Effects of Social Capital

2013-10-15 21.27.53

Although social capital has been defined in several different ways by different experts, however, most commonly it can be called as the outcome of social relations. It not only comprises of financial benefit but also includes expectative benefits that are derived from the cooperation between various groups and individuals.

the major difference between the financial capital and social capital is that the latter fosters positive relationships and thus enhances the fulfillment and the confidence. Even after having so many benefits, social capital can also produce some unwanted results. Yes, it is surprising but true that when we analyze the other side of social capital, we may find that it can put burdens on the society.

Social capital producing negative outcomes is generally called as negative social capital. The potential downsides include restrictions on individual freedom, excess claims on group members and exclusion of outsiders. Additionally, instead of focusing on creating the bond between the two worlds – rich and poor, it emphasizes on bridging the gap between them. The result is that it is deepening the gap between the two. It also puts a barrier in social mobility.

Individuals working in social enterprises need to abide by certain rules and regulations and are supposed to do only what is expected. Their personal development and new ideas in most cases are not welcome. In such a scenario, it gives a sense as if it were creating unwanted results. Though every feature of social capital produces desired results but along with this, it also produces a liability too.

ref. http://www.managementstudyguide.com/social-capital-negative-effects.htm


Hybrid non-profit ventures


“The entrepreneur sets up a non-profit organization but the model includes some degree of cost-recovery through the sale of goods and services to a cross section of institutions, public and private, as well as to target population groups. Often, the entrepreneur sets up several legal entities to accommodate the earning of an income and the charitable expenditures in an optimal structure. To be able to sustain the transformation activities in full and address the needs of clients, who are often poor or marginalized from society, the entrepreneur must mobilize other sources of funding from the public and/or philanthropic sectors. Such funds can be in the form of grants or loans, and even quasi-equity”.

ref. http://www.schwabfound.org/content/what-social-entrepreneur

Social business ventures


Social business ventures 

“The entrepreneur sets up a for-profit entity or business to provide a social or ecological product or service. While profits are ideally generated, the main aim is not to maximize financial returns for shareholders but to grow the social venture and reach more people in need. Wealth accumulation is not a priority and profits are reinvested in the enterprise to fund expansion. The entrepreneur of a social business venture seeks investors who are interested in combining financial and social returns on their investments”.

ref. http://www.schwabfound.org/content/what-social-entrepreneur

“Life begins at the end of your comfort zone”.


Social entrepreneurs drive social innovation and transformation in various fields including education, health, environment and enterprise development. Business methods and the courage to innovate and overcome traditional practices. A social entrepreneur, similar to a business entrepreneur, builds strong and sustainable organizations, which are either set up as not-for-profits or companies”.