Social Interactions and Entrepreneurial Activity

Mariassunta Giannetti and Andrei Simonov

Journal of Economics & Management Strategy, 2009, vol. 18, issue 3, 665-709

Abstract: We show that individuals residing in highly entrepreneurial neighborhoods are more likely to become entrepreneurs and invest more into their own businesses, even though their entrepreneurial profits are lower and their alternative job opportunities more attractive. Our results suggest that peer effects create nonpecuniary benefits from entrepreneurial activity and play an important role in the decision to become an entrepreneur. Alternative explanations, such as entry costs, social learning, and informal credit markets, are not supported by the data.

Date: 2009
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https://doi.org/10.1111/j.1530-9134.2009.00226.x

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Chapter: Social Interactions and Entrepreneurial Activity (2007)
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