Social capital effects on the discovery and exploitation of entrepreneurial opportunities

Social capital refers to social networks and the norms of reciprocity, cooperation and trust associated with them. It can be studied at different levels of analysis. As previous literature suggests, social capital has aspects at both the individual and collective levels. However, theory development and empirical research have focused on separate, sometimes diverging levels. In an attempt to address this, this research examines the simultaneous influence of individual and regional social capital on the discovery and exploitation of entrepreneurial opportunities using individual-level data from the Global Entrepreneurship Monitor linked with regional-level data on social capital. The results show that individuals from regions with higher social capital are more likely to discover and to exploit entrepreneurial opportunities. Moreover, individuals having networks with other entrepreneurs are also more likely to identify a business opportunity and to become an entrepreneur. Also, we found that social capital at individual level had a greater effect than social capital at regional level in the two stages of the entrepreneurial process.     

Social capital and entrepreneurial process

The paper examines the relationship between social capital and entrepreneurial engagement of individuals in 35 nations from Europe and Asia. To the best of our knowledge, this is the first empirical research that attempts to investigate the influence of three-dimensional social capital concept – trust, networks and norms – on three stages of entrepreneurial process – preference, trial and success – using such large and comprehensive cross-sectional micro data. In general, we find that all three dimensions of social capital matter in the entrepreneurship context, albeit differently. They become beneficial in different ways and at different stages of entrepreneurial involvement. For example, among trust variables, institutional trust in general, and trust in business-oriented and business-supporting actors in particular, exert significant positive effect on entrepreneurial process. Individuals with formal membership in professional associations are more likely to perceive entrepreneurial opportunities, while some close or strong-tie networks might prevent them from progressing in the entrepreneurship ladder. Finally, individual level civic norms appear to be negatively associated with early-stage entrepreneurship, while the success in becoming an entrepreneur is not found to be bound by people’s civic norms.     

Philanthropy and social capital in Mexico

• The aim of this paper is to examine the factors underlying philanthropic behavior in Mexico. In particular, we analyze the influence of social capital on two types of behavior: giving and volunteering. This research is based upon groundbreaking national public opinion surveys conducted in 2005 and 2008, the first of their kind in Mexico to focus on donations and volunteerism. We find that membership in associations (an important component of social capital) is strongly and positively associated with secular giving and volunteering. We also tested the role of three other aspects of social capital: participation in informal personal networks, a belief in the norm of reciprocity, and interpersonal trust, and our findings show that the former two have a consistently significant effect on our dependent variables but interpersonal trust does not. We discuss the implications of this for a society where trust in others is comparatively low. Differences between Mexico and the USA, for example, highlight the importance of context in philanthropic behavior. Mexicans' religiosity also stands out as an important variable, particularly when it comes to understanding religious forms of giving and volunteering in the country. The practical significance of our findings for the promotion of philanthropy is that Mexican nonprofits must compensate for being in a low‐trust culture by encouraging membership and a sense of group belonging.

Copyright © 2014 John Wiley & Sons, Ltd.     

Assessing Trust Through Social Capital? A Possible Experimental Answer

Trust is important in economics: several transactions are based on it; unfortunately it is difficult to measure. The recent economic literature on social capital shows a positive association between this concept and trust. As social capital is easier to measure than trust, this paper analyzes the possibility of assessing trust using a measure of social capital. A basic trust game is played in three Western European countries with undergraduate students; a questionnaire measures their level of social capital as time spent within social networks. This measure is stronger and more precise than the ones generally used. The use of an experiment instead of a questionnaire allows for constructing a measure of trust that is continuous in principle. Moreover, to play an experiment allows for observing the behavior of the participants better than by the means of a survey. The results are supportive of the fact that trust can be assessed through social capital, although the presence of a strong geographical effect has to be accounted for.     

Non‐Economic Factors in Economic Geography and in ‘New Regionalism’: A Sympathetic Critique

In the current debate on local and regional development and after several ‘turns’, dominant critical models have found some security in institutional, cultural and evolutionary approaches. Interest today centres on success and competitiveness and how they are reproduced in a few paradigmatic regions. A distinctive feature of these regions and places is the embeddedness of certain non‐economic factors such as social capital, trust and reciprocity based on familiarity, face‐to‐face exchange, cooperation, embedded routines, habits and norms, local conventions of communication and interaction, all of which contribute to a region’s particular success. Although these approaches may not deny the forces of the capitalist space economy, they do not explicitly acknowledge them or take them on board and so they tend to discuss non‐economic factors and institutions as autonomous forces shaping development. This essay provides a critique of these concepts based on their (1) inadequate theorization, (2) depoliticized view of politics and de‐economized use of economics and (3) reduction of space to territory. The essay concludes that we need a far more penetrating renewal of radical critique of the current space economy of capitalism. Old concepts such as uneven development, the social and spatial division of labour, the geographical transfer of value, accumulation and imperialism must be combined with cultural and institutional issues, with those non‐economic factors mentioned above.     

Measuring the Returns to Networking and the Accumulation of Social Capital: Any Evidence of Bonding,Bridging, or Linking?

This article presents analyses of individual investment in social capital using both the British Household Panel Survey (BHPS) and the UK Time Use Survey (2000) (UKTUS). We suggest a general theoretical framework that could possibly explain individual investment in various forms of social networking. Measures of social capital are then constructed in an attempt to capture the extent of individual investment in bonding, bridging, and linking networks. These measures, together with other socioeconomic indicators, are used as explanatory factors in wage equations, estimated using ordered probit, OLS, and instrumental variable approaches. We are unable to identify any consistent returns from investment in bonding and bridging networks. In contrast, the evidence suggests that any returns to investment in the development of linking social capital simply derive from the positive signals that group membership may transmit to potential employers. Our results underline the contrast between studies that consider social capital as an attribute of communities, as opposed to individuals, in that we find a negative return to social activity at the level of the individual.     

Enlargement and the labour market: perception,theory and fact

Favourable labour market outcomes are essential for economic and social cohesion within the newly enlarged European Union. However, Eurobarometer evidence indicates that many in the 10 incoming countries are not convinced that membership will deliver such a result. Also, there is no unambiguous theoretical framework that suggests otherwise. A more optimistic scenario can be obtained by reference to the experiences of earlier low‐income Community entrants during their first years of membership, although long‐term convergence has remained elusive.     

Preindustrial patterns in Chinese organizational culture

Chinese organizational culture is usually described as being influenced by Confucian social norms and unique to the country. The paper argues in contrast to this view that there are important cultural similarities between values and norms in organizations in China and other developing countries. It is suggested that China, like other developing countries, is in a process of industrialization but retains preindustrial social norms which shape social relations and organizational structures. The paper shows first that the morals of social distance and reciprocity which anthropologists have found to be constitutive of a large number of preindustrial communities also govern relationships within and between organizations in present-day China. The paper then turns to organizations in Africa and Latin America and it is shown that the same social morals structure behaviours in these two developing regions, suggesting that the cultural characteristics of Chinese organizations are not simply unique to this country but a set of preindustrial norms that industrializing countries have in common as a legacy of the past.     

Trust and corruption: The influence of positive and negative social capital on the economic development in the European Union

Why are the Scandinavian countries in the European Union significantly richer than Southern/Eastern European countries? We try to answer this question from an empirical social capital perspective. In particular, we are interested in the interplay of social trust as a positive and corruption as a negative manifestation of social capital. The opportunities to provide answers by multivariate modelling are, however, limited by several problems related to small sample size and low degrees of freedom. Regarding these problems, we test the interrelating influences between positive and negative social capital by applying a path model that accounts for Granger-like causal effects. Our empirical results, referring to a sample of up to 25 EU countries, show that corruption might harm poor European countries but is not able to affect social trust. However, corruption in itself means that resources end up in the wrong places and not in socioeconomically optimal investments. There is, therefore, a direct damaging effect of corruption on wealth. This implies that economic actors have to invest higher transaction and control costs which will bind resources to non-productive purposes and thus destroy economic wealth. Most remarkable is that the augmentation of positive social capital could work as an effective counterforce to corruption, even if it does not compensate for the economic loss caused by corruption. Thus, adding the social capital perspective may contribute to understanding present day variation in the wealth of European nations by the damaging effect of corrupt activities and/or the positive force of social trust.     

Human capital,social capital,and innovation: a multi-country study

The authors examine the effects of two forms of capital, i.e. human capital and social capital, on innovation at the country level. We use secondary data from the World Development Report on a country's overall human development to test for a relationship between human capital and innovation. We also use previous conceptualizations of social capital as comprising trust, associational activity, and norms of civic behaviour to test for relationships between these indicators of social capital and innovation using data from the World Values Survey. Unlike most previous studies that examined human and social capital within a given country, we develop and empirically test a theoretically grounded model that relates human and social capital to innovation at the societal level across 59 different countries, thus providing a more global view of the role of these two forms of capital in generating value. We find strong support for the positive relationship between human capital and innovation and partial support for the positive effect of trust and associational activity on innovation. However, contrary to our prediction, we find a negative relationship between norms of civic behaviour and one of our innovation measures.     

The role of Embeddedness in Industrial Symbiosis Networks: Phases in the Evolution of Industrial Symbiosis Networks

Industrial symbiosis (IS) has emerged as a body of exchange structures to progress to a more eco‐efficient industrial system, by establishing a collaborative web of knowledge, material and energy exchanges among different organizational units. However, even given the potential economic and environmental benefits derived from IS networks, the process of emergence and development of these networks seems far from straightforward. The effective operation of such networks relies heavily on aspects such as trust and general reciprocity, aspects insufficiently covered in the IS literature. Based on the theoretical framework provided by social network analysis and economic geography and the empirical data collected through qualitative methods, based on the approach of Grounded Theory, the authors propose a modelling framework to analyse the main mechanisms in the building of trust and embeddedness and identify different phases in cooperation leading to effective IS exchanges. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.     

Trust or bust: Growth effects of knowledge,human and social capital revisited

Social capital consists of trust, collective values, and shared norms. It helps society to work efficiently and, hence, promotes knowledge accumulation and growth. This paper identifies the contribution of social capital to differences in total factor productivity among European subnational regions, but, unlike other studies, it focuses on the effects of interregional differences in social capital. To do so, the paper employs a spatial Durbin model of a social-capital extended Cobb-Douglas production function. Our results suggest that transfers of knowledge might be secondary to the presence of collectivism and human capital in knowledge-generating regions. Although knowledge can cross boundaries, an absence of skills and trust limits local growth capacity. Our estimations also suggest the presence of gravity effects emanating from social and human capital in which some regions lose against others nearby that have more abundant social and human capital.     

Taxes and Benefits: Two Options to Cheat on the State

In this article we study the social norms to abstain from cheating on the state via benefit fraud and tax evasion. We interpret these norms (called benefit morale and tax morale) as moral goods, and derive testable hypotheses on whether their demand is determined by prices. Employing a large survey data set from OECD‐member countries we provide robust evidence that the demand responds to price proxy variables as predicted by theory. The main general conclusion of this article is that social norms (which are widely accepted as determinants of individual economic behaviour) are themselves influenced by economic factors.     

Impact at the ‘Bottom of the Pyramid’: The Role of Social Capital in Capability Development and Community Empowerment

Rooted in the notion of inclusive capitalism, the Bottom‐of‐the‐Pyramid (BoP) approach argues for the simultaneous pursuit of profit and social welfare by creating markets for the poor. This idea has been both celebrated and criticized in the literature. We do neither in this paper. Instead, by leveraging insights from Amartya Sen's work on capability development and the literature on social capital, we offer a more socially embedded and community‐centric BoP approach. By redefining poverty not just as a lack of income, but also as a lack of ‘capabilities’ in Sen's sense that can be developed through leveraging social capital, we offer a systemic framework for understanding the societal impact of business‐driven ventures in the BoP and empowering BoP communities through these ventures. Specifically, we argue that any business initiative in the BoP ought to be evaluated on the basis of whether it advances capability transfer and retention by (a) enhancing the social capital between a particular community and other more resource rich networks, and (b) preserving the existing social capital in the community.     

Happiness in transition: An empirical study on Eastern Europe

This paper analyzes the determinants of life satisfaction in a pooled data set of representative individual survey data from seven East European countries collected during the early phase of economic and political transformation using ordered logit models. Those core socio-demographic and economic variables relevant in the US and West European countries have a similar impact on happiness in Eastern Europe under conditions of dramatic economic, political, and social change. The individual effects of variables across countries are not statistically different from the results obtained from the pooled data set. Cross-country differences in aggregate happiness can be explained well by variations in the unemployment rates, the degree of political freedom and the human development index.     

Good Governance and Norms of Citizenship: An Investigation into the System‐ and Individual‐Level Determinants of Attachment to Civic Norms

Norms of citizenship are seen as a precondition for a functioning polity and society. But what determines the importance citizens attach to these norms? Are individual‐level features, like education or social embeddedness, relevant? Do system‐level features like the economic situation or quality of governance matter? Our findings from a multilevel analysis indicate that, paradoxically, a political system's effectiveness and legitimacy undermine the very norms on which it depends for both effectiveness and legitimation. In well‐functioning states, citizens' attachment to civic norms declines. As for the effect of welfare policies, there is no “crowding‐out” effect in the sense that if the state provides for citizens who are less well off, solidarity among citizens was reduced. Few individual‐level characteristics that relate to the public sphere—such as social embeddedness—are found to matter, indicating that norms are perpetuated in the private sphere.     

Effects of structural,relational and cognitive social capital on resource acquisition: a study of entrepreneurs residing in multiply deprived areas

ABSTRACT

Emerging research demonstrates that structural social capital facilitates the resource acquisition of entrepreneurs residing in multiply deprived areas. However, their usage of relational and cognitive social capital that translates to accessible resources is not well understood. We contribute to knowledge and comprehensively examine effects of structural, relational and cognitive social capital taken together on the resource acquisition of entrepreneurs residing in multiply deprived areas. Results from a national survey of entrepreneurs residing in multiply deprived areas across England show that large networks, bonding ties, trust, reciprocity, obligations and expectations, and shared language and codes facilitate their resource acquisition. Also, we demonstrate that they are reluctant or unable to bridge social distance and adopt narrative storytelling. Furthermore, the results indicate that entrepreneurs residing in multiply deprived areas in the most deprived regions suffer from less resource acquisition.     

The CAPITAL in Social Capital: An Austrian Perspective

In recent decades economists started discovering the importance of the social dimension of economic interactions. Contemporary economics has borrowed several sociological concepts for its own use, among the most important being the concept of social capital. However, this transfer within disciplines did not occur without a loss—the nature of social capital in economics remains confused and obscure. The purpose of this article is to clarify it, specify the possibilities for its use, and discuss their limits. It is argued that economics once also possessed a view of human beings that was more “socialized” than the modern neoclassical Homo oeconomicus, and that this more “socialized” view still exists in the Austrian school of economics. Because this tradition of economic thought has also developed an elaborate capital theory, it can serve as an ideal source where we can look for inspiration in the current social capital debate. First, social capital is (re)defined along these lines as an individual's asset connected with recognized reciprocity (as opposed to interactions usually classified as “altruistic”). Then major critical claims about the relation between social and physical capital are answered and the connection between social capital, trust, and social norms is described.     

The Impact of Terrorism on Social Capital: Evidence from the 2015 Charlie Hebdo Paris Shooting

We examine the impact of terrorism on social capital by exploiting variation in the 2014 European Social Survey administration dates coupled with the 2015 Charlie Hebdo attack in Paris, France. Using the difference-in-differences estimator, we find that the attack had a positive, causal impact on the overall level of social capital among French respondents. Further, the effect seems to be driven by an increase in institutional and interpersonal trust, as well as by engagement in social networks. This rise in social capital peaks in the immediate aftermath of the terrorist attack but subsequently decays to pre-attack levels within approximately one month.     

What Do You Know,Who Do You Know?: School as a Site for the Production of Social Capital and its Effects on Income Attainment in Poland and the Czech Republic

This paper criticizes traditional approaches to stratification, which suggest that education contributes to inequality solely by endowing people with different amounts of human capital (knowledge and skills) or credentials. What these approaches overlook is the social component of education—friends, acquaintances and other connections one accumulates while in school. These connections reduce the uncertainty inherently present in the hiring process by compensating for lack of information with trust. We argue that social capital gained while in school has an independent effect on individual income, and show how this effect varies by education and experience levels. Conceptualizing schooling as an important source of social capital and finding ways to disentangle the effects of human and social capital on individual income are a contribution that economic sociologists can make to the study of education and inequality.