Yuen Ching, CHAN

Social Capitals

There are, according to Burt (1992), at least three kinds of capital in the competition of investment.  First, the financial capital included any currency in hands, owned properties, reserves in banks, shares in the stock market, revenues from planned transactions in the near future, etc.  Second, the human capital consisted of a person’s natural qualities.  These are “charm, health, intelligence, and looks” and “skills you have acquired in formal education and job experience” that allowed you to perform the best in certain duties (Burt 1992: 8).  Third, here we are, the most powerful capital in the imperfect competition, it is the social capital.  Social capital is the relationships with other people included close/remote, direct/indirect, formal/informal relationships, which we will mention later on, that allowed more opportunities for the investor to utilize his/her financial and/or human capital.  This overall interaction of the two capitals with the social capital would provide a competitive advantage for a person’s investment because he/she would get a higher rate of return comparing to those have less access of social capital (Burt 1992).  

Social Network

Social capital is a key to be successful and social networking is the way to obtain social capital.  The better quality and the higher quantity of social network you have gained, the more successful you are, in any social context, especially in the business investment.  Social networks are “sets of relationships, ties or links” (Carruthers & Babb 2000: 48) between people.  There are personal, corporate and national level of networks which are linked in different degree of strength and formalization, length of time and directness.  In his studies, Brian Uzzi (1996, 1997) distinguished two kinds of social networks in which different kinds of benefits are generated.  These are the Arm’s-length ties and the Embedded ties (Carruthers & Babb 2000).  

Join now!

Individual Networks

The Embedded ties referred to close and personal relationship consisted of consistent interaction overtime.  The tie is a business arrangement based on implicit understandings where anything can be easily arranged and re-arranged and, thus, there is no need to have formal contract (Carruthers & Babb 2000).  

Inter-organizational Networks

        The Arm’s-length ties referred to the remote and impersonal relationship in which both parties are egocentric.  This relationship is short termed and highly formalized.  Thus, the use of contract is inevitable to protect both parties.  

Benefits from Individual Network

Uzzi figured out the differences ...

This is a preview of the whole essay