4Capital and Performance

Dr. Alex Liu

• Introduction
  

 

• 1. Evolution of Capital
  




• 2. New capitalism needs 4Capital
  

 

• 3. Material capital: definition & measures
  

 

• 4. Intellectual capital: definition & measures
  

 

• 5. Social capital: definition & measures
  

 

• 6. Spiritual capital: definition & measures
  

 

• 7. 4Capital determines results
  

 

• 8. 4Capital and life satisfaction
  

 

• 9. 4Capital and organizational performance
  

 

• 10. 4Capital and national development
  

 

• 11. Measuring your 4Capital
  

 

• 12. 4Capital Transformation
  

 

• Conclusion
  

 

• Appendix

• BACK

Our research results and also that of many other studies demonstrate a huge impact of 4Capital on the success of entrepreneurial teams. However, this relationship holds not only for new organizations, but also for established and large organizations.

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4Capital and Corporate Social Responsibility

Our 4Capital theory originates from the entrepreneurship research we have conducted. Naturally, the theory has quickly obtained recognition in the fields of entrepreneurship and business development. Many scholars and practitioners such as Ernest Chu agree that start-ups have better chance to succeed and established enterprises can enjoy rapidly growth, only if these organizations achieve an optimal combination of material capital, intellectual capital, social capital and spiritual capital.  

At the same time, belief in developing spiritual capital and some related practice plans are starting to gain recognition in the fields of corporate social responsibility and enterprise sustainable development. Some scholars and some practitioners including Ken Eldred claim that business ethics is a better concept than corporate social responsibility, while spiritual capital catches more meaningful aspects than the business ethics.

In recent years, corporate social responsibility has become a popular term, with its importance being recognized widely. For example, both Fortune and Forbes added a social responsibility category in their enterprising rating. In Europe and North America, almost all public companies have established their CSR departments. But, in practice, most of these CSR departments function like public relation departments with their functions focusing on philanthropy and self-promotion. These CSR departments are seen like cosmetics and fire departments. Therefore, these CSR as being established to avoid criticism actually have received a lot of criticism.

4Capital theory believes that once an enterprise achieves its optimal 4Capital combination, corporate social responsibility will be achieved naturally. At the same, the enterprise will also achieve a long term and sustainable rapid development. In the United States, a lot of empirical research such as that published in Global Finance and Strategic Management Journal confirmed our views. Since 2001, more and more research has been conducted to demonstrate a strong significant positive relationship between CSR and long-term financial performance. That is, the stronger CSR an enterprise has, the better its financial return. However, cosmetic CSR only produced negative impacts on financial return for the corporations adopting them.

For the above mentioned reasons, the CSR departments of many enterprises have started to learn about our 4Capital theory and started to make effort in applying 4Capital theory to achieve corporate social responsibility and to achieve long term sustainable development, because corporate social responsibility and long term sustainable development are in supporting each other, rather than in conflict with each other under our 4Capital theory.