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The British social theorist Anthony Giddens has developed a theoretical structure that explains human agency (action) in the context of social structure and integrate action and structure. In this approach, termed structuration theory, Giddens argues that human agency and social structure are not two separate concepts or constructs, but these are together produced by social action and interaction. In sociological analysis, their separation may be a result of how sociologists examine and interpret social reality, with agency and structure being two ways that social action can be studied and understood sociologically.
There is a duality of structures in society – on one side there are individuals as actors in particular situations, who enter into knowledgeable activities and participate in social action and interaction in these situations. At the same time, the social world is composed of social systems and structures – these are the rules, resources, and social relationships that actors produce and reproduce through social interaction. The study of structuration means examination and analysis of the ways in which social systems are produced and reproduced in social interaction. Giddens defines structuration as “the structuring of social relations across time and space, in virtue of the duality of structure.
Social action as praxis – structuration
Giddens adopts a praxis approach to social action, whereby social action is composed of enacted conduct (what people do in social action and interaction), social practices, local production of praxis, and reproduction of practices. This approaches includes an examination of the material conditions in which social actors interact (situations, context, place), and the social and material environment that both enable and constrain social action. He emphasizes space – proximity or distance and how these are mediated by technology and social structures – and time – continuity and discontinuity and the organization of activities across time. While praxis is situated locally, since that is where actors are located and where social interaction occurs, this action is connected to social life both locally and over broader geographic regions, potentially, globally.
These connections work in both directions – local conditions and situations are affected by ideas and structural features that are societal-wide or even global, and social praxis is the means that institutions and social structures are produced and reproduced. While Giddens generally adopts a praxis approach to social action, he differs from ethnomethodological, symbolic interactionist, and microsociological perspectives in more explicitly examining how social action and social practices are connected to ongoing and pervasive systems and structures.
Systems and structures – structuration
Structuration means changes in practices as well as regularities and continuation in these.
Systems means a set of things working together as parts of a mechanism or an interconnecting network; a complex whole.
· Procedural rules – how the practice is performed. Give and take of encounters, language rules, walking in a crowd. Goffman (face, roles, role distance) and ethnomethodologistsanalyze these.
· Power/agency is the capacity or ability to make decisions and do things (Adams and Sydie, p. 49). In this context, social structures provide resources (material and authority) and rules (procedural and moral), but within this context, individuals have the capacity to act and make decisions about their actions. Within traditional settings, people were not individuals in the modern sense and generally had little power to make decisions that would change their social setting. In modern societies, some are more powerful than others, and systems and structures exercise domination. At the same time, individuals have a range of ways of exercising the capacity to act, make decisions, and change their course of action – a “transformative capacity” and ability to “make things happen” (Adams and Sydie, p. 50).
Swiss Finance Venture Capital
Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks and any other financial institutions. However, it does not always take just a monetary form; it can be provided in the form of technical or managerial expertise.
Though it can be risky for the investors who put up the funds, the potential for above-average returns is an attractive payoff. For new companies or ventures that have a limited operating history (under two years), venture capital funding is increasingly becoming a popular – even essential – source for raising capital, especially if they lack access to capital markets, bank loans or other debt instruments. The main downside is that the investors usually get equity in the company, and thus a say in company decisions.
Angel Investors
For small businesses, or for up-and-coming businesses in emerging industries, venture capital is generally provided by high net worth individuals (HNWIs) – also often known as ‘angel investors’ – and venture capital firms. The National Venture Capital Association (NVCA) is an organization composed of hundreds of venture capital firms that offer funding to innovative enterprises.
Angel investors are typically a diverse group of individuals who have amassed their wealth through a variety of sources. However, they tend to be entrepreneurs themselves, or executives recently retired from the business empires they've built.
Self-made investors providing venture capital typically share several key characteristics. The majority look to invest in companies that are well-managed, have a fully-developed business plan and are poised for substantial growth. These investors are also likely to offer funding to ventures that are involved in the same or similar industries or business sectors with which they are familiar. If they haven't actually worked in that field, they might have had academic training in it. Another common occurrence among angel investors is co-investing, where one angel investor funds a venture alongside a trusted friend or associate, often another angel investor.The Venture Capital Process
The first step for any business looking for venture capital is to submit a business plan, either to a venture capital firm or to an angel investor. If interested in the proposal, the firm or the investor must then perform due diligence, which includes a thorough investigation of the company's business model, products, management and operating history, among other things.
Since venture capital tends to invest larger dollar amounts in fewer companies, this background research is very important. Many venture capital professionals have had prior investment experience, often as equity research analysts; others have Masters in Business Administration (MBA) degrees. Venture capital professionals also tend to concentrate in a particular industry. A venture capitalist that specializes in healthcare, for example, may have had prior experience as a healthcare industry analyst.
Once due diligence has been completed, the firm or the investor will pledge an investment of capital in exchange for equity in the company. These funds may be provided all at once, but more typically the capital is provided in rounds. The firm or investor then takes an active role in the funded company, advising and monitoring its progress before releasing additional funds.
The investor exits the company after a period of time, typically four to six years after the initial investment, by initiating a merger, acquisition or initial public offering (IPO).
A Day In The Life
Like most professionals in the financial industry, the venture capitalist tends to start his or her day with a copy of the Wall Street Journal, The Financial Times and other respected business publications. Venture capitalists that specialize in an industry tend to also subscribe to the trade journals and papers that are specific to that industry. All of this information is often digested each day along with breakfast.
For the venture capital professional, most of the rest of the day is filled with meetings. These meetings have a wide variety of participants, including other partners and/or members of his or her venture capital firm, executives in an existing portfolio company, contacts within the field of specialty and budding entrepreneurs seeking venture capital.
At an early morning meeting, for example, there may be a firm-wide discussion of a potential portfolio investment. The due diligence team will present the pros and cons of investing in the company. An "around the table" vote may be scheduled for the next day as to whether or not to add the company to the portfolio.
An afternoon meeting may be held with a current portfolio company. These visits are maintained on a regular basis in order to determine how smoothly the company is running and whether the investment made by the venture capital firm is being utilized wisely. The venture capitalist is responsible for taking evaluative notes during and after the meeting and circulating the conclusions among the rest of the firm.
After spending much of the afternoon writing up that report and reviewing other market news, there may be an early dinner meeting with a group of budding entrepreneurs who are seeking funding for their venture. The venture capital professional gets a sense of what type of potential the emerging company has, and determines whether further meetings with the venture capital firm are warranted. After that dinner meeting, when the venture capitalist finally heads home for the night, he or she may take along the due diligence report on the company that will be voted on the next day, taking one more chance to review all the essential facts and figures before the morning meeting.
Physical Capital
Physical capital is one of the three main factors of production in economic theory. It consists of manmade goods that assist in the production process, for example, machinery, office supplies, transportation and computers.
In economic theory, factors of production are the inputs required to engage in the production of goods or services in pursuit of profit. Economists have not agreed on the exact delineation of each category; however, they generally agree that there are three main factors of production.
New or startup companies invest in physical capital early in their lifecycle, often before they have produced a single good or secured their first client. For example, a company that manufactures microwave ovens must make several investments before it can sell a single microwave; the company must build a factory, purchase the machinery it needs to manufacture the product and it must manufacture some sample microwaves before any stores will carry their product.
Evaluating Physical Capital
Experts agree that physical capital is an important consideration in a company's valuation, but it is also one of the most difficult assets to evaluate. Fixed capital, for example, manufacturing machinery, has long-term value and is relatively illiquid because it is usually designed to fulfill a particular purpose. On the other hand, the value of physical capital can change over time or increase in value if the asset itself is upgraded or there are changes to the firm that affect its value.
Investment in human capital is to the fore of debate and analysis in OECD countries about how to promote economic prosperity, fuller employment, and social cohesion. Individuals, organisations and nations increasingly recognise that high levels of knowledge, skills and competencies are essential to their future security and success. Investment in skills and competencies takes place in a variety of settings ranging from early childhood education to informal learning in the workplace, and involves a wide range of actors from individuals to enterprises and governments.
This report aims to clarify what is now known about human capital and how it can be measured. It responds to a request by governments represented in the OECD Council "to develop an initial set of indicators of human capital investment based on existing data, analyse areas where significant gaps remain in internationally comparable data, identify the cost of development of data collection for new measures and performance indicators, and report to the right constitutions.
Human capital accumulation is an important determinant of individuals’ earning capacity and employment prospects, and therefore plays an important role in determining the level and distribution of income in society. Recent OECD work has also confirmed the importance of investment in education as a determinant of economic growth and education is also found to be associated with various non-economic benefits. Across countries, there is a broad consensus that some degree of
government involvement is needed in the provision of educational services.
The basic domain of study of the social sciences, according to the theory of structuration, is neither the experience of the individual actor, nor the existence of any form of social totality, but social practices ordered across space and time. Human social activities, like some self-reproducing items in nature, are recursive. This approach provides Giddens with a means of integrating human social action with the larger systems, structures, and institutions of which we are a part. It is the continual repetition of social action and interaction in regular and habitual forms that constitute what sociologists consider as the larger social forms.
This structuration perspective differs from the external and coercive social facts of Durkheim, where structures appear to have an ongoing existence that is separate from the individual and has a strong determining effect on individual action. For Giddens, structure is not outside social action, but exists only because of social action, and it is the repeated patterns of social action that constitute the structural reality. As with Durkheim’sstructural determination of individual action, a structuration perspective implies that there are constraints on social action. But structuration allows for the possibility of flexibility, creativity, and change in individual and group action. At the institutional or societal level, a structuration approach provides a way of explaining social change (eg. through social movements and collective responses of large numbers of individuals).
Structuration means changes in practices as well as regularities and continuation in these.
Systems means a set of things working together as parts of a mechanism or an interconnecting network; a complex whole.
Giddens uses the closely related concepts of systems and structures in his theory of structuration. Systems are “patterns of relations in groupings of all kinds, from small, intimate groups, to social networks, to large organizations” whereas structures are specific practices surrounding how social actors deal with rules and resources. Systems include social and cultural systems (similar to those of Parsons) and structures include class structures, educational institutions, etc.
Goffman’s interaction order of face-to-face encounters, can be considered as one form of a local system. Networks that people establish through print or electronic communication, or occasional person-to-person meetings associated with conventions or conferences, are examples of systems that have become more common with the development and expansion of new and inexpensive forms of communication and transportation. Structure is more specific and detailed than system, referring to structured practices. Rules and resources are the two primary features of structures such as market exchange, class structures, political organizations and processes, and educational institutions.
· Procedural rules – how the practice is performed. Give and take of encounters, language rules, walking in a crowd. Goffman (face, roles, role distance) and ethnomethodologistsanalyze these.
· Moral rules – appropriate forms of enactment of social action. Laws, what is permissible and what is not. These do not refer ultimate values (eg. spiritual or sacred values), but refer to appropriate ways of carrying out social action and interaction. Durkheim and Parsons emphasized the importance of these – norms, mores, customs, laws.
· Material resources – allocation of resources among activities and members of society. Means of production, commodities, income, consumer and capital goods. Marxian analysis demonstrates the inequalities associated with allocation.
· Resources of authority. Formal organizations, how time and space are organized, production
and reproduction, social mobility, legitimacy, and authority. Weber analyzed the latter issues in
the context of power and its exercise. Wright included these resources as assets in his
explanation of contradictory class locations.
Giddens identifies four aspects of modern society that differ from earlier, traditional forms of social organization.
· Distanciation. This refers to social relationships being local and global. Relationships and influences can be immediate or direct, as they were in traditional society. But modernity has created the possibility of distant influences and distant relationships. The first page of “Dilemmas of the Self” describes this – distanciated influences, mediated experiences, and multiple images. Yet the individual is generally able to make sense of these, find a means of sorting through and organizing these images and influences. Giddens argues that this is not a “random or passive process” on the part of an individual but “each reader imposes his own order on this diversity and this is “part of the protective cocoon which helps regulate ontological security.” (Dilemmas, p. 1). Also note Giddens’s reference to the “networked diaspora” of the French immigrants.
· Power/agency is the capacity or ability to make decisions and do things (Adams and Sydie, p. 49). In this context, social structures provide resources (material and authority) and rules (procedural and moral), but within this context, individuals have the capacity to act and make decisions about their actions. Within traditional settings, people were not individuals in the modern sense and generally had little power to make decisions that would change their social setting. In modern societies, some are more powerful than others, and systems and structures exercise domination. At the same time, individuals have a range of ways of exercising the capacity to act, make decisions, and change their course of action – a “transformative capacity” and ability to “make things happen” (Adams and Sydie, p. 50).
· Risk is a new element that modernity introduces. While traditional societies were subject to external forces (natural disasters, weather, seasons), most of these were outside individual control. In modernity, many of these are now subject to control by individuals or society and it is often possible to calculate or determine risks associated with alternative possible course of action. The insurance industry, probability and statistics, and political processes all demonstrate a shift from uncertainty (not calculable) to risk (calculable). While individuals can make calculations to protect them from risks, modern society has also created many new forms of risk (eg. ecological and “terrorism”), against which individuals or society may not be able to protect themselves by planning and. However, Giddens points to ways that “individuals make decisions aimed at risk reduction and peace of mind” (Adams and Sydie, p. 50).
· Trust. Given the risks associated with modernity, and the fact that our knowledge about the factors that affect us can often not be known or understood locally by individuals, it is necessary for people to exercise trust in others. We vest trust in experts, known sources, friends, authorities, institutions, and structures. For Giddens, this is a necessary feature of modernity, but one that also can create difficulties, especially when trust is eroded.
Swiss Finance Venture Capital
Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. Venture capital generally comes from well-off investors, investment banks and any other financial institutions. However, it does not always take just a monetary form; it can be provided in the form of technical or managerial expertise.
Though it can be risky for the investors who put up the funds, the potential for above-average returns is an attractive payoff. For new companies or ventures that have a limited operating history (under two years), venture capital funding is increasingly becoming a popular – even essential – source for raising capital, especially if they lack access to capital markets, bank loans or other debt instruments. The main downside is that the investors usually get equity in the company, and thus a say in company decisions.
Angel Investors
For small businesses, or for up-and-coming businesses in emerging industries, venture capital is generally provided by high net worth individuals (HNWIs) – also often known as ‘angel investors’ – and venture capital firms. The National Venture Capital Association (NVCA) is an organization composed of hundreds of venture capital firms that offer funding to innovative enterprises.
Angel investors are typically a diverse group of individuals who have amassed their wealth through a variety of sources. However, they tend to be entrepreneurs themselves, or executives recently retired from the business empires they've built.
Self-made investors providing venture capital typically share several key characteristics. The majority look to invest in companies that are well-managed, have a fully-developed business plan and are poised for substantial growth. These investors are also likely to offer funding to ventures that are involved in the same or similar industries or business sectors with which they are familiar. If they haven't actually worked in that field, they might have had academic training in it. Another common occurrence among angel investors is co-investing, where one angel investor funds a venture alongside a trusted friend or associate, often another angel investor.The Venture Capital Process
The first step for any business looking for venture capital is to submit a business plan, either to a venture capital firm or to an angel investor. If interested in the proposal, the firm or the investor must then perform due diligence, which includes a thorough investigation of the company's business model, products, management and operating history, among other things.
Since venture capital tends to invest larger dollar amounts in fewer companies, this background research is very important. Many venture capital professionals have had prior investment experience, often as equity research analysts; others have Masters in Business Administration (MBA) degrees. Venture capital professionals also tend to concentrate in a particular industry. A venture capitalist that specializes in healthcare, for example, may have had prior experience as a healthcare industry analyst.
Once due diligence has been completed, the firm or the investor will pledge an investment of capital in exchange for equity in the company. These funds may be provided all at once, but more typically the capital is provided in rounds. The firm or investor then takes an active role in the funded company, advising and monitoring its progress before releasing additional funds.
The investor exits the company after a period of time, typically four to six years after the initial investment, by initiating a merger, acquisition or initial public offering (IPO).
A Day In The Life
Like most professionals in the financial industry, the venture capitalist tends to start his or her day with a copy of the Wall Street Journal, The Financial Times and other respected business publications. Venture capitalists that specialize in an industry tend to also subscribe to the trade journals and papers that are specific to that industry. All of this information is often digested each day along with breakfast.
For the venture capital professional, most of the rest of the day is filled with meetings. These meetings have a wide variety of participants, including other partners and/or members of his or her venture capital firm, executives in an existing portfolio company, contacts within the field of specialty and budding entrepreneurs seeking venture capital.
At an early morning meeting, for example, there may be a firm-wide discussion of a potential portfolio investment. The due diligence team will present the pros and cons of investing in the company. An "around the table" vote may be scheduled for the next day as to whether or not to add the company to the portfolio.
An afternoon meeting may be held with a current portfolio company. These visits are maintained on a regular basis in order to determine how smoothly the company is running and whether the investment made by the venture capital firm is being utilized wisely. The venture capitalist is responsible for taking evaluative notes during and after the meeting and circulating the conclusions among the rest of the firm.
After spending much of the afternoon writing up that report and reviewing other market news, there may be an early dinner meeting with a group of budding entrepreneurs who are seeking funding for their venture. The venture capital professional gets a sense of what type of potential the emerging company has, and determines whether further meetings with the venture capital firm are warranted. After that dinner meeting, when the venture capitalist finally heads home for the night, he or she may take along the due diligence report on the company that will be voted on the next day, taking one more chance to review all the essential facts and figures before the morning meeting.
Physical Capital
Physical capital is one of the three main factors of production in economic theory. It consists of manmade goods that assist in the production process, for example, machinery, office supplies, transportation and computers.
- Land or natural resources. These factors include the land on which factories, shipping facilities or stores are built and the natural resources of a production process such as the corn needed to make tortilla chips or the iron ore used to make steel.
- Human capital. This factor includes labor and other resources that humans can provide - education, experience or unique skills - that contribute to the production process.
- Physical capital. This factor includes manmade goods that enable the production process such as machinery, buildings, computers and other goods needed for the production process to run smoothly.
Physical Capital and Firms
The accumulation of physical capital with established firms and the associated investment required can pose a significant barrier to entry for new companies, particularly those in manufacturing-intensive industries. The diversification of physical capital is a measure of the level of diversification in a particular industry. From the perspective of physical capital, starting a new law firm is much easier than opening a new manufacturing plant. Theoretically, an attorney would need only an office, a phone and a computer. Consequently, law firms outnumber steel manufacturers by a significant margin.
Evaluating Physical Capital
Capital Human Investment
This report aims to clarify what is now known about human capital and how it can be measured. It responds to a request by governments represented in the OECD Council "to develop an initial set of indicators of human capital investment based on existing data, analyse areas where significant gaps remain in internationally comparable data, identify the cost of development of data collection for new measures and performance indicators, and report to the right constitutions.
Human capital accumulation is an important determinant of individuals’ earning capacity and employment prospects, and therefore plays an important role in determining the level and distribution of income in society. Recent OECD work has also confirmed the importance of investment in education as a determinant of economic growth and education is also found to be associated with various non-economic benefits. Across countries, there is a broad consensus that some degree of
government involvement is needed in the provision of educational services.
All OECD countries seek to ensure that all young people enter working life with a minimum amount of human capital acquired during the years of compulsory education. However, governments are also heavily involved in the financing and delivery of post-compulsory education and training where returns may to a larger extent accrue to the individual and where participation is by choice. This element of discretion highlights the importance of incentives, raises certain equity issues and indeed questions about the appropriate role of government in the provision of such education and training.
Human capital investment in all countries is associated with significant labour-market gains for the individuals in question, such as higher post-tax earnings, higher participation in the labour market and improved employment probability.
− The costs to individuals of pursuing post-compulsory education differ across countries and are strongly influenced by policy-related factors including the length of education programmes, the subsidisation of tuition fees and public financial support to students.
− Private internal rates of return for young people who successfully pursue a post-compulsory education suggest that there are strong incentives for the average student to engage in education activity. Social rates of return are also high, even if they are lower than the private rates, and point to the benefits of investment in post-compulsory education for society as a whole.
− Incentives to invest in formal education diminish at an increasingly rapid rate as a function of age, reflecting a shorter period to amortise investment costs and higher costs in terms of foregone earnings. Private internal rates of return are correspondingly low and fall strongly with age.
− The limited evidence available shows that employers have an incentive to train their employees since such activity results in higher productivity and profits.
− Notwithstanding the expansion of enrolments in tertiary education in recent decades, students in higher education still tend to come from relatively favoured backgrounds.
− Financing arrangements in post-compulsory education tend to be regressive. Those not participating in post-compulsory education -- typically people from disadvantaged backgrounds -- do not benefit at all from public funding while graduates from tertiary education institutions receive large government subsidies, even though they are likely to come from relatively well-off families and have high-income prospects.
Human capital investment in all countries is associated with significant labour-market gains for the individuals in question, such as higher post-tax earnings, higher participation in the labour market and improved employment probability.
− The costs to individuals of pursuing post-compulsory education differ across countries and are strongly influenced by policy-related factors including the length of education programmes, the subsidisation of tuition fees and public financial support to students.
− Private internal rates of return for young people who successfully pursue a post-compulsory education suggest that there are strong incentives for the average student to engage in education activity. Social rates of return are also high, even if they are lower than the private rates, and point to the benefits of investment in post-compulsory education for society as a whole.
− Incentives to invest in formal education diminish at an increasingly rapid rate as a function of age, reflecting a shorter period to amortise investment costs and higher costs in terms of foregone earnings. Private internal rates of return are correspondingly low and fall strongly with age.
− The limited evidence available shows that employers have an incentive to train their employees since such activity results in higher productivity and profits.
− Notwithstanding the expansion of enrolments in tertiary education in recent decades, students in higher education still tend to come from relatively favoured backgrounds.
− Financing arrangements in post-compulsory education tend to be regressive. Those not participating in post-compulsory education -- typically people from disadvantaged backgrounds -- do not benefit at all from public funding while graduates from tertiary education institutions receive large government subsidies, even though they are likely to come from relatively well-off families and have high-income prospects.
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