The Model of Evaluation of the Impact of Corporate Social Capital on the Operation of Enterprise

Abstract

Concept of corporate social capital has gained significant attention of academicians and practitioners from different backgrounds recently. As any other form of capital (i. e. physical or human capital), social capital refers to a specific asset that yields a stream of benefits over the time. Social capital is an essential asset in contemporary business world where timely information, proactive adjustment to the market changes and flexibility are the main competitiveness factors. Social capital enables efficient cooperation, facilitates exchange of knowledge and information, lowers the costs of contracts and has many other positive impacts. But it can also become an obstacle for goal achievement or cause losses because of the improper investment or over investment. As any other asset social capital also needs considerable investments to be created and maintained. If these investments are channeled into the improper form of social capital it will not produce expected benefits but, contrarily, will cause significant costs.

Hence, the need for the means for the evaluation of corporate social capital impact that could be applied by academicians as well as practitioners occurs. Recent studies on the corporate social capital impact are concentrated on the particular impact of different types of social capital or particular conditions that determine the nature of the impact. Most scholars concentrate solely on positive or negative side of impact of social capital trying completely to reveal the broad and various nature of impact of social capital or concentrate on the particular aspects of some part of this impact. There is no attempt in scientific literature to integrate the theoretical and methodological findings on evaluation of the impact of corporate social capital in order to develop the instrument for the evaluation of aggregate impact of social capital. Besides, the big variety of the criteria reflecting both positive and negative impact of corporate social capital is applied in scientific literature. Some of it reflects indirect impact of social capital or are overlapping. So, it causes confusion when developing the instrument for the evaluation of corporate social capital impact and shows the need to analyze and systemize it with the aim to compose the thorough but small-scale list of corporate social capital impact on the operation of enterprise evaluation criteria.

This article aims to meet the demand for the instrument for the evaluation of the aggregate impact of corporate social capital presenting the model based on the cost-benefit analysis method. Cost-benefit analysis method was chosen developing the model of evaluation of corporate social capital impact on operation of enterprise because of several reasons. First, it allows evaluating and comparing not only quantitative but also hardly measurable more intangible impact. Comparing total positive and negative impact it enables to evaluate the aggregate impact. Second, the quantitative as well as qualitative analysis methods can be applied in the boundaries of cost-benefit analysis that is essential when evaluating social capital impact as one type of analysis methods cannot entirely reveal the impact of this factor. Besides, cost-benefit analysis is not very complicated and can be easily applied by the practicing even without special economic background. These reasons allow seeing cost-benefit analysis as the efficient tool for the evaluation of corporate social capital impact on operation of enterprise.