The so-called social capital (SC) builds the platform in every society for any innovative actions between people. Although the SC concept itself is rather a complex one when it comes to its multidimensionality and measurement (Fukuyama 1995; Scrivens and Smith 2013), this concept refers mainly to the level of trust between people in the society. Thus, the magnitude of social capital in a given society represents the extent to which people in this country treat themselves as reliable in their socio-economic roles, outside their family ties. In the absence of social capital, people do not expect other people would behave accordingly to the requirements they should fulfill as social actors. For example, when social capital is low, many people would not expect doctors of medicine to provide them with honest and high quality health advisory, but they would rather expect them to be driven by self-interest and opportunism in their interactions with patients. Similarly, in the educational context, students may have problems in relying on their teachers’ competencies, because they would again expect some other unethical and unprofessional motives driving their behaviour. One can easily imagine the difficulties created for entrepreneurs, while they try to launch and manage their businesses in such extreme context.
Unfortunately, the European Union is very diverse with regard to the level of social capital characterizing their member states. While Scandinavia is commonly known as the region with particularly high social capital, not only in EU but even in the worldwide context, there are also European regions, where social capital is low or even very low. Specifically, post-communist regions tend to exhibit low levels of SC, which concern Romania, Bulgaria, Hungary, Poland and other Visegrad Countries, but it also refers to some regions in Germany that were a part of East Germany until the end of 80ties in 20th century. Of course, it does not mean that these are regions, where entrepreneurial spirit is absent. Actually, some of these post-communist economies develop dynamically, which is connected with many new companies established in these countries and more effective management of existing companies. While low social capital is visibly disturbing entrepreneurship in these regions, there are also some leverages like relatively cheap labour, effective education system and strong intrinsic motivation among people for improving their life conditions.
Nevertheless, while these regions have progressed enormously since they have switched towards market economies, the economic growth cannot be powered by economic efficiencies only. Further development is largely dependent on moving towards more innovation-based economies. In turn, innovations (especially radical ones) demand collaborative actions which is very visible in international supply chains, where most successful new products are developed as a result of collaborative product design, development and joint commercialization. If the level of social capital is low, the flow of knowledge between social actors may be not enough for boosting innovations, i.e. resulting in new brands recognizable on international scale. Stimulating entrepreneurship in such context may demand special approaches, because some traditional methods may not provide adequate means to do so. This creates the major challenge especially for education and institutions in these regions.
References:
Fukuyama, Francis (1995), Trust: The social virtues and the creation of prosperity (Free Press Paperbacks).
Scrivens, Katherine and Smith, Conal (2013), ‘Four interpretations of social capital: An agenda for measurement’, (OECD Publishing).
Provided by: UEK
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