Social capital, incentives and the case of democratic firms

In recent years, numerous concepts of capital have been introduced in social science literature. This can be documented by a data search of articles published within the last few years. In our analysis, we shall focus on one of the latest addition to the family, namely social capital. What is social capital? Does it contribute to a firm performance and how? This presentation try answer to these questions by starting from the economic literature on social capital within firms, which shows that the structure of productive organization and compensation schemes, improving people’s ability to work together in groups and organizations, can favour the accumulation of social capital. The presentation illustrates, moreover, a model where the choice of workers to exert co-operative effort is the variable key, which allows the accumulation of social capital in firms. I assume that the structure of team incentives in the firm and the presence of social norms determine the workers’ collaborative attitude and we compare the capitalistic and co-operative firms in the social capital accumulation process.