What is Social Capital?

We all know how important networking and forging relationships are to a business. However, there is more to it than just shaking hands while exchanging business cards and social media information. That's where social capital comes in and it can deliver exponential gains for your company.

Social capital is the value that comes from positive relationships between people, not just contacts outside your business but also the relationships within your own company.

There are two main areas to explore with social capital; external and internal. External social capital is what you can gain from interactions with the world outside your business. You can parlay this capital into opportunities for your business to grow and profit. Yet just as important is your internal social capital. This comes from the relationships that are built among your workers and employees and it is just as vital to your success.

External social capital

External social capital refers to the relationships you have outside your business. These could be sales leads, connections to vendors, or individuals you've met through events or online. It could also just be the circle of people you interact with as you do business. Every day we come in contact with potential new sources to help build social capital.

While networking is the act of meeting new people in the hope of it evolving into a business relationship, it is the cumulation of these positive relationships that leads to a growth in social capital. However, people need to value not only your relationship but you and your company's positive reputation.

Social capital is the value that comes from positive relationships between people, not just contacts outside your business but also the relationships within your own company.

By building this circle you have the potential to create new clients, partners, or avenues for growth for your business. This is where a positive reputation and the way the world sees you are very important. In order to extend your external network, your contacts need to know they can trust you before they'll want to introduce you to others, thereby expanding your network and potentially growing your social capital.

It's also important to value the connections that your employees have outside of work. They might have the ability to generate leads because of their network of contacts or to bring in deals or even vendors or partnerships. All of this creates value and adds to the social capital available to you as you operate your business.

Social capital is also important in the hiring process. If you have a worker you value and they suggest someone they believe would be a good person to hire, that's external social capital. 

How can you build external social capital?

Just like regular networking, building your external social capital is about extending your circle of contacts, but doing so in a way that brings people into your circle that have like-minded concepts, ideals, and approaches to the world and business. 

You can build external social capital with these ideas:

  • Attend events and join organizations that are similar to your interests or are connected to your business  Find events in your industry or trade associations that connect you with like-minded people and companies. Serve on boards and committees and consider holding an office in an organization if it seems appropriate.
  • Use LinkedIn to connect with others. Engage with others on the site. It's great to have thousands of contacts but if they don't know who you are, it does nothing for you. Post relevant articles and stories but also respond to the posts of others. Also, don't just pop up when you want or need something from a contact. Create genuine relationships. Make sure you use LinkedIn to its fullest potential and have a well-crafted profile.
  • Don't be afraid to ask for introductions virtually and in person. If it's a meaningful connection, people will be happy to help. Always be authentic and don't put on a false front just to impress people in the hope they can get you something. People see through this and if you get discovered it will have the opposite effect and take away from the social capital you have developed. Plus the person who made the introduction will think twice about helping again.
  • Involve your company in events or charities. Not only is this a great way to give back to the community, but it allows you to meet others and create relationships with people and businesses that have like-minded values. It also gives your employees a way to become involved with a meaningful cause and spread the good word about your company.

Social capital within a company 

Internal social capital is all about the relationships between the people who work in a company. It's about how they interact, their shared workplace values, and the trust they have for their co-workers. The greater these attributes are, the better workers relate and the more social capital you develop in the workforce.

When employees are striving for a unified goal and have the same perception of the company, it creates a stronger working environment. The camaraderie of the workplace and the ability to share in the experience builds on this and that's how social capital is created. The more there is, the more successful the workplace team can be.

When you have a large amount of internal social capital, your employees will not only trust each other but work well together. This leads to better communication skills and the ability to efficiently exchange information. Projects will go smoother as employees work together and aren't afraid to share information out of fear of competition. Employees will actually enjoy working with each other. This creates an environment that supports an exchange of ideas and passion for projects, which leads to greater innovation and productivity.

Without social capital, you can see teams fall apart. Lacking trust in their fellow employees or a bond, they will fight among themselves and think only of their own wants and needs, versus the team.

Developing high levels of workplace social capital lays the groundwork for a pleasant and positive working environment that will help you retain employees. This can also lead to an increase in productivity and efficiency which can lead to higher profits. 

Using your workplace's social capital in hiring

Aside from the productivity, the social capital created from a positive workplace provides you with another wonderful opportunity when it comes to the hiring process.

Have you ever come across a company where everybody enjoys working there and talks endlessly about their co-workers and the amazing camaraderie and working environment? That's an example of a company that has created a high level of social capital within its workforce. People want to work at companies like this and it's an example of how internal social capital can be built.

This is also where trust and authenticity come into play. You can know all the people in the world, but if your company has a poor reputation or is seen as inauthentic, potential workers won't trust you as an employer. No one wants to apply to a company seen as a bad place to work.

Workplace Culture

A positive workplace culture is the engine of building social capital within your company. Businesses large and small have put countless hours and dollars into this because they know it's an investment in their workforce that will pay off in the long run.

Abobe has been regularly named one of the highest-ranked workplaces and the best companies to work for. They offer a number of ways to help their employees including good benefits, child care, and training and education programs. Of course, this creates a better-skilled workforce, but there is also education to make workers more efficient, which creates less stressed employees that are better trained to handle assignments and projects. When employees are  properly trained, they work well together because they are operating with the same skill set.

Many companies also add to this by offering classes in management and workplace skills. So not only are workers learning how to do their individual job, they are being trained on how to be better managers and administrators on their way up the ladder. This creates trust among workers since they see how the process functions and have faith that the system at the company works.

Recent changes in social capital

Covid brought drastic changes to the dynamics of the workplace and the creation of social capital. Workers were pulled away from their normal routine and suddenly forced to interact remotely. No longer was there the same sense of in-office esprit de corps as employees had to work at home and companies saw their earned level of social capital plunge.

Faced with this change, companies had to find creative ways of keeping employees connected remotely. As workers returned to the office, businesses had to deal with social distancing and mental health as well as employees who decided they were happier working from home or leaving their jobs altogether. Some companies have been able to deal with this by continuing remote work, while others have taken the stance that employees must work in the office.

No matter the decision, companies have had to weather this storm and find ways to keep employees productive as they rebuild. As we continue to return to normalcy, companies will need to make changes as they see fit for their individual employees and their needs in order to rebuild their internal social capital.

How can you build social capital inside your company?

  • Internal social capital goes hand-in-hand with a positive work culture. The biggest and best way to help build internal social capital with your workforce is by providing a positive work environment. This not only makes employees feel valued, it creates an environment where they are secure and can interact and do their jobs together to the best of their abilities.
  • Be clear about what your company stands for. Be up-front about your business's missions and goals. By being clear, your workers will understand precisely what they are working for and are more likely to become invested in the company. This allows your workers to get behind you and band together with a common goal.
  • Provide opportunities for your workers to get to know each other and bond. Offer training seminars or recreational activities, but make sure they are needed and not seen as unnecessary wastes of time. Also, present recreational activities that are actually enjoyable and something everyone is interested in and wants to attend. Nobody wants to be forced into an activity they don't enjoy. Team building events can be a valuable tool as long as they are genuine with a purpose and goal, not just some silly thing that takes them away from their work.
  • Stay ahead of problems. Get ahead of the curve and stop interpersonal issues before they drive a wedge into your team. Management needs to be attentive to the workings of the company and be knowledgeable of what is going on with their employees.
  • Increase happiness in the workplace. Provide good benefits, the ability for advancement, and transparent policies. Do what you can to destress the process of working and simplify the chain of command for human resources or grievances so workers feel secure.
  • Provide meaningful training. This can go a long way to creating more social capital. This develops trust, because employees know their fellow workers are well-trained. Plus employees can see the path and see that those promoted are deserving and not just advanced on a whim or for murky reasons.
  • Build solid teams for projects. Assemble well-thought-out teams that bring together different skills from the workers. This allows workers to use their strengths and not have redundancy or competition from people on the same tasks.
  • Reward your employees for good work and hitting goals. Set realistic goals and follow through on your promises for bonuses or rewards. Don't just single out employees, but also reward the team and workplace as a whole.
  • Promote real equality and diversity in your workplace. Have solid policies about treatment and behavior and make sure it isn't just lip service. Be authentic and your employees will respond positively.


  • Social capital is the value you derive from relationships, networking, and interacting with people
  • Social capital can be used to create situations that advance your company's growth, relationship circle, and potential profits
  • A company has external and internal social capital that it creates from relationships
  • External social capital is created from relationships such as interacting with other businesses, and vendors, or through the work you do
  • External social capital can be built on a high level of company authenticity and a positive reputation
  • Internal social capital is derived from the relationships and working environment of your workforce
  • A positive workplace culture is one of the strongest ways to create high internal social capital
  • High social capital in the workplace leads to higher rates of productivity, worker retention, and profits
  • You can raise internal levels of social capital by treating your workers well, offering them opportunities to advance, and creating an environment where they trust each other


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