Social Networks, Trust and Social Capital in Value Chain Development

Zahra S Campbell-Avenell

Social regulation is the theory that all economic behavior is influenced by social institutions, which in
turn motivate the behavior of the actors in the market (Harriss-White 1998: 1- 36). Membership in social
networks can facilitate the creation of social capital, which can be conceptualized as the density,
strength, and structure of social networks in which individuals are entrenched. The more tightly knit
social networks are, the greater the opportunity for social capital development, since networks can
monitor and reward cooperation, punish defectors and discourage free riders, all the while promoting
altruism and expectations of symmetrical reciprocity from members.

Social Capital

“Social capital is the aggregate of the actual or potential resources which are linked to possession of a
durable network of more or less institutionalized relationships of mutual acquaintance and recognition -
or in other words, to membership in a group - which provides each of its members with the backing of
the collectively-owned capital, a 'credential' which entitles them to credit, in the various senses of the
word” (Bourdieu 1986: 51).

Social capital may be seen as a form of “currency” embedded in networks of social relationships from
which an individual can potentially or actually derive resources that can be translated to physical and
economic capital (Bourdieu 1986). Putnam defines social capital as “social networks and the associated
norms of reciprocity and trustworthiness” (2007: 137). The sources of social capital are entrenched
within the social structure in which individuals are located; thus social capital refers to “the resource
available to actors as a function of their location in the structure of their social relations” (Adler and
Kwon 2002: 18). Access to resources made available through social capital must be actively maintained,
since it is “temporary and borrowed” (Lin 1999: 468).

There are two kinds of social capital: structural and cognitive. Structural forms of social capital are those
created by “established roles and social networks supplemented by rules, procedures and precedents”
while cognitive forms of social capital are those which are formed “on the basis of shared norms, values,
attitudes and beliefs” (Krishna and Uphoff 1999: 7). As Astone et al note, social capital is inalienable;
that is, it cannot be exchanged with or transferred to another person (1999: 4). It is also important to
note that social capital is “highly context-dependent and time-bound” (Pantoja 2000: 16). Social capital
can be classified as “bonding”; i.e. exclusive, between members of a similar group, or “bridging”; i.e.
inclusive, between members of different groups (Putnam 2000).

Importance of Social Capital

Evidence suggests that social capital is directly proportional to improved health outcomes, greater
safety, higher education levels, longer, happier lives, and a better functioning democracy and economy
(Putnam 2000). Additionally, it has been observed that “mutually beneficial collective action”, which is
defined as the “the benefit flow that we associate with and expect to observe from the "asset" of social
capital” is positively related to superior development outcomes (Krishna and Uphoff 1999). One of the
many positive consequences of social capital accrual is increased social solidarity and a reduction in the
size of vulnerable populations (Cava and Nanetti 2000: 46).
The possession of social capital has been demonstrated to have externalities for the entire community.
In an analysis of watersheds in Rajasthan, social capital enabled several communities to effectively
harness a common resource (Krishna and Uphoff 1999). Isham and Kahkonen’s (1999) case study on
water projects in Indonesia concluded that social capital increases the capacity of villagers to design and
maintain water supply systems in Central Java. Similarly, Reid and Salmen (2000) found that trust is the
key determinant for making agricultural extension successful in Mali. Pargal, Huq and Gilligan’s study on
solid waste removal in urban areas of Bangladesh, as well as Rose’s study of social capital in Russia also
demonstrate important organizational and economic benefits of social capital (cited in Grootaert and
van Bastelaer 2001).

Social capital can complement other forms of capital to stimulate economic growth (Grootaert 2001).
When measured amongst agricultural traders in Madagascar, research revealed that those who have
more social capital are better connected, have better price information and client reliability, and thus
enjoy greater sales and higher margins (Grootaert and van Bastelaer 2001, Fafchamps and Minten
1999). Research in India and Tanzania similarly demonstrated that social capital greatly advances the
ability of the poor to manage scarce resources and provides an enhanced buffer from economic
vulnerability (Grootaert 1998:11). Enhanced economic productivity can be achieved through
membership in social networks due to improved access to information, labor, credit, as well as contract
enforcement provided by social control. Social networks, particularly those based on kinship or native-
place ties, can help promote small businesses due to trust and cohesion among members. Social capital
can also act as a buffer to predatory businesses, lower barriers to entry for newcomers, and increase the
survival and success rates of members (Peng 2004: 1068). In addition, social relationships are
advantageous because they help to define an individual’s identity and behavioral norms that guide their
choices and actions (Barrett 2004: 3).

It is important to note, however, that social capital only refers to the ability to acquire resources and not
the actual acquisition of resources. This is particularly pertinent with regard to the poor, who despite
having strong bonds within social networks may still only have access to limited resources (Portes and
Landolt 2000: 532).

Dimensions of Social Capital

Multiple sources of social capital have been identified, and vary with the local context. Some are
described below:

(a) Family and kinship connections, which would include the single household, the extended
family, or the clan, based on ‘strong’ ties of blood and affinity. An important factor is that family/kin
relationships are mainly created by birth, not by choice.

(b) (Wider) social networks or ‘associational life,’ which would include networks of individuals,
groups and organizations that link individuals from different families or groups in common activities
for various purposes. This would be the form of social capital closer to the definition in terms of
‘networks of civic engagement’ or ‘local associations.’ This form of social capital covers a full range
of formal and informal horizontal arrangements.

(c) Cross-sectional linkages or ‘networks of networks,’ which would include the networks linking
together organizations from various sectors of society (i.e., NGOs, grassroots organizations,
government agencies, private firms) that allow to combine resources and different types of
 knowledge to find solutions to complex problems. Through these networks, public-private cross-
sectoral linkages, and mutually supportive and complementary relations are established. This form
of capital provides the articulations between horizontal and vertical associations and organizations.

(d) Political Capital, which would include the norms and networks shaping relations between civil
society and the state thereby allowing a society to mediate conflict by effectively responding to
multiple citizen demands. Political capital is related to informal institutional arrangements that may
result in clientelism, rent seeking and exclusion, or in effective representation, accountability and
participation. This is a form of social capital that lies in the realm of ‘political’ society.

(e) Institutional and policy framework, which would include formal rules and norms (constitutions,
laws, regulation, policies) that regulate public life. This is what has generally been identified as
macro-level social capital. It has a sort of double nature, since it may induce the creation of other
forms of social capital, while it constitutes in itself a resource that facilitates coordinated actions.

(f) Social norms and values, which would include widely shared cultural beliefs and the effects such
beliefs have on the functioning of society at large. Norms and values support other forms of social
capital as well as representing the most general and most difficult form of social capital. (Pantoja
2000: 26 – 27).

Figure 1 below shows the scope of social capital, which includes participation in formal and informal
social networks, everyday interactions, as well as trust.

Figure 1: From Narayan and Cassidy (2001: 67).

Ethnicity and Social Capital

Social capital has been demonstrated to be significantly lower in ethnically fragmented societies, where
norms of reciprocity and trust are shared within, rather than across, social groups. Alesina and La
Ferrara (2000) find that engagement and participation in social groups is markedly lower in ethnically
diverse communities. Greif similarly notes that “collectivist” societies are characteristic of developing
countries, where “the social structure is highly fragmented, with individuals interacting socially and
economically mainly with members of a particular ethnic, religious or familial group, and where contract
enforcement is primarily expected through informal institutions” (cited in Pantoja 19). Social networks in
industrial districts in developing countries are usually shaped by religion, ethnicity, language, caste or
regional background (Nadvi 1998: 29). It can be particularly challenging to strengthen existing networks
in such “divided societies where ascriptive forms of identification, such as ethnicity, represent a
fundamental social cleavage” (Reilly and Phillpot 2002: 907).

Ethnicity provides a powerful kind of “bonding” social capital, strengthening high levels of in-group
solidarity and trust, but often excluding the possibility of creating important “bridging” social capital
across groups. Research conducted in Papua New Guinea, one of the most ethnically diverse places in
the world with over 852 languages (about a fifth of the world’s total) and over 1000 documented ethnic
groups, suggests that the more ethnolinguistic diversity there is in a particular area, the lower the
overall level of provincial development (Reilly and Phillpot 2002: 918). High levels of ethnic
fragmentation are also negatively correlated with indicators of social capital such as education quality
and radio usage (Reilly and Phillpot 2002: 920). This is consistent with Putnam’s findings, which revealed
that immigration and ethnic diversity reduce social cohesion and inhibit social capital formation, at least
in the short term (2007).

Migration networks, particularly from the rural to urban areas, offer an opportunity to use ethnically
based social capital. Such networks tend to exhibit “circular and cumulative causation” (Massey 1990: 4)
due to the information about job opportunities that is disseminated among potential migrants, as well
as the networks’ increased ability to support new rural-to-urban migrants (cited in Silvey and Elmhirst
2003: 868). In industrial districts, technology is often “endogenized, or related directly to the social
fabric in which it is located”, which implies that small businesses have business knowledge that is often
community-specific, accumulated over a long period of time, and that technical progress is an
incremental process (Nadvi 1998: 14). Often there is a “dogma of ethnic skills” and a preponderance of
ethnic specialization, e.g. Chinese tine minders and traders and Indian rubber tappers, to name a few
(Horowitz, cited in Bates 1985: 109 – 111).

Research in Northern Rhodesia (now Zambia) suggests that ethnicity is “double edged” in that it
provides incentive for urban migration and skill acquisition leading to employment; but it is also used for
political organization, sometimes to violent ends (Bates 1999). In many regions of Africa, educated
people have built and used urban ethnic associations for protests, many of which have escalated into
violence (Bates 1999). This does not necessarily imply that ethnic differences always lead to hostility; but
that they have the potential to be exploited.
Developing Social Capital

Although there is no consensus in the literature as to whether or how social capital can be produced,
some research has concluded that social capital creation is possible, at least in the short term. Fukuyama
(2000) argues that social capital is frequently a byproduct of social factors that cannot be easily changed
such as religion, ethnicity or tradition. However, several theorists disagree, asserting that social capital
can be intentionally created, particularly with external intervention. There are two approaches to
fostering social capital: ‘bottom up’ and ‘top down’. The first is more common, and relies on
strengthening local networks and building productive relationships with the market, government and
NGOs (Bebbington 1996). The ‘top down’ approach has been successfully employed in areas of rural
Mexico, where state reformers scaled up regional organizations by offering them positive incentives and
shielding them from possible negative sanctions (Fox 1996: 1090).

Hobbs (2001) has accumulated a number of theorists’ ideas about social capital development which
merit further study. These include Falk and Kilpatrick (1999), who argue that the development of social
capital is the result of a series of high quality “learning interactions” that include a historical dimension,
as well as issues of trust, values and norms; Sabel (1994), who asserts that social capital is developed as
the outcome of actors agreeing to a series of negotiations, and Hechter (1997), who proposes a multi-
stage process for social capital formation, based on mutually agreed rules and regulations.

Social capital is an enigma: it cannot be purchased or transferred, and is a temporary asset that must be
actively maintained. This paper identifies a few methods for creating and sustaining social networks,
including community preparation, building trust, forming social organizations, promoting education and
Information and Communication Technologies (ICT), government intervention and harnessing existing
social networks.

Community Preparation

Warner (2001) notes that since building and maintaining social networks require investments,
communities need to be informed about the benefits of building networks to increase social capital. She
asserts that “If the object of network building is not endowed with social, economic or cultural capital
then the effort will not be considered worthwhile” (Warner 2001: 188). Albee and Boyd (1997) similarly
observe that participation in social networks rarely happens spontaneously, and “social preparation” is
required to support engagement at the local level. Social preparation involves works which involves
collecting information, analyzing the situation, prioritizing actions the group wishes to pursue, joining
together into a group and working out the means to implement the actions (Albee and Boyd 1997: 3).
Community agents, animators and facilitators can be instrumental as social mobilizers and activists,
encouraging participation in local groups, as well as creating linkages across groups (Albee and Boyd
1997).

Through literature on social movements, it has been observed that “the intensity of participation
depends both on the embeddedness in social networks and on the individual perceptions of
participation, that is, the evaluation of a number of cognitive parameters related to engagement” (Passy
and Giugni 123). If individuals are convinced of the potential advantages of membership in a social
network, they are more likely to join the network.
Building Trust

Trust can be defined as “trust as the subjective probability with which an actor assesses that another
actor or group of actors will perform a particular action, both before she or he can monitor such action
(or independently of his or her capacity ever to be able to monitor it) and in a context in which it affects
his or her own action” (Adler 2001: 217). The intersection between trust and social capital is a relatively
obvious, but under-researched area. This may be because the relationship between trust and social
capital has been articulated by various theorists in different ways. Fukuyama (1995) and others equate
trust with social capital; some theorists such as Putnam (1993) see trust as a source of social capital;
others such as Coleman (1988) see trust as a form of social capital; yet others (Lin 1999) see it as a
collective asset (Adler and Kwon 2002: 26). Social capital can be defined as “interpersonal trust
expressed through the relationships that exist among a society’s members, its institutions and
organizations” (Reid and Salmen 2000: 1). For the purpose of this paper, trust is treated as a valuable
source of social capital; one that grows with use over time.

Bjornstad’s study of trust in the context of a borehole and irrigation project in rural Malawi suggests that
the decision to trust others is a rational one, and people will only trust each other if they believe that
their chance of gaining is higher than their chance of losing (2008). Matějů and Vitásková (2005) suggest
that social capital can be conceptualized in terms of mutually beneficial exchanges rooted in social
relations that permit individuals to meet their own goals. General shared norms alone, Bjornstad
asserts, are not enough to engender trust, which is based on individual assessments of trustworthiness
derived from previous interactions (2008: 11). Ostrom similarly finds that face-to-face interchange
greatly increases the probability of cooperation, for both one-time and repeated interactions (2003: 29).

Trust can be developed over time by creating familiarity through repeated interactions, calculation
based on common interests, norms that create predictability and trustworthiness (Adler 2001: 218).
Social capital thus can be built by establishing trust over a period of time through interactions with and
exposure to new groups, and participating in activities with them. Figure 2 below depicts how trust is
created and maintained:

Figure 2: The Dimensions and Components of Trust. From Adler (2001: 218).
Adler and Kwon acknowledge that “trust…that is demonstrated today typically will be reciprocated and
amplified tomorrow” (2002: 22). The success of any microfinance project depends on trust and solidarity
among group members, and between members and the MFI. Casson and Della Giusta (2004), in their
study of microfinance programs in Mexico, find that societies with dense social networks find it helpful
to have an external “trust-broker” to promote trust.

An important feature of trust to keep in mind is that it is extremely context-specific. Social capital is
often dependent on the proximity of groups to each other. Carpenter et al note the importance of “the
interconnectedness of residents in specific geographical locales, where space both facilitates and
constrains the initiation and sustainability of such connections” (2004: 855). Casson and Della Giusta
(2004) demonstrate the specificity of trust in different contexts, even within two similar regions of rural
Mexico. This is why development interventions aimed at building trust must incorporate the pre-existing
social relations, norms and practices of communities.

A case study on agricultural extension in Mali finds that trust is at the root of their success (Reid and
Salmen 2000). The study noted that there were three aspects of trust that were equally important: the
quality of farmer relationships; trust between extension workers and farmers; and the relationship
between extension workers and their national organizations. It also highlighted the significance of pre-
existing social cohesion: the inclination of villagers to attend association meetings, congregate at places
of worship and to build and maintain public infrastructure was translated into the likelihood of success
for the agricultural extension project (Reid and Salmen 2000). The authors also emphasized the need for
development projects to be designed according to differing levels of pre-existing social capital within a
community.

Social Organizations

Cernea asserts that “Creating organizations is equal to creating new social capital” and the way to build
social capital is to "increase, diversify, multiply, and solidify the various forms of formal organization" of
communities (1993: 13, 2). Mondal (2000) examines how two large NGOs organized poor, landless
farmers in Bangladesh into village organizations, and reports that this resulted in reduced poverty rates,
improved trust and networking, greater skill level, enhanced gender equality and progress in human
rights. Huntoon (2001) suggests that governments can foster social capital development by providing
funding to voluntary and charitable associations. Onyx and Bullen (2000) propose citizen engagement to
develop social capital through outsourcing by the government.

Astone at al note that “The inalienability of social capital implies that any programmatic efforts to
redress this situation must focus on either the development of equivalent ties for members of other
groups (e.g., mentoring programs) or limiting the use of family ties in hiring by employers (e.g.,
affirmative action programs)” (1999: 4). The findings of Nelson et al (2003) detail how “concord
organizations” work with groups in conflict in the US, Northern Ireland, South Africa and Palestine. The
authors note that bonding social capital that connects people with a shared identity can alienate
outsiders, creating exclusive networks that reinforce the differences between the exclusive network
members and “others” (Nelson et al 2003: 10). One way to avoid this, the authors assert, is to balance
bonding social capital between individuals within a social group with bridging social capital with
outsiders. The methods used by various concord organizations for social network formation and bridging
social capital provide promising strategies that can be replicated elsewhere, particularly in ethnically
diverse communities. Among these are structured dialogue groups to facilitate conversation between
groups with opposing views; education and training activities for and about diverse groups; conflict
management and mediation; and community service and economic development.

Warner (1999) explores how social capital can be constructed to enhance involvement of excluded
groups. She asserts that “in communities where forums for interaction no longer emerge as natural
extensions of work, school, or play, they can be intentionally created and designed to encourage
development of social capital to enhance community problem solving in specific arenas of concern”
(Warner 1999: 379). Such spaces may be incidental, voluntary or quasi-official, but they must be
relatively participatory.

Education

Social capital can be transmitted through educational institutions, which provide social control in the
form of norms and rules (Fukuyama 2000). Governments can also indirectly promote social capital
creation by providing property rights and public safety to encourage an environment of trust. Education
can contribute to social capital formation in the following ways: by “strengthening the human capital
needed for economic development, social harmony, and state accountability” (Reilly and Phillpot 2000:
914). School education fosters the development of social capital by providing students with social skills
such as participation and reciprocity; forums for community activity; and by providing students with the
knowledge of how to participate responsibly in their society (Reilly and Phillpot 2000: 914). In a market
development context, the notion of education can be expanded to include training and capacity building
of actors. Participation in group workshops and learning initiatives provide entrée into new social
networks, and with regular interactions, can develop social capital.

Information and Communication Technologies

Flor (2004) argues that Information and Communication Technologies (ICT) can be instrumental in
creating social networks to foster social capital development. Using the case of China’s Central
Agricultural Broadcasting and Television School (CABTS), which has over 900,000 annual enrolments, he
demonstrates that social capital can increase significantly through Intra and Internet connectivity. He
provides the following reasons for why this is so:

“1. Superimposing electronic networks on social networks allow individuals to cross easily
between these networks

2. Electronic networks provides “doors” between online community infrastructures

3. Access to the World Wide Web increases the potential social capital of a community through
the augmentation of its knowledge capital” (Flor 2004: 4).

Government

Governments, particularly at the local level, can affect both the creation and mobilization of social
capital because, at least in theory, local governments are “easily accessible to citizens, charged with
matters of high community concern, and capable of mobilizing large numbers of participants” (Lowndes
and Wilson 2001: 636). They can do this by shaping the conditions in which social networks such as
voluntary associations can thrive (Lowndes and Wilson 2001: 631). Lowndes and Wilson propose that
there are four dimensions of institutional design within local governance that affect social capital:
"relationships with the voluntary sector; opportunities for public participation; the responsiveness of
decision-making; and arrangements for democratic leadership and social inclusion" (2001: 633)

Government institutions can foster community social capital development through decentralized
programs at the neighborhood level, in which autonomy is shared with citizens, rather than through
hierarchically structured programs (Warner 2001: 189). These programs can enhance individual
engagement with existing institutions, and involve the broader community through community-based
interventions such as community policing and neighborhood based social service systems (Warner
2001).

Fox (1996) found that social capital accumulation in rural Mexico was possible through coproduction by
state reformists and local societal actors or by the interaction of local societal groups and external allies,
including religious, political and developmental actors. He discovered that social capital may also be
produced from the ‘bottom up’ through autonomous local social, civic or political initiatives but external
collaborators are still essential for their survival (Fox 1996: 1098).

In Kerala, India, a leftist movement in the North has created a number of civic communities through a
combination of state intervention and popular pressure. The social capital thus created has surpassed
that of historically social capital-rich South, and implemented statewide land reform in India, the most
consistent of its kind (Tornquist 1998, cited in Pantoja 2000: 21).

Building (and Diversifying) Social Networks

One novel method of building new networks is through “network weaving” (Ricchiuto). According to this
model, a “network weaver” builds and develops connections between and within individuals, groups
and other networks. Network weavers do the following:

“1. They constantly learn about the assets and opportunities in the network. This includes the tangible
and intangible, shared and isolated, well-engaged and unengaged talents, resources, funds, space,
expertise, and knowledge available within the network.

2. They constantly learn about the dreams of people in the network. These are the passions inspiring
what people are striving to create and pursue.

3. They constantly introduce and connect people with complementary dreams and assets” (Ricchiuto).

Granovetter (2005) identifies the concept of ‘weak ties’ that permits new information to flow to
individuals through weak rather than strong ties. Participation in exclusive social networks may be
disadvantageous for the sharing of information due to the “strength of weak ties” – that is, the fact that
more new information is learned from non-members than members of the same network (Granovetter
2005: 34). Close friends tend to move in the same circles and often possess the same information,
whereas acquaintances introduce new ideas and information that is then passed on to the primary
group (Granovetter 2005). Weak ties are much more likely than strong ones to play the role of
transmitting new and useful information across disconnected social networks. Therefore, non-members
can enjoy comparative advantage over members if they have ties with other networks because they can
exploit information by being able to access multiple networks – what Burt terms “structural holes”
(1992). Burt defines structural holes as a “relationship of nonredundancy between two contacts...As a
result of the hole between them, the two contacts provide network benefits that are in some degree
additive rather than overlapping” (1992: 18) Individuals with ties or loose connections to multiple
networks have advantages over tightly-knit social networks, since the structural holes in networks are
where the weak ties pass information to other networks.

One of the key methods of strengthening existing networks is to invite more diverse participants into
the network. Granovetter has observed that the diversity of social networks enables increased access to
resources and information (2005: 34). Glanville’s research similarly concludes that “Greater social
network diversity should also enhance access to a wider social world. Because social relations are more
common among socially similar people…ties between people who are socially different serve as valuable
bridges between otherwise disconnected, homogeneous social worlds” (2004: 466). Diversity within
social networks is also important because ethnically fragmented societies are more prone to corruption
(Mauro 1995). Mauro argues that “ethnolinguistic fractionalization may affect investment not only by
increasing corruption and political instability, but also via a direct channel...[by slowing] down the
diffusion of ideas and technological innovations” (Mauro 1995: 698). Nee et al (1994) assert that when
social boundaries move away from a “gatekeeper function” protecting resources generated by the
ethnic group, and moves towards a “bridging function” fostering inter-group cooperation, the influence
of ethnicity is likely to decline. The more ethnically heterogeneous the urban population, the greater the
opportunity for interethnic economic transactions, and the larger the size and span of firms in the mixed
economy (Nee et al 1994: 853).

Harnessing Social Networks to Build Social Capital

Social capital can also have a spatial, geographical component because of the ability to monitor and
enforce social obligations within a smaller area. Soubeyran and Weber (2002) argue that social capital
creation is fostered and sustained through repeated exchange and face-to-face interactions, which in
turn are facilitated by geographic proximity. Even if members of social networks share common values
and trust each other, this does not preclude competition between members: this combination of
cooperation and competition has been dubbed “co-opetition” (Brandenburger and Nalebuff, cited in
Soubeyran and Weber 2002: 67). Over a period of extensive interactions, local social networks
eventually move from an “ascribed” to an “earned” basis, where “knowing and being known” locally
enables success even if a person does not belong to a particular ethnic group (Nadvi 1998: 33).

Granovetter observes that social networks affect economic outcomes in three ways: by affecting the
flow and quality of information, by imposing reward and punishment, and by creating trust between
members of the network (2005: 33). Research in India and Tanzania has shown that social capital greatly
advances the ability of the poor to manage scarce resources and provides an enhanced buffer from
economic vulnerability (Grootaert 1998:11). Enhanced economic productivity can be achieved through
membership in social networks due to improved access to information, labor, credit, as well as contract
enforcement provided by social control. Social networks, particularly those based on kinship or native-
place ties, can also help promote small businesses due to trust and cohesion among members. It can
also act as a buffer to predatory businesses, lower barriers to entry for newcomers, and increase the
survival and success rates of members (Peng 2004: 1068). Since intense local competition may strain
social ties, social networks “help mediate the boundaries of acceptable competition and encourage local
competition” (Nadvi 1998: 33). In addition, social connections are advantageous because they help to
define an individual’s identity and behavioral norms that guide their choices and actions (Barrett 2004:
3).
The Missing Link(s)

Minority groups are often lacking in social capital because the networks they are embedded in are
similarly disadvantaged. Pantoja notes that since social capital is a shared resource that can provide
access to other resources, “under scarcity conditions…it can also become an integral part of the
structures of constraint created by gender, class, ethnicity…[as well as] religion and caste” (2000:2). For
precisely the same reasons that membership in a social network confers certain advantages, non-
membership can exclude outsiders despite their relative availability, proximity and skillfulness, while
members benefit at their expense (Turner 2007: 410, 412). Networks based on ethnic ties are self-
reinforcing, by discriminating against outsiders and restricting comparative advantages to members. As
Pieter van Dijk et al note, “dominance is often perpetuated by limiting training to co-ethnics, by passing
information about business opportunities along ethnic networks, or by ‘handing down’ market stalls or
other business sites to younger relatives” (1997: 122).

Pantoja’s (2000) case study on social capital in coal mining regions in Orissa, India, demonstrates that
the same social capital that enables group members to work together can be used to exclude non-
members from the advantages of collective action. Although high levels of mutual trust exist, it is
correlated to gender, caste and class, resulting in closed groups with high entry costs to outsiders, and
few horizontal linkages across groups (Pantoja 2000). In Orissa, as in other areas, social networks are
used to exclude historically disadvantaged members of the community. Thus social capital development
may work to perpetuate existing power structures, and have implications for maintaining income
stratification between ethnic groups, which can cause frustration and exacerbate fragmentation along
ethnic lines.

In the literature, social capital is generally conceptualized in gender-blind terms, and pays scant
attention to gendered intra-household issues of power and hierarchy (Silvey and Elmhirst 2003). Social
networks may have particular expectations and demands of women, and membership may have distinct
advantages and disadvantages (Silvey and Elmhirst 2003: 867). Social capital that exists within a general
environment of gender inequity can in fact exacerbate gender subordination (Mayoux 2001). However,
Molinas (1998) observes that cooperation among social networks increases as women’s participation
and social capital increases. His research in Paraguay demonstrates that “increasing women's effective
participation in local peasant organizations...enhances the prospects for the peasant communities...to
alleviate poverty” (Molinas 1998: 421).

Research has shown that women are more likely to be interested in investing in household and
community welfare; they tend to be the main decision-makers in household water and waste
management; and that community undertakings such as cleaning of communal areas are considered to
be extensions of female domestic tasks (Carpenter et al 2004: 856 – 857). Since women usually have
access to fewer assets than men, they are more dependent on resources accessed through social
networks, which in turn suggests that they would tend to engage more in “trust, reciprocity and
cooperative relationships than men” (Carpenter et al 2004: 857).

Women’s membership in social networks is often assumed to contribute positively to their economic,
social and political empowerment; however men's social capital, as well as constraints at the
institutional level, may restrain women's ability to negotiate collective change, and may in fact reinforce
gender subordination (Mayoux 2001). Dolan’s (2001) research in Kenya demonstrated how connecting
women in Kenya to international markets for selling French beans resulted in their increased income,
but eventually led to the appropriation of this traditionally female role by men, leaving the women
without any income source at all.

Figure 3 below demonstrates a more ideal situation for the development of social capital:

From To

Ethnic loyalties Social Capital

Defining Elements

Figure 3: Adapted from Cava, Gloria La and Rafael Y. Nanetti (2000: 46).
How to Measure Social Capital

The difficulty of measuring social capital has been well-documented. There is no standardized measure
of social capital, because of the variety of ways in which it can be defined. Social capital can be
measured using a number of composite indicators related to the quantity and quality of social groups,
such as the Putnam index, or a product of factors including the number, basis and “density” of
membership in social groups, the frequency with which they meet and the extent of their participation
(Isham and Kähkönen 1999: 31, Grootaert 1998: 10). Social capital can also be measured by membership
in more formal institutions like registered self-help groups, cooperatives, microfinance groups, religious
institutions, trade groups and social clubs, etc.

The most frequently used measure of social capital is membership in groups (structural social capital),
followed by patterns of trust and the strength of shared norms and reciprocity (cognitive social capital) .
Astone et al suggest that “The dimensions of social capital are the number of relationships a person has;
the strength of those relationships; and the nature and amount of resources available as a result of
those relationships” (1999: 10). However, this measure excludes both those relationships which exist
outside groups, and those that people maintain with group members after they have formally left the
group (Pantoja 2000: 18). Onyx and Bullen (2000) developed an instrument to measure social capital
using eight factors they identified as comprising social capital, including: local community participation;
proactivity in social context; feelings of safety and trust; neighborhood connections; family and friend
connections; tolerance of diversity; value of life; and work connections.

Gugerty and Kremer (2006) measure social capital among women’s groups in Kenya by the
organizational structure of the groups, their mutual assistance activities, and the strength of external
ties. Pantoja’s study (2000) of coal mining areas in Orissa, India, measured social capital based on the
relationship between the mining company, the communities and their civil society organizations. Krishna
and Uphoff (1999) used membership in networks to measure structural social capital in villages of
Rajasthan, India. Grootaert and van Bastelaer (2001) suggest that the ideal approach to measuring social
capital would include all four quadrants of Figure 4, but in practice, most measures are not as all-
encompassing. Krishna and Uphoff (1999) stress the importance of having a locally validated measure of
social capital, because what works in one area may not be applicable in another context.

Figure 4: From Grootaert and van Bastelaer (2001:20)

Evidently, there are a number of ways to measure social capital and its impact, and due to its context-
specific nature, there can be no singular “best” measure of social capital. Grootaert (2003: 44) proposes
that the focus should be placed on three broad types of proxy indicators that can help in creating a
measurement tool for social capital: membership in local associations and networks, indicators of trust
and adherence to norms, and an indicator of collective action:

 Membership in local associations and networks. Using membership in local associations as an

indicator of structural social capital consists of counting the associations and their members and
measuring various aspects of membership (such as internal heterogeneity) and institutional
functioning (such as the extent of democratic decisionmaking). Which associations to include in
the indicators is culture specific: agrarian syndicates could be relevant in one country, rotating
credit and savings associations in another, parent-teacher associations in yet another. In the
case of networks, which are less formal, the key information is the scope of the network and the
internal diversity of membership. Indicators of membership in associations and networks proved
of key importance in the studies of watershed management in India, access to water systems in
Indonesia, solid waste collection in Bangladesh, primary schools in Kenya, access to services in
Russia, and civil conflict in Cambodia and Rwanda.

 Indicators of trust and adherence to norms. Measuring trust and adherence to norms (cognitive
social capital) requires asking respondents about their expectations about and experiences with
behavior requiring trust. Key questions relate to the extent to which households received or
would receive assistance from members of their community or network in case of various
emergencies (loss of income, illness). Questions of this type were included in the data collection
instruments of several SCI studies. The measurement of trust was critical for the studies of
traders in Madagascar, agricultural extension in Mali, and the civil conflict in Cambodia and
Rwanda.

 An indicator of collective action. The provision of many services requires collective action by a
group of individuals. The extent to which this collective action occurs can be measured and is an
indicator of underlying social cohesion (at least to the extent that the cooperation is not
imposed by an external force, such as the government). Several SCI studies successfully used
such measures, including the studies on watershed management in India, water supply in
Indonesia, and solid waste removal in Bangladesh. As proxies, these three types of indicators
measure social capital from different vantage points. Membership in local associations and
networks is clearly an input indicator, since the associations and networks are the vehicles
through which social capital can be acquired. This indicator resembles perhaps most closely the
use of years of schooling as a proxy for human capital. Trust can be seen as an input or output
indicator or even as a direct measure of social capital, depending on one’s conceptual approach.
Collective action is clearly an output indicator”.

These three broad sets of indicators provide a useful scaffold for designing a measurement instrument,
which can then be disaggregated by gender and ethnicity. Over the course of time, the results indicators
can be reviewed to determine improvements in social status across each sub-group.
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