# Disentangling Director Attributes: Human Capital versus Social Capital of Directors
## 1 Introduction  
\"Human capital resides in individuals. Social capital resides in social relations.\"  
The board of directors is an important component of the governance framework of a firm, and as such, has been the focus of numerous studies seeking to identify attributes of a high-quality board. In recent years, more studies have begun to consider the individual attributes of directors which may influence their contribution to the board, and by extension, their impact on firm value ([PERSON] et al., 2013). This literature suggests that the personal attributes a director brings to their board, known as _human capital_, are likely to impact on how successful they are as a director, with directors who have more experience, knowledge, and skills, fulfilling their roles more appropriately ([PERSON], 2014; [PERSON] et al., 2018; [PERSON], 2005; [PERSON], 2017; [PERSON] and [PERSON], 2013; [PERSON] et al., 2013; [PERSON], 2004). An attribute that has been of particular interest, beyond their personal qualities, is the connections that a director has within their group of peers, referred to as _social capital_. Social capital has been defined as a director's ability to access resources through their connections, including information ([PERSON], 1992). The increasing intricacy of businesses necessitates an extensive range of expertise and experience that directors need ([PERSON] and [PERSON], 2003). This can make it hard for even a group of directors to provide all the required skills, knowledge, and experience personally, especially on smaller boards. One way to gainadditional knowledge and expertise is through social capital, i.e., by accessing the skills, knowledge, and experience of those directors they are connected to from sitting on the same boards of other firms. This suggests that directors who sit on multiple boards, connecting them to other directors, would be valuable for firms making them attractive directors. Recently, researchers have begun to view social capital far more broadly than just the direct connections a director has from sitting on multiple boards, traditionally known as interlocks, which only considers direct connections a director has from sitting on multiple boards. Interlocks create networks of companies that can allow information and other experiences to be exchanged. For instance, firm B has a director who also sits on firm A's board, giving firm B access to the experiences and knowledge of firm A. More recently, researchers have begun to focus on the wider networks formed by the indirect connections among directors sitting on multiple boards. For instance, if another director on firm B sits on the board of firm C, the interlock literature would not recognize A and C as being connected. However, it can be argued that there is an indirect connection between firms A and C via firm B. The idea of indirect connections raises the possibility that social capital brings greater access to resources than was recognized under the literature on interlocks. However, it is important that the concept of _social capital_ is distinguished from a director's human capital. Human capital generally refers to the value of people's personal attributes such as their skills, experience, and knowledge acquired from current and past positions, training, and education ([PERSON], 1993). Admittedly, while these two types of capital are distinct, they are highly interrelated ([PERSON], 1988; [PERSON] and [PERSON], 2015). For instance, a director with a larger network of social connections will be in a position to develop greater human capital as they will likely be offered more opportunities to build experience. Similarly, a director with a highly desirable set of professional skills and prior experience is more likely to be offered additional board seats resulting in greater social capital. The interrelation also suggests that the number of directors one holds is an indication of a director's personal qualities, namely, their human capital, while also indicating the level of a director's social capital.