Banks' Social Capital Investment : Qualitative Insights from Sweden

Abstract: Having recognized the merits of social capital research within other study areas, the authors of this degree project take a look at this concept from a relatively untouched perspective, banks. Social capital has long been a staple in both political science as well as sociology discourse. In recent history, the principles of social capital theory, which entail deriving benefits from building and nurturing social relationships, have been applied to a limited number of organizational contexts. The banking industry is one such organizational context that has remained relatively untouched by the extant body of research on the concept. Given the implied fixation of banks on more so financial capital than social capital, the authors of this degree project found this perspective to be a potentially interesting area of research. Social capital’s strong emphasis on trust also made the bank context appealing as the current climate within the financial services industry is that of widespread distrust, from the outside world, as a result of the financ ia l crisis of 2007 to 2009. As a consequence, the following research question emerged: how do banks invest in social capital? The purpose of this study has thus been to gain insight s into how social capital is invested in by banks, through their network reach, from these banks’ own perspectives, using a qualitative research method. In order to do so, the authors delved into the body of research on social capital and accounted for relevant elements therein, thereby laying the theoretical foundation for an exploratory study. Amongst other elements, this study features a tri- dimensional view of social capital, which has constituted one of the bases upon which banks’ practical approach to the phenomenon have been analyze. This study, which gives credence to a subjective view of reality, provides insights into the social capital investment activities of eight Swedish banks. Furthermore, this study, which depicts sampled banks’ situation in the spring of 2014, analyzes each organization individually based on data derived from semi- struct ured interviews, while making on inferences rooted in theory. What has been found is that banks do not seem to engage in the investment of social capital to the degree that is typical for the concept. Rather, banks have been observed to prefer more superficial, or weak, ties to other parties, more so than strong ones. Furthermore, this study uncovers the lack of bonding among bank members and their ability to attain social capital assets without, in actual fact, needing to invest in deep - seated relationships. Moreover, the completio n of this study calls for inquisitions into other low trust industries, amongst other future research area suggestions. Implications for both the practical and academic worlds are also provided, there among this study's contribution to banking industry constituents in the form of a look into the current techniques used to build relationships by their banking counterparts.