In recent discussions about the difference between relationship capital and social capital, it seems that there is some confusion, so I set about looking at finding some clear definitions to help clarify our thinking about both.

The definition I like best for social capital came from Professor Ian Falk, the Director of the Centre of Research and Learning at the University of Tasmania. He defines social capital as the cement of societys goodwill which creates societal cohesion. Furthermore, he believes that networks, trust and shared values of social capital bring to life our human values, skills, expertise and knowledge. Social capital results from effective communication by providing a social infrastructure supporting for our lives in a web of flexible networks relevant to home, work,learning, leisure and public life.

Professor Falk maintains that ‘Social capital constructs the meaning around the visible picture we present to the world. It tells the world who we are and what we are like. Through social capital we define who we are, what we do and why we do it. Interactions that create social capital give our lives meaning, and in a real sense they weave the fabric of our lives. Social capital is a term that refers to the social values (norms), networks and trust that facilitate a group’s purposeful action. Social capital encompasses the norms and networks facilitating collective action for mutual benefit, as Michael Woolcock says. Another commentator on the topic is Alejandro Portes, who observes that, ‘Whereas economic capital is in people’s bank accounts and human capital is inside their heads, social capital inheres in the structure of their relationships’.

Relationship Capital provides us with a new dimension to relationships. With the concept of ‘a relationship economy’ burgeoning, the truth is we have always been ‘wired’ to equivocate our own professional status and standing within a network of peers. However, since the exponential uptake of virtual networking, the ability to assess the quality and trustworthiness of a.n. other has emerged as a necessity, a solution yet to be solved. Business trends, partnerships and customer relationships become the foundation of wealth creation. Relationships can be evaluated as assets, no less important than physical assets or bank accounts.

Don Tapscott explains relationship capital and outlines the new discipline of Relationship Capital Management. He explains how to design the new relationships can be leveraged in ways that represent significant monetary outcome when well implemented. By and large, we are promoted by word of mouth reputation. That esteem by which you are held by those with whom you have had direct engagement, socially or professionally. Relationship Capital is distinguished from Social Capital, because it is personal. It can only be derived one to one, because it represents the quality of your behaviours, traits and interactions over a period of time. It is a direct reflection of your character as experienced by those who know you and can testify as to your qualities. Relationship Capital is to be merited as that which is portable and defining, transmitting the value of your worth in the marketplace.