Social Capital Investment Research Articles

CEO social capital in family businesses and its effect on investment opportunities: Asset or liability?

AbstractSocial capital is a widely recognized critical intangible resource for firm success, especially in family businesses, which are considered “emotional arenas”. CEOs' social capital could represent a decisive factor, although its influence is unclear. This research aims to deepen the relationship between CEOs' social capital and firm investment opportunity set (IOS). The research hypothesis assumes a positive relationship between CEO social capital and firm's IOS. CEO social capital is estimated considering network centrality indicators suggested by the authoritative social network analysis literature. The IOS is represented by a single composite indicator of four price‐based proxies and one accounting variable. Using a wide sample of listed Italian family firms, the analysis shows that a CEO with a broader relational network decreases firm investment opportunities. The findings suggest that family businesses, in the Italian context, lack the environmental conditions and critical factors to valorize the CEO's social capital in terms of future investment opportunities.

Higher Education: An Investment in Human and Social Capital in Nigeria

Higher Education: An Investment in Human and Social Capital in Nigeria

Do Firms React to Uncertainty by Doing Good Deeds? Uncertainty and CSR Investment

We find that firms invest more to build up corporate social capital, as measured by corporate social responsibility (CSR) intensity, when facing high economic policy uncertainty (EPU). The results are robust to endogeneity concerns. The effects are more pronounced for firms in consumer-oriented industries, firms headquartered in high social capital regions, and for firms in industries with higher levels of irreversible investments. Overall, our results suggest that investment in social capital affects trust between a firm and its stakeholders and this provides a cushion when firms face high levels of uncertainty.

Empowerment Programmes of Faith-Based Organisations (FBOs) and Socio-economic Well-being of Members in Yenagoa Community, Bayelsa State, Nigeria

This is an investigation on the empowerment programmes of faith-based organizations (FBOs) and socio-economic well-being of members in Yenegoa Communities of Bayelsa. This study lay to rest the controversy surrounding FBOs, whether they are empowering members or exploiting them and the extent to which such organisations have met its goals especially that of capacity building, charity and giving. The survey research method was used for the study. From a population of 12,565 FBOs leaders and members in Yenegoa communities, a sample of 659 participants was selected through proportional random sampling method. Data were collected with a face and content validated self-structured instrument title: Faith-Based Organisations Empowerment Scales (FBOES), (r=0.88). Four research questions were raised and answered using the mean, standard deviation and multiple regression statistics analysis. Results showed that, faith-based organisations provided skills acquisition programmes for member’s empowerment. Majority of the FBOs were actively involved in the empowerment of youth, women and the most vulnerable members of the affiliates and even the host communities. Faith-based organisations derived its goals from the teaching on social capital investment elements of trust, cooperation, mutuality, compromise, reciprocity, courage, integrity, networking, mentoring, and communication for peace building and community development. It was concluded that faith-based organisations empowerment programmes had positive impacts on members’ social and economic well-being. In view of these findings, it was recommended that leaders of FBOs in the communities should moderate their lifestyles, emulate and enhance the example of service, humanness and sacrifice in their engagement.

The effect of informal caregiving on social capital investments

Social capital is a resource derived from a person's social network and is important for various outcomes. Social capital declines over time and requires investments to avoid further declines or to increase the stock. However, certain life events can negatively affect social capital. This paper analyzes how informal caregiving, defined as unpaid assistance to persons who cannot perform the usual activities of daily living without help, affects social capital investments. Drawing on the German Socio-Economic Panel (GSOEP) with data for 15 years, I apply fixed-effects (FE) regressions to estimate the effect of changing caregiving status (extensive margin) and the effect of an additional hour of caregiving (intensive margin) on social capital investments. The results show that caregiving negatively affects investments in social capital for weak and strong ties unrelated to the care task. Furthermore, caregiving increases investments in strong ties that are care related.

Effect of Social Capital on Poverty Alleviation among Fish Farming Households in Oyo State, Nigeria

This study investigates the effect of social capital investment on poverty reduction among fish farming households of Oyo State, Nigeria. A multistage sampling technique was adopted in the selection of the respondents. Primary data were collected using a structured questionnaire from a representative sample size of 359 households in four local government areas representing the four agricultural zones, namely Ibadan-ibarapa, Oyo, Ogbomoso and Saki in Oyo State, Nigeria. The study used a multinomial logit regression model to examine the effect of social capital on household poverty. The estimates of the regression model indicated that, in addition to the socio-economic characteristics of some households, social capital endowments have significant effect on the probability of a household being poor. The study concluded that, among other factors, social capital is very important in reducing household’s poverty. It was therefore recommended that stakeholders should be encouraged to invest in households’ social capital to accelerate poverty reduction among the fish farmers in the study area.

Monetary policy, social capital, and corporate investment

We study the effect of monetary policy and social capital on the efficiency of corporate investments among the public US firms. We use social capital of CEOs at the peer- and non-peer levels to build proxies for the CEO networking and the effective federal funds rate and the spread between the rate and the 10-years US Treasury note as our proxies for monetary policy. We capture investment inefficiency from the residuals of Richardson (2006)‘s investment efficiency model. Our results show that both innovations in monetary policy and social capital of CEOs influence corporate investment inefficiency significantly. Stronger social ties amongst CEOs and their peers lead to greater inefficiency in investments while stronger social ties between CEOs and their non-peer directors lead to lower inefficiency in investments. The results strengthen our belief on social capital’s spillover influence on investment decision at the firm level. Our evidence indicates that CEO social ties function as another channel that affects their investment decision and that the influence of social ties also depends on the role of the other parties CEOs are affiliated with—whether they have titles of CEOs or titles of directors.

Measuring regenerative economics: 10 principles and measures undergirding systemic economic health

Applying network science concepts and methods to economic systems is not a new idea. In the last few decades, however, advances in non-equilibrium thermodynamics (i.e., self-organizing, open, dissipative, far-from-equilibrium systems), and nonlinear dynamics, network science, information theory, and other mathematical approaches to complex systems have produced a new set of concepts and methods, which are powerful for understanding and predicting behavior in socio-economic systems. In several previous papers, for example, we used research from the new Energy Network Science (ENS) to show how and why systemic ecological and economic health requires a balance of efficiency and resilience be maintained within a particular a “window of vitality”. The current paper outlines the logic behind 10 principles of systemic, socio-economic health and the quantitative measures that go with them. Our particular focus is on “regenerative aspects”, i.e., the self-feeding, self-renewal, and adaptive learning processes that natural systems use to nourish their capacity to thrive for long periods of time. In socio-economic systems, we demonstrate how regenerative economics requires regular investment in human, social, natural, and physical capital. Taken as a whole, we propose these 10 metrics represent a new capacity to understand, and set better policy for solving, the entangled systemic suite of social, environmental, and economic problems now faced in industrial cultures.

Human and Social Capital Complementarities in the Presence of Credit Market Imperfections

This paper models the individual-level social capital effect the credit market constraints that reduce the accumulation of costly human capital. Human capital, in turn, improves an individual’s income as well as the bequest that they intend to leave for their children. It also helps reduce inequality across a country. Finally, the model shows that investment in social capital has a negative relationship with the interest rate, so that the initial inherited bequest of every individual affects the output and investment in the short-run, as well as in the long-run.

Multiscale impact of researcher mobility.

International mobility facilitates the exchange of scientific, institutional and cultural knowledge. Yet whether globalization and advances in virtual communication technologies have altered the impact of researcher mobility is a relevant and open question that we address by analysing a broad international set of 26 170 physicists from 1980 to 2009, focusing on the 10-year period centred around each mobility event to assess the impact of mobility on research outcomes. We account for secular globalization trends by splitting the analysis into three periods, measuring for each period the effect of mobility on researchers' citation impact, research topic diversity, collaboration networks and geographical coordination. In order to identify causal effects we leverage statistical matching methods that pair mobile researchers with non-mobile researchers that are similar in research profile attributes prior the mobility event. We find that mobile researchers gain up to a 17% increase in citations relative to their non-mobile counterparts, which can be explained by the simultaneous increase in their diversity of co-authors, topics and geographical coordination in the period immediately following migration. Nevertheless, we also observe that researcher's completely curtail prior collaborations with their source country in 11% of the cross-border mobility events. As such, these individual-level perturbations fuel multiscale churning in scientific networks, e.g. rewiring the connectivity of individuals and ideas and affecting international integration. Together these results provide additional clarity on the complex relationship between human capital mobility and the dynamics of social capital investment, with implications for immigration and national innovation system policy.

The impact of human behaviour and restoration on the economic lifespan of the proposed Ntabelanga and Laleni dams, South Africa: A system dynamics approach

Abstract The South African government intends to develop the Mzimvubu Water Project (MWP) which includes the construction of two dams (the Ntabelanga and Laleni dams) in the Tsitsa River, Eastern Cape province, South Africa. This investment is believed to be important to unlock the economic potential of this rural, poor and underdeveloped area. We consider a range of variables to ascertain what the realistic economic lifespan of each of the dams are, subject to uncertainty and complexity, as the benefits from the development of the dams are closely linked to such lifespans. The selected sites are prone to soil erosion thereby potentially jeopardising the derived benefits from the investment. We therefore develop a catchment-wide system dynamics model, incorporating both technical and behavioural dimensions, in an effort to determine which factors influence the economic lifespan of the dams and to what extent. The results suggest that, without taking any restorative or behavioural effects into consideration, the lifespan of the Ntabelanga and Laleni dams are 55–68 years and 26–33 years, respectively. Introducing business-as-usual type behavioural patterns could reduce the dams’ lifespans by between 35% and 44% due to the increased erosion. The increased soil erosion and resulting sedimentation is the direct result of increased human and animal movements due to the economic investment and associated land use change. Restorative and desirable behavioural action that will mitigate these impacts have the potential to reduce this loss to only 4%–9%. This would imply investing heavily both in restoration and in capacity-building and community development programmes to facilitate desirable behavioural change. In sum, this suggests that investment in social and natural capital has to coincide with the investment of financial capital in manufactured capital to make economic development last. Investment in social and natural capital could therefore be viewed as a type of insurance policy, and thus an insurance investment, against the risk of very plausible losses of the benefits derived from the manufactured capital (the dams). Alternatively, the opportunity cost of not investing in social and natural capital, is the much reduced lifespans of the dams and all associated economic benefits.

Coping with Social Capital Investment by Local Firms: The Strategies of MNEs in China

Firms compete with each other not only with market-based competitiveness (e.g. technology, brand, scale, etc.) but also with social based ones. In emerging markets where multinational enterprises (...

Education and the Public Goods Type of Social Capital: Are the Well Educated Free Riding in the Provision of Public Goods?

:In the previous literature, education has been found to promote the individual’s investment in social capital. However, little is known about its effect on the public goods type of social capital as many of the studies have used generalized measures of social capital. Using survey data from Japan with information on participation in neighborhood associations and community activities, we find that individuals with higher education are no more likely than those with compulsory minimum education to invest in the public goods type of social capital. Nor do we find evidence that the more educated free ride on the less educated in the provision of public goods.

Growth strategy with social capital, human capital and physical capital—Theory and evidence: The case of Vietnam

AbstractIn this paper, we develop a theoretical model to explain the impact of social capital (defined at the firm level) on individual firm performance and derive a critical optimal threshold for firms to invest in social capital. The theoretical model we propose reveals how social capital, human capital, and physical capital simultaneously affect firm performance under the main assumption of a decreasing function of social capital on unit cost of physical capital. Our theoretical model is then estimated using unique firm‐level longitudinal data from Vietnam for the period 2005–2015. Using a control function approach in a quantile regression framework, we attempt to establish the causal impact of social capital on firm performance. Our empirical results point to a range of revenue in which investment in social capital is efficient and to evidence suggesting that the role of social capital decreases when firms become richer.

Individual Payoffs and the Effect of Homeownership on Social Capital Investment

We revisit the relation between homeownership and social capital investment with confidential individual-level panel data from Los Angeles County. Using anticipated real wage change as an instrument for ownership, we find strong evidence that homeownership increases participation in block meetings, and find no homeownership effect on three other activities: volunteerism, participation in a local political organization, and participation in a civic group. These results are confirmed in fixed effects models. Our results support a pecuniary motive: that homeownership increases social capital investment when such investments are perceived to generate gains solely for homeowners.

L’intégration des immigrés dans les pays d’accueil-Ce que nous savons et ce qui marche

L’intégration des immigrés est au cœur des préoccupations politiques dans plusieurs pays. Cet article commence par présenter que, dans la plupart des pays européens, les immigrés sont considérablement défavorisés sur le marché du travail par rapport aux natifs. Puis il s’interroge sur la façon dont les politiques publiques peuvent affecter l’intégration des immigrés. Premièrement, nous passons en revue la littérature sur l’efficacité des cours de langue et d’introduction. Ensuite nous cherchons à savoir comment différents aspects du cadre de la politique migratoire peuvent déterminer les modes d’intégration des immigrés. En particulier, nous nous appuyons sur une revue de la littérature récente pour souligner le rôle de la durée du visa et de la prévisibilité de la durée de la migration dans la décision des migrants d’investir dans le capital humain et social propre au pays d’accueil. En outre, nous discutons des implications pour la migration de réfugiés et nous nous intéressons au rôle des règles d’acquisition de la nationalité. L’article s’achève par un aperçu des conséquences pour les pays d’origine. Codes JEL : F22, J15, J61.

An international analysis of CEO social capital and corporate risk‐taking

AbstractThis study examines the effects of CEO social capital on corporate risk‐taking around the world. We document a significant positive relation between CEO social capital and aggregate corporate risk‐taking. Further, we find that CEOs with large social capital prefer riskier investment and financial policies. We also determine that the effect of CEO social capital on corporate risk‐taking is moderated by the extent of legal protections provided to shareholders, the financial development, and the culture of the country in which a firm is incorporated. Our results are robust to alternative proxies of risk‐taking, alternative model specifications, and tests for endogeneity.

How immigration reduced volunteering in the USA: 2005–2011

In this study, we show that an inflow of immigrants reduces volunteering, a proxy of social capital investment, in receiving communities. Since the 1960s, there has been a large decrease in social capital in the USA as well as a considerable inflow of immigrants. This increased heterogeneity of US cities may have increased the cost of investing in social capital, and thereby, reduced such investment. By using the current population survey September Volunteer Supplement for 2005–2011, we examine the relationship between the proportion of foreign-born people and social capital investment by US-born individuals, proxied by volunteering. Once we correct for immigrants’ self-selection to different destinations using a supply–push instrumental variable, we find that a 1 standard deviation increase in the proportion of foreign-born individuals in a state reduces the probability of US-born individuals volunteering by 0.09–0.15 standard deviations and cuts number of hours volunteered by 0.13–0.21 standard deviations.

Investment in Social Capital by Korean Baby-Boomers and the Elderly

Social capital is both an input and an output of individuals’ economic choices, but relatively little is known about social capital investment, particularly in individuals’ old age. With a premise that SC is an individual-level concept in which individuals purposely invest, we estimate elderly individuals’ indexes of the stock and investment in social capital using principal component analysis of their social engagement, networks, and trust in social institutions. We describe the distribution of the social capital stock and investment across various demographic groups, and using a capital-accumulation model, we test hypotheses about the drivers – expected benefits, costs, depreciation, preexisting social capital, and social-capital in one’s community – of individuals’ decisions to accumulate social capital. Linear regressions and mixture models of group-based trajectories are used to identify the determinants and the evolution of social capital investment in individuals’ older age. Implications for their life satisfaction are assessed. Using four waves of the Korean Longitudinal Study of Ageing, we find that the elderly exhibit gradual attrition of social capital, but women retain more social capital on account of better mental health and higher returns on investment from lower starting points. Expected returns on individuals’ social capital affect the investment positively, while costs including opportunity cost of one’s time, and social capital depreciation affect it negatively. Physical and human capital appear to be complementary to social capital, encouraging investment. Stock and investment in social capital in a community lead to higher investment by individuals themselves.

Investing in Social Capital and Competing with Foreign Firms: Strategies of Local Rivals in China

How do local rivals investments in social capital influence the performance of foreign-invested firms in emerging economies? Combining both agency theory and resource-based theory with a competitive rivalry perspective, we argue that the extent to which foreign-invested firms are influenced by rivals social capital investment depends on 1) whether these investments successfully transform into social capital, 2) the level of rivalry between rivals and foreign-invested firms, and 3) the level of government intervention in the competitive environment. An empirical study based on four-year panel data of 30,060 foreign-invested firms in China delivered partial support to our arguments. Specifically, we found that, compared with social capital investment made by privately owned enterprises (POEs) and other foreign-owned enterprises (FOEs), those made by state-owned enterprises (SOEs) are less likely to hurt the performance of FOEs. Additionally, FOEs that have cumulated more intangible assets or operated in high-tech industries are less likely to be influenced by the social capital investment made by local rivals China. Contrary to our expectation, government intervention tends to reduce rather than enhance the negative impact of local rivals social capital investment on the performance of FOEs.