Does Social Capital Improve Labour Productivity in Small and Medium Enterprises?

This paper reports the findings of an empirical study on the relationship between social capital and labour productivity in Small and Medium Enterprises (SMEs) in Italy. By means of Structural Equations Models (SEMs), the analysis investigates the effect of different aspects of the multifaceted concept of social capital. Bonding social capital of strong family ties and bridging social capital shaped by informal ties connecting friends and acquaintances are proved to exert a negative effect on labour productivity, economic performance and human development. On the contrary, linking social capital of voluntary organisations positively influences the stated outcomes.