Executive Report: Measuring and Valuing Social Capital

This guide shows how businesses can make social capital part of their decision-making and reporting.
NBS September 24, 2017

A Way for Business to Think About Relationships

Executive Report
Click to download
“It’s not what you know but who you know.” People have always recognized the importance of relationships.

The integrated reporting movement asked that businesses make relationships part of their reporting. International Integrated Reporting Council (IIRC) guidance suggests that a company’s public report should include information about six forms of “capital,” including social capital, which focuses on “institutions and relationships.”

South Africa: Leading Integrated Reporting

South Africa is the first country to make integrated reporting a requirement for listed companies. When a group of South African business leaders met in 2013 to identify sustainable development challenges, they asked: How can we measure and value social capital for business decision-making and reporting?

“Business and society must come to a place of agreement on how businesses create value,” said Ansie Ramalho of the Institute of Directors in Southern Africa.

In response, the Network for Business Sustainability South Africa asked scholars to conduct a systematic review of social capital research. With direction from a Guidance Committee of business leaders, researchers Moses Acquaah, Kwasi Amoako-Gyampah, and Nceku Q. Nyathi reviewed and synthesized 314 studies.

What this Report Provides

Designed for business leaders, this Executive Report provides: The report can also be used by government representatives and other societal change agents. While the research addresses the South Africa context, the findings have global relevance.

Understanding Social Capital

Relationships are familiar territory. Social capital is a formal way of thinking about relationships. Technically, the term refers to an individual’s or group’s ability to secure or obtain resources, knowledge and information through relationships with and among individuals and groups.

These relationships exist inside an organization (e.g. among employees) and outside an organization (e.g. between the organization and external stakeholders such as communities, consumers and regulators).

Social capital has three key elements:

Figure: Three Dimensions of Social Capital

Recognizing the Value of Social Capital

Social capital has many benefits. Internal social capital – good relationships among employees – makes companies more efficient and reliable, in operations, product and innovation management.

The firm’s relationships with external stakeholders also bring benefits. For example, companies with greater external social capital gain competitive advantage as a result of access to valuable resources, knowledge and information that are not easily traded.

Measuring and Managing Social Capital

Measuring social capital can help firms enhance it, and is also necessary to respond effectively to integrated reporting guidelines.

Each of social capital’s three dimensions is associated with particular measures. In this Executive Report and the Systematic Review, we describe the measures and provide specific tools.

An Issue for Business and Society

Use this report to understand what social capital is, how to measure it, and the value it provides to individuals, organisations and communities. The report will support you in making the business case to continue building social capital.

Ultimately, we need each other to survive. Organisations depend on diverse internal and external relationships. As with other forms of capital, effective management of social capital enhances the success of organizations and society. 

Executive Report
Click to download

Related Resources

Primer

This primer explains the concept of social capital and why and how it should be measured.

NBS
Reports and Articles

Business leaders in South Africa identify a need for research on creating a shared vision for a sustainable future and social capital.

NBS
Systematic Review

This comprehensive review describes what social capital is, how it is measured, and the value it provides to individuals, organisations and communities.

NBS