Advertisement

Does social capital influence small business entrepreneurship? Differences between urban and rural China

  • Xianhua SunEmail author
  • Ailun Xiong
  • Hongyi Li
  • Hans Westlund
  • Yuheng Li
Special Issue Paper

Abstract

This study investigates the relationship between social capital and small business entrepreneurship in China. Unlike previous studies that focus solely on rural or urban residents, this paper pays more attention to the differences between them. According to our study, social capital has both positive and negative impacts on small business entrepreneurship. Based on the data drawn from China General Social Survey, we find that the impact of social capital differs significantly between rural and urban areas. In rural China, residents who have higher social capital tend to have entrepreneurial behaviors, while higher social capital leads to lower intention of small business entrepreneurship in urban China. Individuals whose parents have the experiences of small business tend to have small business entrepreneurial activities; individuals who are better educated tend to find regular jobs instead of having their own small business. The results suggest that small business entrepreneurship in rural China might be “entrepreneurship by necessity.”

JEL Classification

J70 R23 

Notes

Acknowledgements

This work was supported by the research fund from Chongqing Technology and Business University (KFJJ2018037) and the Ministry of Education of the People's Republic of China (19YJC630187).

References

  1. Ács ZJ, Varga A (2005) Entrepreneurship, agglomeration and technological change. Small Bus Econ 24(3):323–334CrossRefGoogle Scholar
  2. Allen WD (2000) Social networks and self-employment. J Soc Econ 29(5):487–501CrossRefGoogle Scholar
  3. Audretsch D, Dohse D, Niebuhr A (2010) Cultural diversity and entrepreneurship: a regional analysis for Germany. Ann Reg Sci 45(1):55–85CrossRefGoogle Scholar
  4. Banerjee A, Duflo E, Glennerster R, Kinnan C (2009) The miracle of microfinance? Evidence from a randomized evaluation. MIT Working PaperGoogle Scholar
  5. Batjargal B (2007) Internet entrepreneurship: social capital, human capital, and performance of internet ventures in china. Res Policy 36(5):605–618CrossRefGoogle Scholar
  6. Bian Y (1994) Guanxi and the allocation of urban jobs in China. China Q 140:971–999CrossRefGoogle Scholar
  7. Bian Y (1997) Bringing strong ties back in: indirect ties, network bridges, and job searches in China. Am Sociol Rev 62(3):266–285CrossRefGoogle Scholar
  8. Bian Y, Huang X, Zhang L (2015) Information and favoritism: the network effect on wage income in China. Soc Netw 40:129–138CrossRefGoogle Scholar
  9. Bourdieu P (1990) In other words: essays towards a reflexive sociology. Stanford University Press, Palo AltoGoogle Scholar
  10. Bourdieu P, Wacquant L (1992) An invitation to reflexive sociology. The University of Chicago Press, ChicagoGoogle Scholar
  11. Bramoullé Y, Goyal S (2009) Favoritism. Cambridge working papers in economics 0942. Faculty of Economics, University of Cambridge, CambridgeGoogle Scholar
  12. Brockhaus RH (1982) The psychology of the entrepreneur. In: Kent CA, Sexton D, Vesper KH (eds) Encyclopedia of entrepreneurship. Prentice Hall, Englewood Cliffs, pp 39–57Google Scholar
  13. Burt RS (1980) Models of network structure. Ann Rev Sociol 6(1):79–141CrossRefGoogle Scholar
  14. Bygrave WD, Timmons JA (2009) Venture capital at the crossroads. Social Science Electronic Publishing, RochesterGoogle Scholar
  15. Cai D, Qiu L, Meng X, Ma S (2018) Liquidity constraints, social capital and family entrepreneurial choices. Manag World 3:79–93Google Scholar
  16. Chen WT (2017) Entrepreneurial learning, knowledge acquisition and entrepreneurial performance: study on the next generation of family firms. (Doctoral Dissertation) Dongbei University of Finance and EconomicsGoogle Scholar
  17. Cheng T, Selden M (1994) The origins and social consequences of China’s Hukou system. China Q 139(6):44–68Google Scholar
  18. Christiansen F (1990) Social division and peasant mobility in mainland China: the implications of the Hukou system. Issues Stud 26(4):78–91Google Scholar
  19. Coleman JS (1988) Social capital in the creation of human capital. Am J Sociol 94:95–120CrossRefGoogle Scholar
  20. Coleman JS (1990) Foundations of social theory. Harvard University Press, CambridgeGoogle Scholar
  21. Davern M, Hachen DS (2006) The role of information and influence in social networks: examining the association between social network structure and job mobility. Am J Econ Sociol 65(2):269–293CrossRefGoogle Scholar
  22. Davidsson P (2003) The domain of entrepreneurship research: some suggestions. Cognitive approaches to entrepreneurship research. Emerald Group Publishing Limited, Bingley, pp 315–372CrossRefGoogle Scholar
  23. Davidsson P, Honig B (2003) The role of social and human capital among nascent entrepreneurs. J Bus Ventur 18(3):301–331CrossRefGoogle Scholar
  24. Démurger S, Xu H (2011) Return migrants: the rise of new entrepreneurs in rural China. World Dev 39(10):1847–1861CrossRefGoogle Scholar
  25. Driessen MP, Zwart PS (1999) The role of the entrepreneur in small business success: the entrepreneurship scan. In: 44th ICSB world conference proceedings innovation and economic development: the role of entrepreneurship and SMEs, Nápoles, 20–23Google Scholar
  26. Dunn T, Holtz-Eakin D (2015) Financial capital, human capital, and the transition to self—employment: evidence from intergenerational links. J Labor Econ 18(2):282–305CrossRefGoogle Scholar
  27. Fan C (2002) The elite, the natives, and the outsiders: migration and labor market segmentation in urban China. Ann Assoc Am Geogr 92(1):103–124CrossRefGoogle Scholar
  28. Gedajlovic E, Honig B, Moore CB, Payne GT, Wright M (2013) Social capital and entrepreneurship: a schema and research agenda. Entrep Theory Pract 37(3):455–478CrossRefGoogle Scholar
  29. Grootaert C, Bastelaer TV (2001) Understanding and measuring social capital: a synthesis of findings and recommendations from the social capital initiative. The World Bank, Social Capital Initiative, Working paper No. 24Google Scholar
  30. Huhe N (2014) Understanding the multilevel foundation of social trust in rural China: evidence from the China general social survey. Soc Sci Q 95(2):581–597CrossRefGoogle Scholar
  31. Jenssen JI, Koenig HF (2002) The effect of social networks on resource access and business start-ups. Eur Plan Stud 10(8):1039–1046CrossRefGoogle Scholar
  32. Kansikas J, Murphy L (2011) Bonding family social capital and firm performance. Int J Entrep Small Bus 14(4):533–550CrossRefGoogle Scholar
  33. Kim PH, Aldrich HE (2005) Social capital and entrepreneurship. Found Trends Entrep 1(2):245–268Google Scholar
  34. Kim J, Miner AS (2007) Vicarious learning from the failures and near-failures of others: evidence from the U.S. commercial banking industry. Acad Manag J 50(3):687–714CrossRefGoogle Scholar
  35. Kinnan C, Townsend R (2012) Kinship and financial networks, formal financial access, and risk reduction. Am Econ Rev 102(3):289–293CrossRefGoogle Scholar
  36. Knight J, Yueh L (2008) The role of social capital in the labor market in China. Econ Transit 16(3):389–414CrossRefGoogle Scholar
  37. Laffineur C, Barbosa SD, Fayolle A, Nziali E (2017) Active labor market programs’ effects on entrepreneurship and unemployment. Small Bus Econ 49(4):889–918CrossRefGoogle Scholar
  38. Le AT (1999) Empirical studies of self-employment. J Econ Surv 13(4):381–416CrossRefGoogle Scholar
  39. Li H, Yang Z, Yao X, Zhang H, Zhang J (2012) Entrepreneurship, private economy and growth: evidence from China. China Econ Rev 23(4):948–961CrossRefGoogle Scholar
  40. Light I, Dana L (2013) Boundaries of social capital in entrepreneurship. Entrep Theory Pract 37(3):603–624CrossRefGoogle Scholar
  41. Lin N (1999) Social networks and status attainment. Ann Rev Sociol 25:467–487CrossRefGoogle Scholar
  42. Lindquist MJ, Sol J, Praag MV (2015) Why do entrepreneurial parents have entrepreneurial children? J Labor Econ 33(2):269–296CrossRefGoogle Scholar
  43. Ma X (2016) Determinants of the wage gap between migrants and local urban residents in China: 2002–2013. Mod Econ 7:786–798CrossRefGoogle Scholar
  44. Ma G, Yang E (2011) Social networks, informal finance and entrepreneurship. Econ Res J 46(03):83–94Google Scholar
  45. Paterson L (2014) Education, social attitudes and social participation among adults in Britain. Sociol Res Online 19(1):1–15CrossRefGoogle Scholar
  46. Reynolds P, Bosma N, Autio E, Hunt S, De Bono N, Servais I, Lopez-Garcia P, Chin N (2005) Global entrepreneurship monitor: data collection design and implementation 1998–2003. Small Bus Econ 24:205–231CrossRefGoogle Scholar
  47. Robison LJ, Siles SME (2002) Is social capital really capital? Rev Soc Econ 60(1):1–21CrossRefGoogle Scholar
  48. Shen J (2013) The joint use of formal and informal job search methods in China: institutional constraints, working mechanisms and advantages. (Doctoral Dissertation) University of TorontoGoogle Scholar
  49. Shen J (2015) A third type of job search behavior: the use of the formal-informal joint channel in matching individual qualifications with hiring requirements in urban China. J Chin Sociol 2(1):3CrossRefGoogle Scholar
  50. Sluis JVD, Praag MV, Vijverberg W (2010) Education and entrepreneurship selection and performance: a review of the empirical literature. J Econ Surv 22(5):795–841CrossRefGoogle Scholar
  51. Stuart T, Hybels HRC (1999) Interorganizational endorsements and the performance of entrepreneurial ventures. Adm Sci Q 44(2):315–349CrossRefGoogle Scholar
  52. Stuart T, Sorenson O (2003) The geography of opportunity: spatial heterogeneity in founding rates and the performance of biotechnology firms. Res Policy 32(2):229–253CrossRefGoogle Scholar
  53. Timberlake S (2005) Social capital and gender in the workplace. J Manag Dev 24(1):34–44CrossRefGoogle Scholar
  54. Wang Y (2013) Research on the individual businesses of city—based on the investigation on Xinyang city in Henan province. (Doctoral Dissertation) Dalian University of TechnologyGoogle Scholar
  55. Wennekers S, van Stel André, Reynolds TP (2005) Nascent entrepreneurship and the level of economic development. Small Bus Econ 24(3):293–309CrossRefGoogle Scholar
  56. Westlund H (2006) Social capital in the knowledge economy: theory and empirics. Springer, BerlinGoogle Scholar
  57. Westlund H, Bolton R (2003) Local social capital and entrepreneurship. Small Bus Econ 21:77–113CrossRefGoogle Scholar
  58. Xiong A, Li H, Westlund H, Pu Y (2017) Social networks, job satisfaction and job searching behavior in the Chinese labor market. China Econ Rev 43:1–15CrossRefGoogle Scholar
  59. Yao X, Zhang T (2008) Strong ties and weak ties: Guanxi dependence in growth of firm. J Manag Sci China 11(1):143–152Google Scholar
  60. York JG, Venkataraman S (2010) The entrepreneur-environment nexus: uncertainty, innovation, and allocation. J Bus Ventur 25:449–465CrossRefGoogle Scholar
  61. Yueh L (2009) China’s entrepreneurs. World Dev 37(4):778–786CrossRefGoogle Scholar
  62. Zhang LY, Zhang HN (2013) Financial constraints and family entrepreneurship: based on perspective of urban-rural differences in China. J Financ Res 9:123–135Google Scholar
  63. Zhang B, Hu J, Fan C (2015) Social network, information acquisition and households’ entrepreneurial income: an empirical research based on perspective of urban-rural differences in China. Econ Rev 2:52–67Google Scholar
  64. Zhao Y (2002) Measuring the social capital of Chinese workers. Curr Sociol 50(4):555–571CrossRefGoogle Scholar
  65. Zhao W, Ritchie JRB, Echtner CM (2011) Social capital and tourism entrepreneurship. Ann Tour Res 38(4):1570–1593CrossRefGoogle Scholar

Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.School of EconomicsChongqing Technology and Business UniversityChongqingChina
  2. 2.School of ManagementChongqing Technology and Business UniversityChongqingChina
  3. 3.Business SchoolChinese University of Hong KongShatinHong Kong
  4. 4.CEFMSHunan UniversityChangshaChina
  5. 5.Division of Urban and Regional StudiesKTH Royal Institute of TechnologyStockholmSweden
  6. 6.Jönköping International Business SchoolJönköpingSweden
  7. 7.Institute of Geographic Sciences and Natural Resources ResearchChinese Academy of SciencesBeijingChina

Personalised recommendations