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Analyzing the influence of social capital on self-employment: a study of Chinese immigrants

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Abstract

This paper studies the influence of social capital on immigrants’ self-employment, differentiating between structural, relational and cognitive social capital. The paper has a particular focus on Chinese immigrants and explores the effects of the so-called guanxi, a specific form of social capital for Chinese communities. The empirical research is based on a survey conducted in 2012 among Chinese immigrants in Andalusia (Spain) in which both business owners and paid employees were interviewed. A logistic regression specification was employed to test the hypotheses. The results show that the Chinese immigrants with greater structural and relational social capital and better ‘guanxi’ are more likely to become business owners. On the contrary, cognitive social capital seems to favor the option for paid employment versus the option for self-employment among Chinese immigrants. However, in the specific case of the Chinese immigrants who have a business owner in their family, the cognitive social capital also has positive effects on self-employment.

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Notes

  1. Low language skills or cultural differences represent obstacles for immigrants not only to find a job, but also to carry out a business activity. However, local business owners very often prefer native employees, so immigrants—more frequently than locals—have to create their own jobs.

  2. See Gu et al. (2008:14) for a more detailed differentiation between ‘guanxi’ and other forms of relational exchange in Western societies.

  3. We also included other control variables such as the business owner’s age, the Chinese area of origin and the province of destination in Spain. None of these variables were significant in the models and their inclusion did not alter the results.

  4. The interpretation of the interaction effects in nonlinear models implies certain difficulties. Thus, the interaction cannot be evaluated simply by looking at the sign, magnitude or statistical significance of the coefficient on the interaction term. In this paper, the marginal effects have been computed following Ai and Norton (2003).

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Authors and Affiliations

  1. Department of Applied Economics, Faculty of Economics and Business Sciences, University of Seville, Av. Ramón y Cajal, 41018, Seville, Spain

    Isidoro Romero & Zhikun Yu

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  1. Isidoro Romero
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  2. Zhikun Yu
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Correspondence to Isidoro Romero.

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Table 8 Correlation table
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Romero, I., Yu, Z. Analyzing the influence of social capital on self-employment: a study of Chinese immigrants. Ann Reg Sci 54, 877–899 (2015). https://doi.org/10.1007/s00168-015-0692-y

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