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Trusting Communities Foster Entrepreneurship, According to Fox Professor

Seok-Woo Kwon, an assistant professor at Temple University’s Fox School of Business has co-authored a paper called ”Community Social Capital and Entrepreneurship” that was recently published in the journal the American Sociological Review. The article examines how social trust can benefit a larger community in addition to an individual. Kwon and his colleagues Colleen Heflin from the University of Missouri and Martin Ruef from Duke University, have been working on social trust research for 10 years.

Kwon explained his rationale for exploring the topic of social trust: “People have been researching a lot about the ‘If I have a lot of social capital, then I benefit from it.’ For example, I get a better job, I get a quick job referral, or I have a higher chance of starting my own business. But I thought, what if I don’t have a high social capital but I’m surrounded by people who do. Their benefits are going to spill over to me.”

Kwon, Heflin, and Ruef tested the hypothesis that social capital can benefit the community by analyzing data from Robert Putnam’s Social Capital Benchmark Survey, the National Opinion Research Center’s General Social Survey, and the 2000 Census. Their study suggests that social trust supports entrepreneurship by encouraging groups to participate in free exchange of information, and helping small entrepreneurs develop recognizability for their companies.

However, the researchers note that there are downsides to community influence on entrepreneurship as well. In communities that are divided by religious, ethnic, political, or economic differences, communities create homogenous organizations. Also, white people receive more spillover of social capital and social trust than minorities and immigrants in the same communities.

Kwon summarizes the results of the study: “the immediate, direct translation of this is that you’ve got to build a community with high social capital. That means building a community with a lot of trust, where people get to meet and socialize with each other.”

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