Social Capital

Social capital basically is value created through social dynamics. Various socialists have defined the term differently. Some are of the view that it is an individualistic approach whereby an individual forms relations so as to serve his own good, whereas others argue that it creates value for the group as a whole. Going by any of the perspectives we can be sure of two things –

  • Social dynamics is involved
  • It creates value

Lets us know understand the concept of social dynamics and how it leads to value creation.

Social dynamics

Social Dynamics is a very broad term and includes interpersonal relationships, interactions due to those relationships, the emotional phenomenon associated with those relationships and the behavioural aspect of those relationships. Relationships foster bonding, information exchange, trust, reciprocal interactions and mutual cooperation. The term embodies in itself the interpersonal as well as intrapersonal dynamics. Interpersonal dynamics relate to association between two or more people leading to their specific behaviours due to this collaboration whereas intrapersonal dynamics refers to a changes happening within an individual due to which he is motivated to become a part of the group. Group dynamics, that is, the way the groups interact and collaborate among themselves and with the other peer groups, also forms the part of social dynamics.

Value creation

People, when in a relationship, tend to act in manner that is mutually beneficial.

When considered from the perspective of organisations, it can lead to effectiveness and efficiency. It can increase productivity with minimal usage of resources as when an employee is better informed, he will use this information for benefit of the organisation thus creating value for the organisation. This value creation can be tangible or intangible. Tangible aspect would show up in the financial figures of the organisation. The profit margins would go up, market share would increase and such company would definitely have competitive advantage. Intangible aspect would reflect in the corporate environment. Corporate environment would become congenial, in turn, leading to better employee retention, employee engagement, and decrease in attrition rates.

When considered from the perspective of the country, nation as a whole would gain. People interact to form groups and groups interact to form communities. When the communities with common goals and motivations would act for the benefit of the society, considering it to be their social responsibility, then country as a whole would prosper. The society will stand to gain when the dynamics within the group and among the groups is healthy. This prosperity would again reflect tangibly and intangibly. Tangible side would be visible from the financial figures of the country, that is, its financial reserves would go up, growth rate of the country would increase and the country would make a mark in the global arena. Intangible side would be visible from the basic environment in the country – law and order situation would improve, corruption would decrease and on the whole the country might become the most liveable place and excellent place to do business. This will attract more foreign firms to tansact.

Thus it can be inferred from the above discussion that Social capital is networking among people and groups and the behaviours that result from that networking and collaboration. These individuals and groups work in unison towards a common goal for the benefit of individuals as well as group, in turn, benefitting the community as a whole and thus creating tangible and intangible value in the process.

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