Social Capital, Benefits of

Economic Benefits

Social capital helps individuals and communities prosper economically. Individuals who can draw on social capital are better able to secure employment, obtain job promotions, and find a new job if they are laid off. People with wide social networks are more likely to hear about employment opportunities than people with few connections, and employees who have somebody to vouch for them have an easier time getting ahead in the workplace than those who do not. Whom you know can be as important for personal advancement as what you know. Both the executive whose thick Rolodex of contacts facilitates business deals and the newly arrived immigrant who gets a job with the help of a fellow villager know that social capital can mean the difference between personal economic success and failure.

Social capital also facilitates economic prosperity at a local or regional level. If local economic actors know and trust one another—because they are members of a chamber of commerce or a trade association, or because they attend the same house of worship or socialize together—they more readily share information and resources, solve problems collectively, and implement economies of scale. While these activities help individuals, they are also often good for the broader community. For example, by drawing on social capital, businesses can better guard against the effects of economic downturns, such as by temporarily lending their employees to enterprises in growth sectors. New enterprises that create jobs and other economic opportunities have a better chance of success if their owners can draw on knowledge, financial capital, technical assistance, or other forms of support from a town's established businesspeople. Social capital also allows economic actors to identify and pursue shared interests that have clear social benefits, such as investments in an educated workforce or the cleanup of a local business district. Communities high in social capital therefore have a collective advantage over communities whose economic actors are too suspicious to engage in coordinated activities and must invest in surveillance and other methods to detect and minimize cheating.

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