Social capital and entrepreneurship: An exploratory analysis

This study explores the relation between social capital and entrepreneurship. We construct a measure of social capital which incorporates indicators of; trust (generalized and institutional); associational activities (passive and active membership); and civic norms. Self-employment is used as a proxy for entrepreneurship. Before empirically testing the relation between social capital and entrepreneurship, this study reviews the literature concerning the definition and measurements of social capital, the relationship between entrepreneurship and social capital, and explanations on how the different dimensions of social capital affect entrepreneurship. Results from an empirical model which simultaneously controls for factors which are theorized to affect entrepreneurship at both individual-and country-levels indicate that a positive relationship exists between social capital and entrepreneurship.