Network Capital Golden

A fascinating paper by Manuel Acevedo of the Open University of Catalonia proposes a relationship between Social Capital and the Network Society that results in a new community asset he calls Network Capital.

With the rapid and explosive growth of social networks and the whole host of Web 2.0 applications, we are witnessing the formation of new forms of community.  Howard Rheingold (who tweeted a pointer to this article) wrote The Virtual Community in 1993, presaging the conceptual framework, based on some of the early BBS and real-time messaging tools available to the pioneers of what was then yet to be identified as "cyberspace".  Acevedo's paper validates Rheingold's prescience in a compelling fashion.

Communities are no longer defined only by place, but also by interest, becoming organized into social networks. When the interaction takes place among members of an electronic network, which are likely loosely-knit in geographic terms, the resulting social capital is network based. Network capital could then be understood as a measure of the differentiated value in the Information Age that communities structured as social networks generate on the basis of electronic (digital) networks for themselves, for others and for society as a whole.

While Acevedo examines this asset as an accelerant for human development, it seems to be an important resource for innovation-driven economic development.  Certainly, Acevedo's example of how Network Capital powered the Open Source movement illustrates its investment in creating value that can be monetized, create opportunities, and generate new wealth.

An early and still paradigmatic example of network capital comes from the creation of Free/Open Source software (FOSS). People from different locations, who may not ever see each other, use Internet and net-based tools to exchange information, generate knowledge, work collaboratively and develop well-defined products, ‘all for the love of it’. These people consider themselves as software artists (even activists), and participate on a voluntary basis. They meet at specific cyberplaces, eg. distribution lists, extranets or project management applications, and sometimes in person as well, at conferences or other public events.

FOSS communities have crafted a culture of sharing and solidarity which not only makes their processes sustainable, but is a stimulus and reference for others to also pursue electronic-based collaboration. The ‘Open-Source’ approach is becoming known for its methods and philosophy in fields outside of software production, as a collaborative methodology. This collaboration helps the individuals who take part in it, and the resulting products help specific personal or institutional users, as well as large sectors of society who in this way have additional software choices made available to them – a good example of knowledge as a global public good.

The graphic at the top of this post is included in the paper as an example of how projects can be enabled with Network Capital, as well.  As we develop and implement strategies to create value through innovation and entrepreneurship, it seems evident that raising and deploying Network Capital is as fundamentally critical to success as Private Equity Capital.