BUILDING SOCIAL CAPITAL: A ROAD TOWARDS ECONOMIC DEVELOPMENT

Abstract

Social capital is perhaps the most important resource in the economic milieu. It enables individuals to get access to information and resources via social networks that otherwise would not be available, so that they would get into business activities easily. Social capital is the transferred knowledge, or to be more precise knowledge that is being transferred via transmission from another subject, through interaction in the social networks. Unlike human capital which represents personal knowledge gained thanks to our own efforts, social capital enables transferred knowledge to penetrate the individual and become personal knowledge. The success of many enterprises depends on the relationships inside the company among the employees themselves, but also on the outside relations with suppliers, buyers, creditors, government and non-government bodies and so forth. That is to say, the success of businesses depends on the relations with society. The complexity and dynamics of today’s business activities create big risks which are the product of globalization, demographic changes and technologic advancement which reduces transaction expenses almost to zero. All those factors create tough competition, uncertainty and pressure which can be reduced via social capital. In literature we can find bonding social capital and bridging social capital. By internal connection of the narrow and closed social networks we can create bonding social capital which enables the individual to get to the necessary resources with the help of their close ones (family and friends) so that they could start their business easily, while the companies can acquire benefits if they create powerful network among their employees. Bridging social capital refers to the external relations with individuals of different social groups and networks (suppliers, media, government bodies and agencies and so forth). Social capital on organizational level can have positive impact over different fields in business, including the creation of intellectual capital, improved distribution of scarce resources, increased level of innovation, better distribution of knowledge and cross-functional team efficiency, better choice of talents for recruiting and so forth. To conclude, social capital has influence over the integration processes in one society. Researches show that in conflict areas bridging social capital contributes to reconciliation between communities.