The Changing Role of Social Capital During the Venture Creation Process: A Multilevel Study

Abstract

We assess how social capital relates to individuals' initial interest in becoming an entrepreneur, formally setting up a venture, and subsequent survival of the venture. Conceptualizing and measuring entrepreneurship as a sequential process inferred from cross-sectional data for 22,878 individuals living in 110 regions across 22 European countries, we find that regional social capital is relevant for formally setting up a venture, but it is not associated with initial interest, nor with venture survival after establishment. By assuming variability and not uniformity in how social capital relates to entrepreneurship, we gain a better understanding of the contextual determinants of the venture creation process.