Entrepreneurship and Social Capital: Analysing the Impact of Social Networks on Entrepreneurial Activity from a Rational Action Perspective

Abstract

Governments have invested heavily in building local and regional entrepreneurial networks in order improve economic performance and regeneration. However, there are many types of network, and different types of network are appropriate for different purposes. Some types of network are most useful in the early stages of entrepreneurial activity and others at later stages. Careful definitions are necessary in order to analyse the role of networks in generating interpersonal and inter-organizational trust, and hence in augmenting the stock of social capital. Effective networks are normally intermediated by reputable trust-brokers. The reputation of government gives it a significant role as a trust-broker, but there is a danger that its reputation may be undermined when it extends its activities into areas where it lacks the competence to intervene effectively.