Bauernschuster, Stefan Falck, Oliver Heblich, Stephan
Year of Publication:
Jena economic research papers 2008,079
This paper tests the importance of social contacts on entrepreneurship. To measure differences in the interconnectedness of social contacts, we compare rural and agglomerated areas. A smaller community size in rural areas generates greater network closure. Agents' neighborhoods are more likely to overlap, which intensifies social contacts and thus facilitates resource mobilization. Analyzing the impact of social contacts across regions, we find that greater network closure increases the likelihood of being an entrepreneur by 1.9 to 14.2 percentage points, depending on the number of underlying social contacts. These results remain robust after applying matching techniques and concentrating on young entrepreneurs.
Occupational choice entrepreneurship social contacts