Measuring Social Capital

Does the term ‘social capital’ mean anything to you? According to the Community Foundation of Silicon Valley, “social capital, or community connectedness, refers to social networks and the norms of reciprocity that arise from them. A growing body of hard-nosed literature over the last several years shows that social capital, and the trust, reciprocity, information, and cooperation associated with it, enables many important individual and social goods. Communities with higher levels of social capital are likely to have higher educational achievement, better performing governmental institutions, faster economic growth, and less crime and violence. And the people living in these communities are likely to be happier, healthier, and to have a longer life expectancy.”

Now that you know what it is, you might find the Social Capital Community Survey Network website to be a useful tool. Here is the website address.

Is there a correlation between a community’s social capital and its capacity for economic growth? Many researchers believe there is. Here are a couple illustrations of this point. First, consider that today’s economy is driven by knowledge and human capital. That takes people who can relate to one another. Second, consider the fact that a community’s ability to find collaborative solutions to problems and to develop opportunities is important to economic development success. Third, consider the fact that every EDO is competing for the best available leadership to guide its efforts. Fourth, consider the fact that both communities and businesses boil down to people.

I think this is an interesting and important issue that economic development should give greater attention to in the future. For one, social capital is a crucial ingredient in growing clusters; that is people must be able to work together and access each other’s business and economic networks. Businesses belonging to clusters must be parts of each other’s value chains, and to do that, they must trust each other and must be able to partner solutions.

You will be hearing a lot more about social capital in the future. Count on it.