What is Social Capital?

Social Capital is considered as one of the key drivers of social development in modern societies, the other being economic capital, cultural capital and human capital. According to the World Bank, Social Capital refers to “the institutions, relationships, attitudes, and values that govern interactions among people and contribute to economic and social development” (Grootaert and van Bastelaer, 2001). Social Capital is seen as the “connections among individuals, social networks and norms of reciprocity and trustworthiness that arise from them” (Putman, 2000). Meanwhile, the Organisation for Economic Co-operation and Development (OECD) defines Social Capital as “networks together with shared norms, values and understandings that facilitate cooperation within or among groups” (OECD, 2001).


Social capital includes social norms (personal attitudes and social values), networks and institutions. The strategies deployed in social capital development include cognitive, relational and structural aspects, incorporating psychological and sociological concepts of role transformation, social trust in horizontal bridging across heterogeneous groups and collaboration in vertical linking partnerships across sectors and power hierarchy. Increasing evidence has shown that social cohesion is essential for economic prosperity and long-term sustainable development of a cohesion is essential for economic prosperity and long-term sustainable development of a society. Social capital holds people and institutions together tot work for the common good. The multifaceted nature of Social Capital is shown in Table 1 below.

Aspects of Social Capital (Nahapiet and Ghoshal, 1998)


Focus on the people’s feelings, values and perceptions. It represents resources obtained from a shared vision and value, common set of goals and shared representations and interpretations among groups.


Kind of personal relationships people have developed with each other through interactions, with focuses on the quality of the relationship or interactions and the resources that are created or balanced. It attributes the relationship of trust, trustworthiness, respect and friendship.


Structure or pattern of connections between people – who you contact, how to contact and frequency of shared resources and information. It accounts for what people do (associational links, networks).

Forms of Social Capital (as cited in Ting, 2012)


Linkage between like-minded people (Putnam, 2000).


Links between people of heterogeneous groups or with different backgrounds. Through these linkages, people would have access to external resources of different groups (Putnam, 2000; Gittel and Vidal, 1998).


Linkage in the vertical dimension of bridging Social Capital, in which people of different groups could leverage resources, ideas and information from those who have power to those who do not in the community (Woolcock, 2001).

Table 1. Multifaceted nature of Social Capital

From the economic perspective, various studies have shown that Social Capital is important for economic growth and development (Fukuyama, 1995; Knack & Keefer, 1997; Guiso, Sapienza, & Zingales, 2008). Moreover, Social Capital, together with Governance, Personal Freedom and Safety & Security, are described as the four institutional pillars in measuring society’s wealth and well-being in the Legatum Prosperity IndexTM (Legatum Institute Foundation, 2017). The report has shown that Social Capital is an essential element in developing prosperity.

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