Human Capital and Social Capital are often treated as separate organisational resources. In practice, they are inseparable whenever people need to accomplish something together.
Human Capital resides in people: their knowledge, skills, experience, judgement, creativity and ability to act.
Social Capital resides in the relationships between people: the trust, communication, reciprocity, shared understanding and willingness to cooperate that enable those individual capabilities to connect.
The distinction matters because a collection of capable people does not automatically create collective capability.
Even the simplest cooperation needs Social Capital
Imagine a driver with a flat tire being helped by a stranger. The stranger might have all the necessary Human Capital: knowing how to change the tire, having done it before, and being physically capable. The driver might only need to open the trunk and hand over the keys.
Still, this situation relies on Social Capital. The driver must trust the stranger enough to accept help, requiring clear communication and cooperation. Even if the stranger says, “Sit down and relax — I’ll do it,” the driver must be willing to relinquish control. They may have no prior relationship. This Social Capital can be brief, formed quickly through social norms of trust, reciprocity, and assistance. Without this social link, the stranger’s Human Capital remains disconnected from the driver’s problem.
The principle scales.
Whenever human capability must extend beyond the individual, Social Capital is required to connect it.
From capable individuals to collective capability
This helps distinguish individual Human Capital from Human Capital as a collective organisational resource.
Ployhart and Moliterno (2011) describe organisational Human Capital as emerging from the knowledge, skills, abilities, and other characteristics of individuals through processes operating at the collective level. Therefore, it is not enough simply to employ capable people.
The organisation must also create the conditions under which its capabilities can be combined.
This is where Social Capital becomes functionally prior. People can possess Human Capital independently, but when a task requires coordinated human activity, relationships matter.
Coleman (1988) described Social Capital as a resource embedded in social structure that facilitates action. Nahapiet and Ghoshal (1998) subsequently showed how Social Capital supports the exchange and combination of knowledge. Tsai and Ghoshal (1998) found that social interaction and trust were associated with greater exchange of resources between organisational units, while Reagans and McEvily (2003) demonstrated how social cohesion can support knowledge transfer.
The practical implication is simple:
Having distributed capability among individuals doesn’t automatically make it a collective capability just because they are part of the same organisation.
They have to be able and willing to connect what they know and can do.
A team of champions is not necessarily a champion team
Sport provides an unusually visible demonstration.
A team may contain extraordinary individual talent yet still perform poorly as a collective. Conversely, a less individually talented team can outperform it when its members coordinate, communicate and work effectively together.
Loignon et al. (2025) examined professional football teams and found diminishing returns from simply adding star talent. The contribution of that talent depended on the structure of the team’s Social Capital, as observed in patterns of interaction between players.
It is the familiar distinction between a team of champions and a champion team.
- Human Capital provides the talent.
- Social Capital allows the talent to become a team.
The same principle applies to organisations, although the relationships are far more complex. Knowledge and capability are dispersed across functions, professions, locations and levels of authority. No individual sees the whole system.
Collective capability therefore depends on people being able to find one another, communicate, exchange knowledge, challenge assumptions, coordinate action and trust sufficiently to contribute what they know.
The relationship is recursive
Human Capital and Social Capital should not therefore be treated as two independent stores of organisational wealth.
They continually affect one another.
Healthy Social Capital enables people to share knowledge, learn together, practise, experiment and combine different forms of expertise. Through those interactions, Human Capital develops.
Those same interactions can deepen relationships, trust, reciprocity and shared understanding, strengthening Social Capital in return.
A virtuous cycle becomes possible:
Figure 1: How Social Capital and Human Capital work in unison
The cycle can also go in reverse. When trust breaks down, relationships break apart or individuals start withholding information and judgment, making it increasingly difficult to leverage Human Capital. This leads to a decline in learning, and valuable experience may leave the organisation without being shared. Collaboration becomes tougher, further weakening Social Capital. Despite employing highly capable individuals, the organisation’s overall capability gradually diminishes.
The connection to Adaptive Capacity
This is why Human Capital and Social Capital sit together at the heart of Adaptive Capacity.
Adaptive Capacity depends upon both what people know and can do and their ability to bring those capabilities together when circumstances change.
The relationship can be expressed simply:
- Human Capital provides capability.
- Social Capital connects and mobilises it.
- Together they enable Adaptive Capacity.
Adaptive Capacity = Human Capital + Social Capital
The + in Human Capital + Social Capital should therefore not be read as simple arithmetic.
It represents interaction.
- Without Human Capital, there may be insufficient knowledge, judgement or skill to respond.
- Without Social Capital, those capabilities remain fragmented across individuals.
- Adaptive organisations need both — continually cultivated, connected and renewed.
Sources
Adger, W.N. (2003). Social capital, collective action, and adaptation to climate change. Economic Geography, 79(4), 387–404. https://doi.org/10.1111/j.1944-8287.2003.tb00220.x
Coleman, J.S. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, S95–S120. https://doi.org/10.1086/228943
Loignon, A.C., Fonti, F., Bagherzadeh, M., Gurca, A. & Shresta, S. (2025). When more is less: The role of social capital in managing talent in teams. Academy of Management Discoveries. https://doi.org/10.5465/amd.2023.0039
Nahapiet, J. & Ghoshal, S. (1998). Social capital, intellectual capital, and the organizational advantage. Academy of Management Review, 23(2), 242–266. https://doi.org/10.5465/amr.1998.533225
Ployhart, R.E. & Moliterno, T.P. (2011). Emergence of the human capital resource: A multilevel model. Academy of Management Review, 36(1), 127–150. https://doi.org/10.5465/amr.2009.0318
Reagans, R. & McEvily, B. (2003). Network structure and knowledge transfer: The effects of cohesion and range. Administrative Science Quarterly, 48(2), 240–267. https://doi.org/10.2307/3556658
Tsai, W. & Ghoshal, S. (1998). Social capital and value creation: The role of intrafirm networks. Academy of Management Journal, 41(4), 464–476. https://doi.org/10.2307/257085