Social capital and earnings distribution among female micro‐entrepreneurs in rural Nigeria

Purpose - The purpose of this paper is to examine the role that social capital plays in the determination and distribution of business earnings of female entrepreneurs in selected rural communities of Ogun State, Nigeria. Design/methodology/approach - The theoretical foundation of social capital and its relationship to informal finance was used in a modified Mincer's model to examine the distribution of earnings among a sample of members of informal self‐help groups. The study relied on a set of secondary data collected from a survey of 275 female micro‐entrepreneurs in five rural communities in Ogun State, Nigeria. The analysis of data was done with the use of SPSS computer software while the ordinary least squares regression technique was used in the models' estimation. Findings - The findings show that though human capital variables contribute to earnings in the usual Mincer's parlance, social capital as well as neighbourhood effect variables appear much more important determinants. Originality/value - The study quantified and applied five social capital variables in the estimated earnings function and three of these variables were found to be statistically significant in their effects on earnings distribution among the study sample. The study concluded by advocating a multi‐disciplinary approach to the study of enterprise development as well as a coordinated approach by the government to promote self‐help organisations among women in the rural areas.