
or an industry’s environment. The cultures of most
traditional societies in Africa are different from those
in Western societies, and as a result the social
interactions that engender social capital are different.
In fact, most African societies exhibit social systems
that are collectivistic and relationship-oriented, in which
cultural norms and values favour communal support
and commitment to reciprocity and equity (Acquaah
and Eshun, 2010). Measures of social capital should
reflect these contextual environments. To illustrate,
while both relational and structural measures could be
used in every cultural environment, the use of relational
measures of social capital would be more appropriate
in the African context than measures that use network
structure and position because the cultures are
characterised by strong communal bonds, co-operation
among members, and an emphasis on the interests of
the group. Conversely, developed societies are more
individualistic so measuring social capital with structural
measures is more appropriate. Moreover, even within
the African contexts, different measures or a variation of
similar measures would be needed in different regions
or countries or communities. As Grootaert et al. (2004)
concluded after pilot testing the SC-IQ index, “local
adaption, while resource intensive, is essential”, when
developing measures for social capital. This may be
challenging for some organisations, but in order to
determine the social and economic benefits of their
social capital activities in a community, the measures
should be relevant to that community.
Recommendation #6: Measurement of social capital
should be quantitative as well as qualitative.
Multiple methods should be used to measure social
capital. Social scientists have mostly relied on
qualitative methods to investigate social phenomena
such as relationships, interactions, networks, and
cohesiveness. However, the review indicated that the
vast majority of the studies used quantitative methods
such as questionnaire surveys, and the use of archival
data sources from the World Values Survey and the
General Social Survey in the measurement of social
capital. Social capital is, however, a relational construct
so the use of qualitative methods in measuring it
would allow for a detailed and complete exploration
of the components underlying its measurement such
as networking relationships, ties, connections, and
the extent of civic engagement (i.e. volunteerism,
association membership, social and political
participation). Compared to quantitative measurement
techniques, qualitative approaches to measurement
would enable researchers and practitioners to elucidate
individual and collective behaviors in organisations and
communities which determine the content and quality
of networking relationships, trust, shared collective
norms and values. Including the measurement of social
capital in a qualitative way will improve how it impacts
organisational and community/national outcomes.
Measuring and Valuing Social Capital: A Systematic Review
68
Recommendations for
Determining the Impact or value
of Social Capital
Recommendation #1: Recognise and assess the
value of social capital.
The value of social capital is not easily assessed.
However, the inability to assess its value should not
diminish the ‘capitalness’ of social capital. Social
capital value has effects that persist over time and
thus investments in social capital should recognise
the long-term benefits of the investments. For the
individual, social capital has the potential to increase
job opportunities, lead to income, and improve health,
among others. For organisations, the benefits of social
capital include the potential to decrease costs, open
up markets, gain access to resources, and improve
innovation capability, which can then be translated to
monetary value. For communities, social capital can
promote improved access to loans, financial credit,
and improved sanitation which can subsequently result
in enhanced economic well-being of the community.
Unlike other forms of capital, social capital cannot
be owned or easily traded. The capital resides in the
relationships that individuals or groups establish with
others.
At the same time, organisations, in particular, can take
steps to monetise the value of social capital. Bernardez
and Kaufman (2013) suggest that organisations
and communities can monetize the value added or
subtracted in a double-bottom-line business case by
social and anti–social capital factors and interventions
such as improving communities’ civic engagement,
quality of life, employment, and rule of law. Outputs
can be assessed at three levels of performance:
“value added to society (Mega level), to organisations
(Macro level), and to products and services delivered
by social capital interventions (Micro level).” This will
enable organisations, governments, and communities
to monitor the effective use of new and existing
social capital and control the progress and return
on investment of turning around anti–social capital
(Bernardez & Kaufman, 2013).
Recommendation #2: An Input-Output model is
useful for assessing social capital value.
Social capital is both a result of and a resource
for societal and organisational performance. As a
resource, social capital can be an asset for societal
and organisational performance—providing trust,
rule of law, brand loyalty, and care for shared public
resources. It can also be a liability as ‘anti–social
capital’—building gangs, weakening institutions and
the rule of law, making contracts unenforceable, raising
the cost of transactions, and provoking the “tragedies
of the commons” by destroying shared resources.
Social capital requires actors to establish and maintain
links with others (Raub, Buskens, and Frey, 2013).
Three activities are necessary in order to turn social
capital into value-adding community, organisational,
and individual performance. These activities are (i)
establishing a shared vision among all stakeholders,
(ii) measuring and reporting the value added by social
capital, and (iii) building a supportive social ecosystem
(Bernardez and Kaufman, 2013). These steps imply
a feedback system in which the output potentially
influences changes in the input. For example, a study of
social capital in post-war Rwanda found that conflicts
did not necessarily reduce the stock of social capital
Measuring and Valuing Social Capital: A Systematic Review
69
but transformed it into new forms of social capital
(Colletta and Cullen, 2000).
growth might not be successful without recognising the
underlying social factors in the environment.
Recommendation #3: The value of social capital
depends on the context.
Recommendation #4: Recognise the unfavourable
consequences of social capital.
Assessing the value of social capital requires
consideration of the context in which the social capital
occurs. Within organisations, context might take the
form of the organisational structure as to whether it is
flat and vertical. Context might also be the nature of
training and skill enhancement programs within the
company. Burt (1997), for example, has argued that
for individuals in organisations, social capital provides
the context for the effectiveness of human capital in
helping individuals climb the social ladder. Similarly, a
study of mentoring activities among lawyers indicated
that the social position of junior professionals and the
social network qualities of mentoring relationships either
eased or hindered protégés’ abilities to capitalise on
relationships to gain access to resources of professional
support while trying to build rewarding careers (Kay
and Wallace, 2009). For nations and communities, the
benefits of social capital depend on the political and
social conditions within those nations and communities.
In Kenya, for example, it has been suggested that the
prevalence of local informal institutions, such as land
tenure systems, customs, norms, and networks, help to
explain the success achieved with control of soil erosion
and increased food production (Nyangena and Sterner,
2009). The case study in Mali on the role of Agricultural
Extension agents in building social capital showed that
the trust between contact groups and other members
of the community influenced the effectiveness of the
groups as catalysts for community development. Thus,
attempts at building social capital to enhance economic
Despite the over-arching evidence of the benefits of
social capital, it is important to also recognise the
unfavourable consequences of social capital in order
to minimize the impact of potential negatives that
might arise. While social capital enables individuals,
organisations and communities to gain access to
resources, it could also lead to the denial of the
same access to others. The rules and procedures
in organisations necessary to build trust or gain
efficiencies might also result in limited mobility for
workers or stifle the creativity of workers. The use
of network relationships such as a CEO’s social
capital to obtain information from government officials
might enable an organisation to strategically exploit
the information, to the detriment of competitors.
The eventual result might be corruption within the
community, which then reduces the overall well-being
of the society. Civic associations might place a lot of
emphasis on norms and values that extend beyond
associational boundaries and therefore produce
inclusive social capital, which brings about positive
effects. However, this pursuit might also foster group
boundaries and self-interest, which then leads to the
exclusion of others, to the detriment of society as a
whole (van Deth and Zmerli, 2010). These examples
show that “a higher level of social capital may not
only have benevolent consequences but may also
come with discontent, disaffection, intolerance, the
persistence of social inequality, biased representation,
and economic obstacles leading to the deterioration of
Measuring and Valuing Social Capital: A Systematic Review
70
democratic legitimacy” (van Deth and Zmerli, 2010: 5).
Thus any attempts to understand social capital need to
recognise the duality of social capital’s consequences
as discussed in Chapter 3 of this report.
Recommendation #5: Social capital’s value is also
about the process.
It is important not to ignore the process components
of social capital development in assessing the value
of social capital. Recognition of social capital as an
input-output model is useful in understanding the value
of social capital. The process model shows that social
capital is an asset whose value-creating potential only
materialises as a consequence of resource flows, and
more specifically the mobilisation, assimilation and use
of those resources. The value of social capital depends
on the efforts exerted in building social capital. This is
because the value of social capital, unlike say financial
capital, arises from the relationships between actors,
whether individuals, organisations or community
groups. To illustrate, interactions between actors lead
to the development of social cohesion, which leads to
the development of trust and reciprocity, resulting in
efficiencies and cost reductions which in turn produce
higher economic growth. The value of social capital,
of necessity, depends on the nature of the interactions
between the individuals in groups. In other words, the
efforts expended in communication, building of trust,
encouragement of participation and involvement,
development and acceptance of norms and values will
have an impact on the resulting social capital (Narayan
and Cassidy, 2001).
Conclusions
Researchers and practitioners have long recognised
the role social capital could play in mobilising
resources, information and knowledge from individuals
in organisations and communities for the creation
of human capital, organisational success, health
outcomes, and community social and economic
growth. Consequently, practitioners, policy makers
and researchers have attempted to define, measure
and assess the value of social capital for business and
public policy decision-making and reporting. Social
capital is seen as an individual as well as a collective
societal resource. All the definitions of social capital
recognise that it is characterised by social networks,
trust and reciprocity, and shared norms, values and
goals. There are two forms of social capital (internal
or external) depending on where the individual,
organisation or community obtains resources,
information and knowledge. Social capital is a multilevel construct which can further classified into three
dimensions – structural, relational and cognitive.
In addition to identifying and examining the definition,
forms and dimensions of social capital, this review also
investigated and highlighted the ways in which it has
been measured at the individual, organisational and
community levels. Social capital has been measured
by using networks, relationships, and connection;
trust; civic engagement and voluntary activities, and
association membership; and norms, shared values
and goals. There is, however, different emphasis at the
individual, organisation and community levels. Despite
the growing discussion of how to measure social
capital in the literature, there is lack of consensus about
the indicators that should be used to measure the
Measuring and Valuing Social Capital: A Systematic Review
71
concept. Moreover, there is a wide gap between how
social capital has been defined and how it has been
measured in different environmental and disciplinary
contexts. Thus, there is still a challenge in identifying
and using uniform indicators in measuring social capital
because of its contextual nature.
The report further explored the value and impact
of social capital for individuals, organisations and
communities. This review has provided some
insights into the value of social capital to individuals,
organisations and communities (regions or nations).
For individuals, social capital allows access to
privileged information, provides job opportunities, and
enhances skills. For organisations, social capital value
includes gains in efficiency, increased market share,
and enhanced performance. Social capital provides
value to communities (or regions/nations) in the form
of improved community health, improved sanitation,
reduction in crime, and economic growth. It is worth
noting that the benefits that pertain to individuals can
also be realised by organisations and communities, and
vice versa. While the literature shows that social capital
provides value, there is still a lot of work to be done on
quantifying its value, especially in developing countries
where the impact of social capital can be used as
a basis for policies designed to achieve sustainable
economic and community development.
Social capital has policy implications for businesses,
communities and nations. Thus, it is important to
identify how differing types of social networks can
promote desirable outcomes. Governments and
non-governmental organisations must remember that
businesses contribute to a prosperous economy by
providing jobs, investing capital, purchasing goods
and doing business every day. By addressing social
issues through a shared value exchange, business,
government and service providers will achieve selfsustaining solutions that do not depend on private
and government subsidies. The collective efforts of
business, government and service providers working
together to understand the potential of all their citizens
can have a greater impact on social good than each
operating independently or at odds with each other
(Dyda, 2008).
Measuring and Valuing Social Capital: A Systematic Review
72
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Appendix A: Detailed
Methodology
This appendix contains the detailed methodology used
for the systematic review on social capital. Additional
supporting documents are provided in Appendix B and
Appendix C.
The purpose of this Network for Business Sustainability
South Africa (NBS-SA) review, was to provide a
systematic review and synthesis of social capital in
the academic and practitioner literatures over the
24-year period, 1990-2013. The scope of the review
was developed through a series of discussions among
the researchers, members of the NBS-SA Guidance
Committee, an industry consultant and the Academic
Director of NBS-SA. We sought to provide an answer
to the question: “How can we measure and value social
capital for business decision-making and reporting?”
We addressed the question through the series of subquestions:
• What is social capital? What constitutes the forms
(e.g. internal and external) and dimensions (e.g.
structural, relational and cognitive) of social capital?
• How has social capital been measured in the
management literature? What can we learn about
the measurement of social capital from other social
science disciplines such as economics, sociology,
political science, education, and development
studies?
• How has social capital been valued in the
management literature? How does the value of
social capital differ for individuals, organisations,
and communities?
• What lessons can business leaders and
organisations draw from a systematic review as they
make investments in social capital?
To execute the project, we searched the academic and
practitioner journals, periodicals, reports, monographs,
unpublished papers, working papers, and reports by
international development agencies such as the World
Bank and the Organisation for Economic Development and
Cooperation (OECD).
The specific databases used for the academic journal
searches included:
• EBSCOhost Complete Databases
• JSTOR
• LexisNexis Academic
• EconLit
• Emerald
• ProQuest Direct
• Sabinet (this database covers South Africa and many
other African Journals);
• African Journals Online (AJOL)
• Google Scholar
We initially searched Google Scholar using the phrase
‘social capital’. This resulted in about 3.95 million ‘hits’
which was impossible to review. This led to a strategy where
the initial search process was going to focus on a search
of the literature for studies on social capital in emerging
economies (including Africa, Asia, Latin America, and the
Middle East) published between 1990 and 2013. The
following keyword combinations were used in the search:
• Social capital AND measurement
• Social capital AND measures
• Social capital AND valuation
• Social capital AND value
Measuring and Valuing Social Capital: A Systematic Review
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Social capital AND performance
Social capital AND impact
Social capital AND Africa
Social capital AND Asia
Social capital AND Latin America
Social capital AND emerging economies
Social capital AND transition economies
Social capital AND developing economies
Social capital AND developing world
Social networking AND measurement
Social networking AND measures
Social networking AND valuation
Social networking AND value
Social networking AND performance
Social networking AND impact
Social networking AND Africa
Social networking AND Asia
Social networking AND Latin America
Social networking AND emerging economies
Social networking AND transition economies
Social networking AND developing economies
Social networking AND developing world
Networking AND measurement
Networking AND measures
Networking AND valuation
Networking AND value
Networking AND performance
Networking AND impact
Networking AND Africa
Networking AND Asia
Networking AND Latin America
Networking AND emerging economies
Networking AND transition economies
Networking AND developing economies
Networking AND developing world
Networks AND measurement
Networks AND measures
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Networks AND valuation
Networks AND value
Networks AND performance
Networks AND impact
Networks AND Africa
Networks AND Asia
Networks AND Latin America
Networks AND emerging economies
Networks AND transition economies
Networks AND developing economies
Networks AND developing world
Connections AND measurement
Connections AND measures
Connections AND valuation
Connections AND value
Connections AND performance
Connections AND impact
Connections AND Africa
Connections AND Asia
Connections AND Latin America
Connections AND emerging economies
Connections AND transition economies
Connections AND developing economies
Connections AND developing world
Social ties AND measurement
Social ties AND measures
Social ties AND valuation
Social ties AND value
Social ties AND performance
Social ties AND impact
Social ties AND Africa
Social ties AND Asia
Social ties AND Latin America
Social ties AND emerging economies
Social ties AND transition economies
Social ties AND developing economies
Social ties AND developing world
Measuring and Valuing Social Capital: A Systematic Review
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The search terms were vetted by the NBS:SA Guidance
Committee and the Academic Director. The number
of relevant articles that were obtained from the initial
search was 100 academic and practitioner articles.
The number of articles was deemed inadequate for a
comprehensive review. Thus, based on the advice of
the Guidance Committee and the Academic Director
the second we expanded the scope of the search
to include global studies of social capital. The same
search phrases were used as in the initial search but the
regional focus was expanded to include all countries.
Overall, a total of 348 studies were deemed relevant
for the review. A quick screening process based on
the relevance of the articles to the research questions
was used to narrow down the relevant articles. The
screening involved a quick read of the abstract and/or
a visual scanning of other portions of the entire article.
This result in a final count of 314 relevant articles. The
articles were subsequently classified into five major
categories:
• Business (includes management, marketing,
human resources, information systems, supply
chain, operations management, entrepreneurship,
etc.)
• Economics
• Public Policy (includes political science, sociology,
education, etc.)
• Health
• Others (World Bank, World Council for Sustainable
Development, OECD, Australian Bureau of
Statistics, UK Office of National Statistics, etc.)
The articles were thoroughly reviewed by the
researchers and abstracted into a Word document file
using the following components:
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Title
Authors
Journal or source and date of publication
Summary
Focus of the article: individuals, organisations (firms),
communities (or regions or nations)
Definition(s) of social capital used in the article
Measurement of social capital
Value/impact/benefits of social capital.
Details of the articles are provided as Appendix B (which
is provided in a separate document). The complete
bibliography is attached to the main report.
The relevant literature obtained from the search was
collated. The studies were then thoroughly reviewed
and analysed by documenting the various definitions of
social capital, the measurement of social capital, and
value or impact of social capital. The analysis took the
form of looking for consistent and overlapping findings
with regard to how social capital had been defined, the
forms and dimensions of social capital. We synthesised
the findings the component ways in which social capital
has been measured. Assessing the value of social capital
was challenging since most of the studies examined the
associations between indicators of social capital and its
outcomes rather than causal relationships.
The culmination of the analysis was the development
of several tables, charts and other visuals that could be
could be used to clarify the definitions, measurement and
the value components of social capital. In addition, we
developed several models that sought to integrate the
definitions, measures and value of social capital while
recognising the similarities and differences for individuals,
organisations and communities.
Measuring and Valuing Social Capital: A Systematic Review
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Appendix B: Summary of Studies Used for Review
We provide a summary of the studies used for the review focusing on definitions of social capital, the measurement
of social capital and value social capital in a separate document.
Appendix C. Definitions of Social Capital Terms
SOCIAL CAPITAL
CATEGORY
DEFINITION
Social Network Measures
Betweenness Centrality
The degree to which an actor lies on the shortest paths connecting others in the network.
Bonding
The extent to which a full network consisting of several densely connected groups has minimal ties between
them. It also refers to relationships between individuals from the same group. These social ties are often
understood to be deeper, stronger, and they are more likely to inspire greater group commitment and strength.
Bridging
The extent to which a full network in which groups existed (through slightly less dense), along with scattered
bridging ties between the groups. It also refers to relationships between individuals from different groups. The
relationships usually cross socio-demographic and organisational lines, uniting people who represent different
segments of a community or society.
Centrality
The degree of prominence of actors in a social network.
Closeness Centrality
The degree to which an actor is close to other actors in the network.
Density
The extent to which all members of a network are linked to each other or the network is interconnected by
direct or undirected ties.
Eigenvalue Centrality
The degree to which an actor is connected to well-connected others in a network.
Heterogeneity or Diversity
The extent to which network members have diverse attributes. The attributes could be standard demographic
measures (gender, age, race), or socio-economic status, or racial/ethnicity.
Homophily
The extent to which people interacting in a network maintain close network ties to people who are similar
based on some characteristics.
Linking
The extent of the connections an actor has with people in positions of power and is characterised by relations
between those within a hierarchy where there are differing levels of power. It is different from bonding and
bridging in that it is concerned with relations between people who are not on an equal footing.
Network constraint
The degree to which other actors constrain the focal actor.
Size
The number of actors that an individual is connected to.
Social Cohesion
The solidarity existing among people who know one another.
Measuring and Valuing Social Capital: A Systematic Review
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Strong Ties
Structural Hole
A region in a social network where there are non-redundant sources of information due to weak ties spanning
across otherwise unconnected groups.
Tie Strength
A combination of the amount of time, emotional intensity, intimacy (mutual confiding) and reciprocal services
characterising a tie, hence, the quantity of resources characterising a relation. Tie strength may be in the form
of strong ties or weak ties.
Weak Ties
The indirect influences outside the immediate circle of family, close friends and acquaintances.
Trust Measures
Generalized trust
The trust extended to strangers or people in general.
Institutionalised trust
The trust in organisations, and the formal institutions of government.
Interpersonal trust
The trust in people who are familiar to an individual such as family, friends, and colleagues.
Reciprocity
The provision of resources by an individual, company or institution to another individual, company, or institution,
in which there is an expectation of an equivalent repayment by these recipients to the original provider during
an unspecified time in the future.
Civic Engagement Measures
Association membership
An individual’s membership in a professional, religious, ethnic or civic organisation.
Civic participation
An individual’s participation in the social, and cultural life of a community such as attending community or town
council meetings.
Political participation
An individual’s participation in political activities such as voting in elections, and engaging in other political
activities such as signing petitions.
Volunteerism
An individual’s participation in activities in which he or she donates his or her time and effort. The activities can
include helping vulnerable groups in a community, assisting amateur sporting events, or working for a religious
organisation.
Social support
The degree to which a relationship involve flow of affect or emotional concern, tangible aid, or the provision of
information.
Norms Measure
Civic norms
The general tendency for people in a given society to co-operate and act for the public good.
Measuring and Valuing Social Capital: A Systematic Review
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About NBS South Africa
NBS-SA is an affiliate of the Network for Business Sustainability, a non-profit organization based at Western University and
UQAM (Québécoise des Archivistes Médicales) in Canada. The Network for Business Sustainability produces authoritative
resources on important sustainability issues with the goal of changing management practice globally. We unite thousands
of researchers and business leaders worldwide who believe passionately in research-based practice and practice-based
research.
NBS-SA is hosted by the Gordon Institute of Business Science (GIBS) at the University of Pretoria in partnership with the
Graduate School of Business (GSB) at the University of Cape Town. NBS South Africa is funded by the Leadership Council
members with additional support from the GIBS Transnet Programme in Sustainable Development.
NBS-SA acknowledges the generous support and funding of the Gordon Institute of Business Science (GIBS) at the
University of Pretoria, the Graduate School of Business (GSB) at the University of Cape Town, Deutsche Gesellschaft für
Internationale Zusammenarbeit (GIZ, Germany) and EY.
NBS South Africa Leadership Council
NBS-SA’s Leadership Council is a group of South African sustainability leaders from diverse sectors. At an annual meeting,
these leaders identify their business sustainability challenges — the issues on which their organisations need authoritative
answers and reliable insights. Their sustainability challenges prompt each of the NBS-SA’s research projects.
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