Social trust and new firm formation: a regional perspective

Carlo Corradini ()
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Carlo Corradini: University of Birmingham

Small Business Economics, 2022, vol. 58, issue 1, No 12, 169-184

Abstract: Abstract This paper aims to contribute to the analysis of informal institutions on entrepreneurship. In particular, we follow a regional perspective to explore the role of social trust as a determinant of new firm formation, enhancing the flow of information and knowledge exchange across spatially embedded relational structures that underpin entrepreneurial processes. Also, we argue this bridging effect of social trust may be subdued in regions with higher levels of economic development characterised by stronger quality of governance and more defined entrepreneurial ecosystems. Combining data from Eurostat and the European Social Survey for over 200 regions across nine EU countries, the paper provides novel empirical evidence that social trust plays a significant role in fostering the formation of new firms. At the same time, the results indicate that the strength of formal institutions and the regional economy exert a critical moderating effect as the importance of social trust on new firm formation progressively increases in regions characterised by decreasing levels of economic development.

Keywords: Social capital; Trust; Institutions; Entrepreneurship; Regional economic development (search for similar items in EconPapers)
JEL-codes: L26 O1 O52 R11 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s11187-020-00404-1

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