The Many Sides of Social Capital: How Social Capital Is Related to Entrepreneurship?

This study explores two questions about the relationship between social capital and entrepreneurship that have not received much attention. The first is, how different dimensions of social capital relate to entrepreneurship? The second is, to what extent community social capital is related to the level of entrepreneurship among marginal and dominant members of a community? Social capital is the benefits derived from social connections. We know about the positive aspects of the relationship between social capital but it is also important to examine if there are negative effects. Further, community social capital, which is the aggregate level of social capital in a community, has been found to have a public good quality which has a stronger positive correlation with entrepreneurship than the social capital possessed by an individual. Whether marginal groups are benefitting from community social capital, has escaped extensive attention. This research therefore fills an important gap in the literature on the relationship between social capital and entrepreneurship. The research questions are explored by analyzing archival data, collected via the 2000 Social Capital Community Benchmark Survey (SCCBS) and the Public Use Microdata Sample (PUMS) from the 2000 Census data. I found that social capital is both positively and negatively related to entrepreneurship and marginal groups do not benefit as much from community social capital as do dominant groups. The findings contribute to (a) the identification of social capital’s boundary conditions; (b) establishing the uneven effects of community social capital among dominant groups and marginal groups; and (c) how dimensions of social capital are positively or negatively related to the rate of entrepreneurship and entrepreneurial growth aspirations