In sociology, social capital is the expected collective or economic benefits derived from the preferential treatment and cooperation between individuals and groups. Although different social sciences emphasize different aspects of social capital, they tend to share the core idea “that social networks have value“.(1)
I first heard about the concept of social capital in economics classes at the University of Kentucky. I would be lying to you if I said I truly believed or understood the concept at the time. I learned the definition to pass the test and then moved on. After college, I’ve spent the last decade working with groups of local business professionals in a referral group environment. I’m a believer in social capital. I’ve seen the concept in action time and time again. People make deposits and withdraws (just like a bank) in the relationships day in and day out. You do this in your family, personal and business life every day in some variety.
So, why should someone be part of an organized referral group?
In my experience, the most valuable reason is so that you don’t have to create and manage the structure, policies and procedures of an organization from scratch. Are there other reasons? Of course, but this is the biggest one in my opinion.
A few other reasons to be part of an organization vs. going at it on your own:
- Sharing of best and worst practices occurs across groups and members at a greater frequency. This makes your participation more valuable and efficient.
- Tools. Any organization worth joining will provide you with some tools (curriculum, coaching, support software, marketing tips, etc.).
- Repeatable structure.
How does all of this apply to social capital? A referral organization is all about social capital. A referral group should be an environment that drives referrals and trusting relationships. When a group creates this environment cooperation between individuals and groups starts to happen in a more predictable manner!
1-Social Capital definition: Putnam, Robert. (2000), “Bowling Alone: The Collapse and Revival of American Community” (Simon and Schuster).