CHAPTER 2 REVIEW OF RELATED LITERATURE
2.6 Theoretical framework
bureaucratic red tape, preventing corruption, and providing penalties to officials found to be taking bribes.
• Joint Memorandum Circular No. 1 Series of 2011: These are guidelines used in executing the legalisation and licensing of ventures in all cities and municipalities.
The NEDA ensures that the above regulations are implemented and that they continue to meet their objective of supporting SMME development in the Philippines. The foregoing discussion shows that both developed and developing countries have programmes and institutions that support the development of SMMEs because they are a vehicle for socioeconomic development in all countries.
its function. This can be established through collaborations built on trust that can result in positive relationships. Furthermore, Coleman’s (1988) definition of social capital contains so-called hard ones (aspects), which are the ones that emphasise the relationships built through social networks that can last for a long time, and so-called soft ones, which are the cognitive resources that focus on values, trust, and shared standards.
Coleman (2000) further describes social capital as strong social networks with strong social structures that can lead to economic development. He suggests that human beings form relationships and are responsible for bringing together individuals or groups and forming healthy social institutions (Vermaak, 2009). Relationships are thus established between people who form social structures, which are an aspect of social capital. In such relationships, there is an exchange of goods or information, which implies that social capital is established for the purpose of sharing goods or information for a long time (Coleman, 2000).
According to Putnam (1993, 1995; Tzanakis, 2013), social capital is a resource that results from people with social connections. This is associated with the simple mantra “It’s not what you know but who you know”, which is widely taken to be the initial definition of social capital (Gauntlett, 2011; Kumar et al., 2016). On the one hand, Putnam (1993) mentions that social capital can be a valuable resource for the economic development of an area and, on the other hand, states that the lack of social capital in the USA caused a decline in its democracy. In his contribution to social capital theory, Putnam (1989) views social capital as features or aspects of social organisations (e.g., networks, norms, and trust) that have been widely accepted and supported (Vermaak, 2009).
Ehrenhalt (2000:61) assessed Putnam’s work on the social capital theory and describes Putnam’s work as “a substantial achievement” because of his ability to demonstrate the value of social networks. Although the concept of social capital has been discussed by various authors, they still disagree on a standard definition of social capital (Fukuyama, 1999; McShane et al., 2016).
2.6.2 Dimensions of social capital
Social capital is categorised into three main forms, namely bonding, bridging, and linking social capital (Putnam, 2000; Woolcock, 2001; Berzina, 2011). According to Gailey (2010) and Snider et al. (2017), bonding social capital refers to strong family, ethnic, or neighbourhood ties among people who live close to one another. People in bonding networks often have similar personality characteristics (e.g., class, race, ethnicity, education, age, and religion). It is more limited, caring, and based on close membership and therefore good for obtaining specific support and mobilising informal solidarity (Van Oorschot et al., 2006; Ramos-Pinto, 2012). Bonding social capital
promotes the communication and relationships necessary to pursue common goals. It therefore influences the creation and nurturing of community organisations such as support groups and local associations (Lang & Fink, 2018).
Woolcock (2002) describes bridging social capital as relations with distant friends, associates, and colleagues, who may have different demographic characteristics. Putnam (2000) lists examples of bridging social capital as civil rights movements and non-denominational religious organisations.
Bridging social capital refers to more distant ties of similar persons, such as loose acquaintances and friendships. People in bridging networks differ in terms of crucial personal characteristics.
Bridging social capital looks at the outside, it tightens differences between different communities, and is therefore crucial to organising solidarity and pursuing common goals on a wide scale (Maas et al., 2014; Van Oorschot et al., 2006). Bridging capital is crucial for solving inter-community problems through helping people to get to know one another, building relationships, sharing information, and mobilising resources. Jensen and Jetten (2015) emphasise that bridging social capital allows a group to reach out, engage, and network creatively with socially distant individuals, groups, and organisations. Pronyk (2006) therefore suggests that bonding capital refers to connections within a group, while bridging capital refers to connections between groups.
Linking social capital refers to relations between individuals and groups in different social strata in a hierarchy where power, social status, and wealth are accessed differently by different groups (Taruvinga et al., 2017). Linking social capital brings up ties and networks among individuals and groups who occupy very different social positions and power. It enables people to reach out to dissimilar people in different situations. Linking social capital may involve networks and ties of a community with state or other agencies (Cote & Healy, 2001; Jordan, 2015). Woolcock (2001) extends this to include the capacity to leverage resources, ideas, and information from formal institutions beyond the community. Woolcock (2001), Pronyk (2006), and Gailey (2010) view linking social capital as a sub-category of bridging social capital since it is used to describe the leveraging of ideas, resources, and information in a vertical relationship to formal entities of power and influence for a community’s benefit.
According to Putnam (2000:19), bonding social capital is good for “getting by”, while bridging capital is crucial for “getting ahead”, and linking is about “power of authority”. Jordan (2015) expresses similar views. This study focused on how the social capital theory, through bonding, bridging, and linking relationships, can help to understand how different opportunities and constraints influence the ability of rural SMMEs in the Matatiele Local Municipality to contribute
to social and economic development. The theory helped to understand how collaboration among SMMEs and their ability to work with various government departments and other entities can contribute to the achievement of desired socioeconomic goals.