Social Capital, Business Environment and State Institutions: Theoretical Basics, Practical Experience and Recommendations (With Emphasis on Legislature)

Business social environment as one of environments of surrounding business was of great importance as a result of the economists perspective change, from emphasis on physical capital and then human capital to social capital. Despite these changes, we can say Iran governance has deemed that improving business environment is independence of promoting social capital, with looking at Development Plan Acts (fourth and fifth Plans) and Iran’s Vision 2025. This paper tries to answer these questions by the descriptive-analytical method and use of document what is the role of social capital in improving business environment? Suppose the social capital improves business environment, do state institutions can increase or decrease social capital by taking some process, making some policies and passing some acts. The latter question is important for creating a new perspective in Iran. Policy makers and legislators in Iran have accepted “the effect of state institutions on business environment”. The paper will discuss in a growing literature about the effect of state institutions on social capital and then business environment (social capital as an intermediate variable). At least, Canada and Spain’s experiences confirm the role of legislature in improving social capital is crucial. After analyzing associating social capital with business environment and the effect of state institutions on social capital, this paper will provide legislative recommendations for promoting social capital in Iran.