This study investigates the relationship between social capital and small business entrepreneurship in China. Unlike previous studies that focus solely on rural or urban residents, this paper pays more attention to the differences between them. According to our study, social capital has both positive and negative impacts on small business entrepreneurship. Based on the data drawn from China General Social Survey, we find that the impact of social capital differs significantly between rural and urban areas. In rural China, residents who have higher social capital tend to have entrepreneurial behaviors, while higher social capital leads to lower intention of small business entrepreneurship in urban China. Individuals whose parents have the experiences of small business tend to have small business entrepreneurial activities; individuals who are better educated tend to find regular jobs instead of having their own small business. The results suggest that small business entrepreneurship in rural China might be “entrepreneurship by necessity.”
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Data source: Comprehensive statistical data and material on new China.
The Shi refers to scholars and officials, the Nong refers to farmers and peasants, and the Gong refers to artisans. More information can be found in https://www.hierarchystructure.com/chinese-social-hierarchy/.
Social capital is a broad concept that consists of many components. Due to the availability of data in the data set (CGSS), the parental status is used to estimate social capital.
In the ideal case, a number of other variables that are expected to influence people’s decision to start a firm would be included, as, e.g., risk propensity. However, such data are unfortunately not included in the data set over the individuals in the CGSS and cannot be obtained from other sources.
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This work was supported by the research fund from Chongqing Technology and Business University (KFJJ2018037) and the Ministry of Education of the People's Republic of China (19YJC630187).
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Sun, X., Xiong, A., Li, H. et al. Does social capital influence small business entrepreneurship? Differences between urban and rural China. Ann Reg Sci (2019). https://doi.org/10.1007/s00168-019-00922-1