The Relationship Between Social Capital And Transaction Costs

The definition of the concept "social capital" has been analyzed. The essential characteristic of social capital has been disclosed through the determination of its structure, basic elements, the state of social capital, the reasons for its formation. An important component of the formation of the concept of social capital has been identified, which is the analysis of its forms – structural and cognitive capital. Structural capital is formed through social institutions, networks, associations and it provides certain basic rules to be followed by them. The cognitive component of social capital is made up of trust, relations, values, norms and behaviors. A number of features that reveal the essence of social capital, to be more exact – its elements, have been selected and the way they impact on the level of transaction costs has been identified. The nature of transaction costs has been identified and their classification has been considered. The role of social capital in relation to transaction costs has been studied, which is to minimize the latter. The criterion of coordination of interests of different agents has been analyzed, which is an essential feature, characterizing the transaction costs, and which depends on the accepted norms and rules that are among the components of the definition of social capital. Guarantees have been selected as a result of the coordination of interests. The need to provide guarantees has been clarified, these guarantees being characterized by uncertainties which arise due to limited rationality and opportunism, which are behavioral prerequisites for transaction costs and possibly their increase. Developing rules and adherence to them enhances the guarantee and reduces transaction costs arising from uncertainty, but it should be noted that this process also adds to transaction costs. The efficiency of making new rules has been determined for the cases where the costs of making rules are less than the amount by which the transaction costs are reduced as a result of the introduction of a new rule. The rules have been found to be effective only with the established mechanism of their protection and can be considered institutions, whose changing is an effective tool for reducing transaction costs. The process of formation of social capital has been investigated and the relationship of social capital and the transaction costs at the microlevel, which corresponds to an individual, mezoorganizational level, and the macroeconomic level has been proved.