Human capital vs social capital

Purpose – The aim of this paper is to assess whether employment insecurity/instability is a necessary consequence of operating as a self‐employed worker in the external labour market (ELM) and to examine the role for social capital to influence any such potential insecurity/instability. Design/methodology/approach – A total of 124 workers in the UK construction industry – 78 self‐employed and 46 directly employed – and 12 employers were interviewed in a period spanning the New Construction Industry Scheme in 1999 to provide the empirical evidence for this research. Findings – Belying the common assumptions of atomistic dependence in the face of employers hiring from a competitive and undifferentiated labour pool in an ELM, the results of this research clearly demonstrate a key role for social capital to influence the allocation of work in the ELM and thus minimise the importance of job tenure in determining perceptions of employment security/stability. Practical implications – The role for social capital to influence the allocation of work has attracted increasing attention in recent years. This paper provides further evidence that job tenure by itself, cannot be used as a definitive measure of employment security/insecurity in both internal and ELMs. Originality/value – There is relatively little empirical research on the role of social capital to influence the distribution of work; particularly in the ELM. This paper responds to the increasing call for research in this area to focus on micro/social action rather than on macro/structural variables and mechanisms.