Social Capital

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According to Good (1988) and Gulati (1995), trust is the product of the repeated meeting of actors. This claim jeopardizes (or perhaps merely complicates) the distinction between bond and bridge. After how many meetings does a bridge become a bond? And does the transformation entail loss, increase, or maintenance of the bridge’s resources? That a connection cannot be definable as simultaneously bridge and bond seems improbable, if trust – the elemental contribution of social capital – is the product of repetitious interaction alone, regardless of interaction quality.

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Burt (1992) argued that networks benefit from having structural hole-spanning members. Diverse resources can flow through such actors into the network. The presence of structural hole-spanning members can therefore offset the hazards of network insularity.

Two closed networks (or clusters) exist, A and B. No members of either population interact. A structural hole (the blue floor area) separates them from each other and from any other networks.

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In the influential theorizing of Putnam (2000) and Coleman (1988), the term has undergone elision and is nowadays suggestive more of informal social interconnectedness than the former Marxist definition of social capital as the complement of fiscal capital. The Marxist interpretation is embedded in Marx’s underlying assumptions – that society is stratified according to placement within the productive schema and material dialectics explains the course of human history and the essential nature of human behaviour. 

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In contrast to the first generation of Austrian school economists, Schumpeter proffered that the course of the ceaseless evolution that characterizes economic machination is cyclic in nature. In Schumpeter’s view, the cycle is one of creative-destruction resulting primarily from smaller firms acquiring advantage through innovative practices and eclipsing larger firms. The innovator is made entrepreneur by his/her capacity to propel this cycle by generating and/or manipulating the resources that lubricate and fuel ever-renewing industry. And, since it is innovation that underpins industrial power, the entrepreneur is chief actor. On this premise, entrepreneurialism becomes itself an essential – if not the most essential – resource.

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