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The Downside of Social Capital in New Industry Creation

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  • Mathijs de Vaan
  • Koen Frenken
  • Ron Boschma

Abstract

In this article we develop and test the hypothesis that social capital, defined as a regional characteristic, discourages entrepreneurship in a new and contested industry. The argument follows the logic that high levels of social capital reinforce conformity in values and ideas, and inhibit deviant entrepreneurial activity. Once an industry becomes more legitimized—as a result of an increase in the number of firms present in a region—social capital becomes less restrictive on entrepreneurship and can even have a positive effect on the subsequent number of firms founded in a region. We find evidence for our thesis using data on 1,684 firm entries in the US video game industry for the period 1972–2007.

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  • Mathijs de Vaan & Koen Frenken & Ron Boschma, 2019. "The Downside of Social Capital in New Industry Creation," Economic Geography, Taylor & Francis Journals, vol. 95(4), pages 315-340, August.
    • Handle: RePEc:taf:recgxx:v:95:y:2019:i:4:p:315-340
    DOI: 10.1080/00130095.2019.1586434
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    Cited by:

    1. Doehne, Malte & Rost, Katja, 2021. "Long waves in the geography of innovation: The rise and decline of regional clusters of creativity over time," Research Policy, Elsevier, vol. 50(9).
    2. Ayako Ebata, 2022. "Social embeddedness of pig value chains in Myanmar and its implications for food and nutrition security," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 14(4), pages 965-976, August.
    3. Paweł Kłobukowski & Jacek Pasieczny, 2020. "Impact of Resources on the Development of Local Entrepreneurship in Industry 4.0," Sustainability, MDPI, vol. 12(24), pages 1-25, December.
    4. Eulalia Skawińska & Romuald I. Zalewski, 2020. "Success Factors of Startups in the EU—A Comparative Study," Sustainability, MDPI, vol. 12(19), pages 1-28, October.
    5. Majuri, Matti, 2022. "Inter-firm knowledge transfer in R&D project networks: A multiple case study," Technovation, Elsevier, vol. 115(C).
    6. Xue, Xindong & Reed, W. Robert & Menclova, Andrea, 2020. "Social capital and health: a meta-analysis," Journal of Health Economics, Elsevier, vol. 72(C).
    7. Ron Boschma, 2022. "Evolutionary Economic Geography and Policy," Papers in Evolutionary Economic Geography (PEEG) 2220, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Oct 2022.
    8. Željko Pavić, 2021. "The Impact of Civic and Religious Social Capital on the Antisocial Attitudes of the Youth: A Multi-Level Cross-National Study," Societies, MDPI, vol. 11(3), pages 1-12, September.

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