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Firms, kinship networks, and economic growth in the Kyrgyz Republic

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  • Castañeda Dower, Paul
  • Gerber, Theodore P.
  • Weber, Shlomo

Abstract

While kinship ties support private sector development, they can also lead to economic inefficiencies. The paper examines the impact of kinship networks on firm performance and growth based on our original survey of 1000 firm owners in the Central Asian Republic of Kyrgyzstan. We obtained detailed information on respondents’ business networks, resources they both receive from (in-networks) and provide to their kin and other contacts (out-networks) and their firm's performance. Our results indicate that in-networks raise profitability, out-networks reduce it, and these two forms of network usage are positively, but far from perfectly, correlated. We also show that kin-reliant firms grow slower than firms with access to non-kin assistance but faster than firms that do not have access to any business networks at all. We find evidence that one mechanism of slower growth is lower levels of reinvestment. We conclude that accounting for in- and out-networks helps to resolve the ambiguous message from the broader empirical literature regarding the effect of kin networks on firm performance: the two forms of network use are positively correlated, most likely due to generalized reciprocity within kin networks, yet have opposite effects.

Suggested Citation

  • Castañeda Dower, Paul & Gerber, Theodore P. & Weber, Shlomo, 2022. "Firms, kinship networks, and economic growth in the Kyrgyz Republic," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 997-1018.
  • Handle: RePEc:eee:jcecon:v:50:y:2022:i:4:p:997-1018
    DOI: 10.1016/j.jce.2022.08.001
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    More about this item

    Keywords

    Kinship networks; Firm performance; Reciprocity; Economic growth; Kyrgyz Republic;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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