Social capital stems from the realization that there are resources and conditions within the society which support the growth, development and profitability of business operations. Social capital can be defined as the aggregate of natural resources, human resources and favourable social conditions which businesses employ in the course of creating wealth. In specific terms, these will include: raw materials; qualified manpower; favourable physical environment; security of lives, property and investment; sound morals; political stability, etc.

However, the quality and quantity of these resources available at any point in time depends on the network of interactive social relations between the business and the society.


There is a symbiotic relationship between social capital and business capital, in that, while social capital supports the growth of business capital, business capital in-turn helps in the development and sustenance of social capital. It therefore follows that businesses should not only consume the social capital within the society but should also help in its regeneration. The significance of social capital in sustainable business growth and profitability may not be felt until the system of social capital is comprised. At the outbreak of the youth militancy in the Niger Delta (Nigeria), companies paid millions of naira as ransom payment for abducted staff. The sums spent would have gone in as retained earnings to boost business capital. Today, employers of labour decry the poor quality of available local manpower. This has led to additional costs incurred in staff retaining and the exorbitant costs of using foreign expatriates. The effect of these is high operating cost and declining profits, thereby threatening the growth of business capital. Rising level of unemployment has led to increased crime rate, thus endangering lives, property and investment. This vicious development coupled with lowering moral standards leads to business losses by way of theft, piracy and adulteration of products. Same can also be said of the infrastructural base: companies lose their investment in vehicles and goods through road accidents; they also incur high maintenance cost on vehicles due to the poor state of the roads; factories wind-up or run below installed capacity due to inadequate and unreliable power supply. Natural disasters caused by abuse or neglect of the physical environment can terminate the life of a business. The perennial floods are a clear testimony to this fact.

The reality therefore, is that wealth creation as a business goal is tied to social capital development and regeneration. It is only beneficial that social capital regeneration is integrated into CSR plans.

….still thinking…….

Please follow and like us:
Pin Share