What Is Social Capital and Why Is It So Important?

Social capital is not a new term. In fact, social capital has been examined by many scholars for nearly 100 years. The importance of social capital is not unknown to us, but for some reason we seem to assign it a low value in modern society. We brush off the importance of social capital in exchange for convenience and “efficiency.” So what is social capital and why do we have so much trouble utilizing it correctly?

Simply put, social capital is the value derived from positive connections between people. In industry this is described as a set of various relationships, reputations, and assets, existing within an organization or with its partners and customers, that enable business processes to function as efficiently and effectively as possible. Additionally, for our purposes we will break it down into three constructs. The first construct is Relational Capital, which can be defined as the relationships we have with others in our world. The second construct is Cognitive Capital, which is the knowledge we have to share with the world around us. The third construct is Structural Capital, which is our individual brand and our processes.

You may think the statement “there is value in positive connections with others” is common sense. I would say that you are 100% accurate and it’s even supported by Yale University professor Dr. Laurie R. Santos. Santos asserts that the “sheer amount of time we spend around other people predicts how happy we are.” However, our society is in disagreement and this is demonstrated by the impacts of loneliness and the lack of trust we have with the institutions around us.

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