Social Capital and Entrepreneurship Flashcards
(32 cards)
What is social capital
Bourdieu, 1985 - total potential resources which are linked to possession of a durable network of relationships
- knowing people is useful
- trust is important
structuralists vs interactionists CAMPS
Structuralists: person with many connections owns large social capital - network provides resources and opportunities
Interactionists: social capital is produced in interactions. Cannot be possessed
Regional Social Capital
Wolfe, 2002
- shared norms and values facilitate cooperation
- people closer together share more culturally, trust, etc -
my EG. supporting a football team, attending the same university
Putnam, 1993
- Decentralisation of power in Italy
- Northern regions were better governed and after reform still held true
- Putnam argued social capital was better in North
- higher trust, civic engagement, acceptance of the local authority policy
Putnam’s thesis: social capital very important in modern knowledge based economy. Less important in agricultural or mass production societies
Social Capital and Economic Development
Westlund and Adam, 2010
- met analysis of 65 studies over 15 years
- clear benefits of social capital at the firm level, conflicting at national and regional level
- hard to properly measure
most common measures of social capital, trust and associational involvement, are often inadequate proxies for the complex concept of social capital - measures may not capture the diversity of norms, values and networks that contribute to economic performance
The role of Trust - spectrum
Perfect trust - everyone like a close family member - no need for governance or property rights
low trust - high transaction costs
institutions looks to minimise TCs
Trust Putnam
Putnam, 2000
Decline in US political, civic and religious participation
Frequent use and maintenance of a link important
thus, trust in US and in its government has collapsed
Bonding vs Bridging
Putnam
bonding: likeminded people
Bridging: different people
Dysfunctional societies: lack of bridging
characterised often by low between group trust - too little trust being exchanged in bridging links (Fukuyama, 1995)
Is bridging or bonding better
Generally found bridging better predicts growth
Need both, as well-being is predicated on ability to form and maintain friendships
Strong societies - tend to have strong groups, and strong links between them
Weak ties
Mark Granovetter’s (1973) The Strenght of Weak Ties is a classic in sociology (it has been cited more than 70,000 times)
Argues weak ties (ties between those with not many friends in common) are imperative for community organisation, for diffusion of influence and info
Info about job opportunities often disperve via weak ties
Localness of networks
- like minded people move to same place - e.g grads
Sociologist Barry Wellman has in a series of studes shown that contacts tend to be localised
One finding - half of frequent contacts in the Toronto area occur between individuals who live less than 1 mile apart
Emerging research on whether internet is changing these relationships - in short probably not - at least not yet
Issues and modern solution to lack of data on networks
Lack of historic metric or data. But social media is helping to bridge this gap
Norbutas and Corten, 2018
- communities with high network diversity are also more prosperous economically
Netherlands evidence
diversity = bridging
Dealmakers Role
Feldman and Zoller, 2012
“The empirical results suggest that the local presence of dealmakers is more important for successful entrepreneurship than aggregate measures of regional entrepreneurial and investors network
Why does innovation and VC cluster
Sorenson and Stuart 2001 - study venture capital industry in the US - show that owing to the weight the industry places on interpersonal relationships, VC firms and their investments are incredibly concentrated - relations among actors are strong and embedded
If founders networks concentrate in space, then reliance on network based recruiting strategies may partially account for the geographic clustering of high tech industries
Bridging good, bonding bad
Beugelsdijk and Smulders (2004): This study of European regions found that bridging social capital (ties between diverse groups) positively impacts economic growth, while bonding social capital (ties within homogeneous groups) has a negative effect.
Conclusion on Social Capital
Westlund and Adam conclude that the relationship between social capital and economic performance is complex and context dependent
call for more rigorous research design that account for contextual factors and employ diverse methodologies to enhance the comparability and generalisability of findings
Implications for policymakers and practitioners
Suggest promotiing social capital can be a valuable strategy for enhancing economic performance, but that specific policies and internvetions should be tailored to the particualr context
Dark side of social capital
Baycan and Oner, 2023
bonding - exclusion, intolerance, racism
Kinship Paradox - strong family ties can hinder economic growth by being a safety net that discourages saving and investment
Corruption and crime - facilitates corruption (drug cartels) less uncertainty if there is strong bonding
Organised crime thrives in
environments with high social capital (Rubio, 1997)
bonding bad for innovation
Bonding - strong ties within homogenous groups - hinder innovation - authors cite Crescenzi et al. (2013), who found that bonding ties negatively affect innovation performance due to network closure and insulation from external information and challenges
The Steam Engine
1690s - pump to raise water from mines by suction produced by condensing steam
By the mid 19th century it was used to pull train carriages
Bridging - people from mines’ technology turned into a key technology for transport
Endogenous growth: human capital: how is knowledge spread, improved etc.. bridging by entrepreneurs
