Social Capital, Networks, and Economic Determination (4)

Determination of Social Capital and Networks on Social Structure and Innovation

The simplified bond/bridge dichotomy offers a polarized snapshot of social structure. The positive aspects of bonds are generalized trust, familiarity, identity, and emotional solidarity; the negative aspects are homogeneity, isomorphism, attitudinal compounding, insipidness, and potentially hermetic tendencies (where networks are closed). Bridges are upward-reaching, provide heterogeneity, novelty, and access to resources that are esteemed and diverse; negative aspects are Machiavellianism, exploitation, and general Kantian ethical issues. However, networks (even by Putnam’s dichotomized delineation) might be considered intrinsic social strata-straddling mechanisms, since the ego acts as a point of convergence between differing social strata and bidirectional spillover is conceivable.

Generalized trust, which characterizes bond networks especially (Fukuyama 1995), facilitates acquisition of resources that exceed contractual stipulations. Such facilitative mechanisms acquire magnified importance in societies whose structure is influenced more by informal than formal institutions, and are likely causative in the formation of powerful informal institutions such as the Sicilian Mafia (Putnam, 1993, 2000).

The role of informal institutions is also of social significance in societies characterized by strong formal institutions: the Dyson case study shows that informal networks can impact upon entrepreneurial endeavour (Steward and Conway, 1998; Jones and Conway, 2004) in a developed country. Similarly, boundary spanning between informal networks has led to socioeconomic changes in both less developed countries (Keskin, 2006: Pastoral Risk Management Project study) and developed countries (Fernandez and Vaillant, 2007: Wine Makers of Priorat study).

Innovation is a vital determinant of economic growth but its achievement is dependent on multiple actors providing various necessary resources (Woolcock, 1998). For innovators, drawing upon social capital and the networks of which it is composed is of profound importance (Nahapiet and Ghoshal, 1988). Within the innovator’s network, a diverse bond and bridge portfolio will influence fruition prospects (Steward and Conway, 1998).