One-page summary
Implications of Social Capital for Business in the Knowledge Economy:
Theoretical Considerations
Hans WESTLUND (1)
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Most studies of the phenomena that are considered as social capital have, in the tradition of Robert Putnam's writings mainly focused on what can be called social capital in civil society, outside the enterprises and the public sector. In order to underline the fact that social networks, trust and other factors that are linked to social capital also can be found in industry and the public sector, the term enterprise-related social capital is here used for these phenomena. The enterprise itself is for obvious reasons the prime actor in the creation of its own social capital. By investing in internal and external links and nodes (employees, partners, customers, politicians, etc) the enterprise forms and maintains the social capital it concerns best adapted to its current and future production.
- Enterprise-related social capital
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Enterprise-related social capital is defined as social networks filled with norms, values, preferences, etc, within or externally connected to the enterprise. It can be divided into internal and external social capital. The former is expressed in e.g. company spirit and tacit knowledge. The latter is divided in three groups: production-related, environment-related and market-related social capital. Firms' make intentional and unintentional investments in social capital in all these fields, if still under other denominations.
- Business implications of third sector activities
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The role of the "third sector" (or social economy) for business development is analysed, mainly from Swedish experiences. The analysis results in several conclusions: A simple division between "social" (non-commercial) and commercial activities conceals changes in degree of commercialisation over time. Activities belonging to the third sector are more "social" than commercial" but there are examples of movements along the "commercialisation scale", creating incentives for competitive third sector activities to transform to traditional enterprise forms. Thus, third sector activities contribute to business development to a certain, but small amount. The third sector also seems to have a certain but limited role in creating a favourable local environment for business.
- Social capital in the knowledge economy
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Social capital is becoming increasingly important in the knowledge society. A comparison between the knowledge society and earlier societal forms is made. The discussion is summed up in a hypothesis saying that the transformation from a manufacturing-industrial society to a knowledge society needs a corresponding transformation of the social capital to make growth of business and renewal of the economy possible. With Schumpeter's expression, one might argue that there is a need for a "creative destruction" of obsolete social capital, in order to facilitate the creation of new social capital.
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(1) Research Fellow of the Swedish Institute for Growth Policy Studies (ITPS), ?stersund, Sweden and Associate Professor of the Royal Institute of Technology, Stockholm, PhD in Economic History. Research areas: Social capital, Infrastructure history and planning, Regional development strategies, Crossborder interaction, Russia's regional development. Has e.g. written: Local Social Capital and Entrepreneurship. Small Business Economics, 2003 (forthcoming) (Co-author: Roger Bolton); Social economy and employment -the case of Sweden. Review of Social Economy, Vol. LXI, No 2, 2003 (forthcoming); Form or Contents: On the Concept of Social Economy. International Journal of Social Economics, 2003 (forthcoming). E-mail: hans.westlund@itps.se