Social Capital

Lastly, social capital encompasses all ‘non-market and non-state’ intangible resources (Evers & Schulze-Boing, 2001 p. 296) outside economic and human capital (Laville & Nyssens, 2001). Social capital is defined as the collection of resources that permit access to a network or affiliation with a group instrumental to goal realization (Flap, 1995). It differs from human and economic capital in that it is owned by the two parties simultaneously and cannot be used only by one of the parties. Thus it diminishes for both parties should one of the parties withdraw from the relationship (Burt, 1995). SE social capital derives from the organization’s connections to their local environment (Adler & Kwon, 2002). Granovetter (1985) refers to this as ‘local embeddedness’ as the interconnectivity to local public authorities, community, private entities, direct, indirect customers and stakeholders are a prerequisite and important source for SE to create social value.

Social capital permits SE organizations to reduce transaction costs from stakeholders and gain access to human and financial capital and partnerships (Laville & Nyssens, 2001). Furthermore, like any other asset, social capital needs investment which can be achieved through building networks with external players, augmenting social capital, and thereby gaining benefits. These benefits include power, access to information and cohesion; and the internal actors can strengthen their identity by increasing capacity for collective action (Adler & Kwon, 2002). Consequently, this can create a dependency for the SE organization, if the relationship becomes more important to the SE (Sommerrock, 2010).

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