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The Role of Social Capital for Innovation

Social capital is a term which the majority of individuals will know, but we often don’t take the time to take stock of, or think of the implications that a lack of social capital might have. In its simplest form, social capital is centered on the formation of networks and the value which is accrued from reciprocity. It acts as the ‘glue’ in a network of relationships to ensure longevity and offers a key source of competitive advantage. Over the past few years, the value of not only networks, but social capital has been clear to help businesses overcome crises by accessing diverse resources, breaking information silos and increasing creativity. The social structural perspective of social capital highlights that it can be a key resource for both business and emotional resilience. Consequently, the Levelling Up the United Kingdom White Paper has identified social capital development as being as important as other capitals such as physical capital, human capital, intangible capital, financial capital and institutional capital. 

by Professor Kristel Miller, Dr Lisa Messina and Dr Grace Carson, winners of the Innovation Caucus Thought Leadership funding call, 2022.

Social capital is a highly intangible and tacit concept, with ongoing challenges over both its conceptual clarity and how it can be explored in practice. This motivated researchers from Ulster University and Queens University, Belfast to undertake research which would develop a comprehensive understanding of social capital, its core dimensions and moderators, and to extend understanding on the role it plays in enhancing innovation and funding success.

The project was led by Professor Kristel Miller, from Ulster University Business School, whose research expertise falls within the broad remit of how firms can develop innovation capabilities, university-industry knowledge transfer and how to enhance the competitiveness of regions.  Dr Grace Carson and Dr Lisa Messina from Queens University Management School were co-investigators and provided complementary expertise. Grace’s research expertise relates to exploring the effectiveness of institutional support mechanisms for SMEs and the value networks can have for firm innovation. Lisa has expertise on the role social capital plays for start-ups and the support mechanisms that can aid the development of effective innovation ecosystems.

This research was conducted over four months and comprised two stages of data collection. First, a systematic literature review to understand the latest state of the art of research relating to the role of social capital for innovation and in helping to achieve funding. Second, interviews conducted with programme managers from a range of Innovate UK and ESRC programmes in order to understand the following topics: if social capital is a precursor for success in funding, the initiatives associated with programmes which may lead to social capital development; if social capital building activities are actively supported within funding calls; and if programme managers track social capital development over time. Each programme call and associated documents were also reviewed.

The literature review findings unravelled that the relationships between social capital and innovation is ambiguous, and is reliant upon many moderators such as firm size, regionality, industry, gender and ethnicity. Furthermore, different types of networks and ties have value in different ways. Some are more directly related to innovation and others are indirect, where networks facilitate the access of resources and support, which in turn aids innovation. Despite ambiguity in the literature, overall it is suggested that there is a positive relationship between social capital, innovation and firm growth/performance.

The findings of the empirical research identify that there continues to be conceptual ambiguity over how social capital differs from networks; however, the Innovate UK Knowledge Transfer Network does play a key role in helping different types of individuals to develop social capital. For many Innovate UK and ESRC funding programmes, social capital is a precursor to receiving funding, since there is often the need to form consortiums with diverse but complementary expertise. It was identified that the success of many funding applications now does rely on the ability to form and demonstrate strong partnerships between universities, industry and relevant government and not for profit organisations. This is to ensure that projects have wide reach and impact. However, there are particular programmes such as Fast Start and the ICURe programme which don’t require social capital prior to application, in order to be successful. In fact, they promote the development of social capital as a core part of their programmes. 

A core challenge identified in both literature and the empirical data related to the challenges associated with measuring social capital due to the intangibility of the concept. Social capital development can take a long time to develop, so challenges exist in tracking the mechanisms that lead to the development of social capital many years later.  However, this research identified that there are a range of proxies and survey tools which can be adapted depending on if someone wishes to measure social capital at the individual, group or regional level. It was also identified that funding programmes could embed more specific questions into both the application process and reporting processes to help capture both the levels of social capital at the start of a project and how this might have progressed over time. 

Overall, this research highlights the important role that social capital has for innovation and funding success, both directly and indirectly. Yet, both in existing research and in practice, much still remains unknown on how social capital development can be better supported and measured. This research concluded with future research directions and practical recommendations that will be of value to researchers and policy makers interested in exploring this topic further. 

Click on this link to read the full report.