What is Social Capital and How Much Of It Do You Have?

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Social Capital: What’s Your Social Net-Worth?

Ever since Adam Smith’s redefinition, capitalism isn’t just about financial capital anymore.

Other forms of capital also exist. Besides money, we rely on human labour, on land, water, and energy, on machinery, and the community — and every business needs these resources to function efficiently.

But there is another distinctive form of capital that is barely discussed. Social Capital.

Where I come from, no one gets very far without social capital. We call it connections — and academic qualifications, on-job experience, skills, or expertise are all perceived as secondary in the new dynamic view of success.

Social capital is an intangible asset, but it is real — and unlike the other forms of capital, it cannot be measured quantitatively, yet its value can be felt immensely wherever it exists.

The term ‘Social’ describes social capital as it resides in networks and relationships.

While “Capital” emphasizes that social capital, like human capital or financial capital, is productive: It helps us create value, gets things done, achieves set goals, and fulfills our missions in life.

But saying that social capital is “productive” is an understatement: No one can be successful—or even survive—without it.

Building the right social networks is one of the best strategies you have to scale your business and boost your career.

However, many believe they should be able to get along without social capital; they mistake “going it alone” as the prescription for success. Others pretend to thrive without social capital, using it secretly as if it were improper or even unethical.

Of course, you might still be required to have some financial capital, skills, or expertise to operate at ease. But, social capital is like the engine oil to help you navigate smoothly and scale to the next level.

Below are some instances where social capital has been of immense benefit to individuals and organizations;

Better Pay and Faster Promotions

Empirical evidence has found that people who have rich social capital are paid better and are more likely to scale up faster in an organization.

The more the structural holes in an organization, the more entrepreneurial solutions will arise — and quite faster too.

A structural hole here is created when two disparate people who have no prior direct connections are put together to bridge the value gap.

Here is how it works:

Suppose you have a tie with Jeff who works in sales and a tie with Earnest who works in the IT department.

And considering that Jeff and Earnest do not know each other and are unaware of each other’s existence.

You learn that Earnest needs some user feedback about the latest business tool created by his department. The same software Jeff has interacted with first-hand in different market scenarios.

By putting Jeff and Earnest together, you create value by bridging the structural hole.

In this way, something of value is created in a short time — a problem is solved, money and time saved, and work made easier.

Getting a Job

Lately, the dynamics of finding a job are shifting. Employers are becoming more interested in ‘who recommended you’ than the qualifications you have.

Of course, there are still job openings advertised in the media and random people get hired every other day. But more people are finding jobs through personal contacts than by any other means.

On the side of employers. It’s now easier to find good and qualified people by tapping networks of personal contacts.

As a matter of fact, some organizations now hire strictly based on Referrals from high authorities within their niche.

Mind Power and Effectiveness

Power and influence stem from many sources—formal authority, coercion, expertise — as well as one’s position in networks of workflow, communication, and friendship.

In today’s world of business, social networks and expertise are becoming more and more beneficial than formal authority and coercion.

In fact, a good manager is required to not just have a good social net worth, but also have an accurate mental map of the networks within his industry.

Managers who consistently build networks are more influential and tend to bring more value than those who only occupy peripheral positions.

Referral Marketing

There is no doubt that advertising increases awareness of a product or brand. However, recommendations are more persuasive and lead to more actual sales.

To any businessperson, the phrase ‘influencer marketing’ isn’t new. And Social influencers have mastered the art of using their social networks to promote products and services.

In fact, social media influencers wield the power to put your business high in the sky — or drop it to the drains in one tweet.

As more people take product reviews or endorsements very seriously, good managers are learning to tap into this important marketing strategy.


The dynamics of success as it relates to business is fast evolving and social capital seems to be the core of it all.

Everyone and everything is now going social. We spend hours on social media every day — engaging in social communities and building social networks.

Whether we do this consciously or unconsciously isn’t the issue. But more importantly, several studies have found that we all need social networks to operate without a hitch.

This puts on ice the deep-rooted myth of individualism — that we succeed or fail based on our individual efforts or capabilities.

In addition to the points above;

Social capital helps in bridging financing gaps through the “informal investing grapevine” where friends colleagues and family support and promote a business.

It also enhances organizational learning through informal interactions in and between organizations.

Social capital also births strategic alliances that are mutually beneficial to companies, businesses, or entrepreneurs.

With all said, I will leave you with this question.

What’s your social net-worth?

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