In his scholarly article “Building a Network Theory of Social Capital,” Nan Lin attempts to consider social capital as “assets in networks,” studying social networks in terms of social capital and the returns that investments in social capital can provide. Lin explains the notion of “capital” in terms of classical social and economic theories, though mainly uses the term to refer to the process by which individuals can acquire and invest in capital in order to earn returns. Lin explains that the notion of social capital is straightforward: “investment in social relations with expected returns” (Lin 30).
Lin identifies three opportunities for “profit” through social networking. First, Lin argues that individuals usually find themselves in imperfect market conditions. As such, social ties can provide an individual with increased information about opportunities or choices that the individual would not have been privy to without investing in joining a social network. This theory loosely relates to theories about the strength of weak-ties and network “bridges”, though here Lin seems to suggest that these weak-ties are solely concerned with sharing information (while perhaps strong-ties are limited to actual friendship). Second, Lin proposes that an individual’s existence in a social network may exert an influence on agents that may make decisions (for example, hiring or promotion) regarding the individual. Lastly, Lin argues that an individual’s membership in a social network can convey social credentials about that individual. These social credentials may reflect the individual’s accessibility to outside resources or simply convey some sort of status (if other individuals have allowed this person in their network, they must know/like something about that person that I don’t know).
Based upon these three “profit opportunities,” Lin attempts to both explain the existence of vast social networks (and the inequalities within them) as well as the value that individuals receive from “investing in” and joining these networks. Lin’s article was published in 1999, well before the phenomenal explosion of social networking sites like myspace.com or facebook.com, though the author does have the foresight to mention that he thinks “cyber-villages” may provide an easily-measurable tool for determining the value of social networks.