Key Difference – Human Capital vs Social Capital
Social capital and human capital are two types of resources. The key difference between human capital and social capital is that human capital refers to skills, knowledge, experience, etc. possessed by different individuals whereas social capital refers to the resources we gain from being a social network.
What is Human Capital?
Human capital measures the economic value of an employee’s skill set. It can be defined as “the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country” (Oxford dictionary). It is built on the basic production input of labor measure where all labor is considered to be equal. This concept accepts the fact that not all labor is equal and that quality of labor can be improved. Factors like experience, education, skills and abilities of an employee have economic value to his employer and for the entire economy. The term human capital can also refer to the collective individual knowledge, skills, talents, abilities, experience, training, intelligence and wisdom of a population. These assets represent a form of wealth since they can be used for the economic development of a country.
The concept of human capital was popularized by Gary Becker and Jacob Mincer who stated that knowledge, habits, personality attributes, etc. that are embodied in the ability to perform labor have an economic value.
In an organization, human capital is the organization’s intellectual capital, which includes competencies, knowledge, skills and creativity. But this capital cannot be seen in the organization’s financial statements. Since human capital refers to skills and competencies of the employees, it is dependent on the employees. When employees leave a company, this human capital is negatively affected.
What is Social Capital?
Social capital can be defined as “the networks of relationships among people who live and work in a particular society, enabling that society to function effectively” (Oxford dictionary). Social capital can also refer to the resources or benefits we gain from being a part of social networks.
It is also important to know that the term social capital has more than one meaning and definition. The author Lyda Hanifan described social capital as “tangible assets [that] count for most in the daily lives of people: namely goodwill, fellowship, sympathy, and social intercourse among the individuals and families who make up a social unit”. Sociologist Pierre Bourdieu defined it as “the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition.”
Social capital is typically divided into three subtypes:
Bonds: Links based on common identity such as close friends, family, members of the same ethnic group – i.e., people like us.
Bridges: Links that go beyond a common identity – distant friends, colleagues, etc.
Linkages: Links to people up and down the social ladder
What is the difference between Human Capital and Social Capital?
Definition:
Human Capital: Human capital is the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country
Social Capital: Social capital is the networks of relationships among people who live and work in a particular society, enabling that society to function effectively.
Individual vs Collective:
Human Capital: Human capital includes individual competencies and skills of employees.
Social Capital: Social capital depends on groups of people.
Image Courtesy: Pixabay
Reference:
Bourdieu, Pierre. “The forms of capital.(1986).” Cultural theory: An anthology (2011): 81-93.
Hanifan, Lyda Judson. “Social capital–Its development and use.” The Community Center (1920): 78-90.
Excellent and simple yet clear differentiation between the two concepts. Honestly, have been struggling to get to know the difference of the two concepts and before reading this article, always my thought was that the two concepts are used interchangeably. I was totally wrong, and this article has totally cleared the confusion I have had. Now, I am super confident I can clearly describe these two concepts to colleagues who might have confusion just like me before my reading on this.