Assessing Social Capital: Small and Medium Sized Enterprises in Germany and the U.K

“Social capital” can be considered to be the product of co-operation between various institutions, networks and business partners. It has potential as a useful tool for business ethics. In this article we identify categories pertinent to the measurement of social capital in small and medium sized enterprises (SMEs). By drawing on three different sectors, one business-to-business service, one business-to-customer service, and one manufacturing, we have enabled the consideration of sectoral differences. We find sector to play an important part in relation to business practices and social capital. Our inclusion of SMEs from Germany and the United Kingdom has called attention to cultural, institutional and economic aspects of two regions of Europe and how they can influence SME social capital. Social capital is found to be influenced by context and, in particular, institutional arrangements. In analysing the data we note particular areas of interest from the point of view of SMEs and social capital as being: formal engagement, networking within sectors, networking across sectors, volunteerism and giving to charity, and finally a focus on why people engage. We conclude that there is a considerable amount of further research needed on social capital, SME’s and business ethics.