The Role of Social Capital in the Development of Community-Based Co-operatives

Based on a network model of social capital, we derive a set of hypotheses on the formation of social capital among activists engaging in community-based co-operatives for public service delivery. The hypotheses are subsequently tested in a large-scale questionnaire survey in Austria. The results of our study support the findings of Granovetter (1973) and Burt (2001) on the importance of weak ties and structural holes in social networks. On the one hand, critical resources for a community-based co-operative can be found in the acquaintance networks rather than friend or family networks of residents. On the other hand, the paper identifies co-operatives as a suitable form of organising community-based initiatives. Its flexible and open network structure allows the bridging of structural holes within and outside the community, which facilitates necessary information and resource flows. Our analysis provides valuable insights for policy makers concerned with fostering community engagement through co-operatives. Furthermore, the authors contribute to the debate on social capital and its relation to civic participation and the community context.