Social Capital

AAA

DEFINITION of 'Social Capital'

An economic idea that refers to the connections between individuals and entities that can be economically valuable. Social networks that include people who trust and assist each other can be a powerful asset. These relationships between individuals and firms can lead to a state in which each will think of the other when something needs to be done. Along with economic capital, social capital is a valuable mechanism in economic growth.

INVESTOPEDIA EXPLAINS 'Social Capital'

For example, if you know someone at a company where you are applying for a job and this connection helps you get the job at the company, you have used social capital. Social capital can also have negative effects. For example, if a social network is used for manipulative or destructive purposes that will affect the economy negatively, such as when a group colludes to fix market prices.

RELATED TERMS
  1. Capital

    1) Financial assets or the financial value of assets, such as ...
  2. Social Entrepreneur

    A person who pursues an innovative idea with the potential to ...
  3. Guanxi

    A Chinese term meaning "networks" or "connections," understood ...
  4. Uneconomic Growth

    When economic growth produces negative external consequences ...
  5. Ghosting

    An illegal practice whereby two or more market makers collectively ...
  6. Intangible Asset

    An asset that is not physical in nature. Corporate intellectual ...
Related Articles
  1. Can You Count On Goodwill?
    Personal Finance

    Can You Count On Goodwill?

  2. Human Capital: The Most Overlooked Asset ...
    Investing Basics

    Human Capital: The Most Overlooked Asset ...

  3. Evaluating A Company's Management
    Active Trading Fundamentals

    Evaluating A Company's Management

  4. Intangible Assets Provide Real Value ...
    Markets

    Intangible Assets Provide Real Value ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center