Innovation and Social Capital in Nordic Welfare States: The Advantages of Nordic Societies in a Modern Economy

The importance of creating innovations for modern welfare states in knowledge-based economies continues to increase. This chapter investigates the impact of social capital on innovation by considering the varying natures of social capital and the type thereof supporting innovation systems in Nordic countries. By classifying countries into four clusters of social capital types according to generalized and particularized trust, we illustrate the effects of each social capital category on innovation. The results show that social capital characterized by high generalized trust and high particularized trust has the greatest positive impact on innovation. Another important finding is that Nordic countries have a hybrid type of social capital with both high generalized and particularized trust. Finally, our findings confirm that the function of innovation systems in Nordic countries is supported by the hybrid type of social capital. This study provides new evidence that each type of social capital has a significantly different effect on innovative performances.