Family: Burden or Support to Entrepreneurship in Times of Crisis?

Yanina Domenella ()
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Yanina Domenella: Universidad Autónoma de Madrid, https://www.uam.es/

Working Papers from CEMFI

Abstract: During economic downturns, governments often provide business grants to stimulate entrepreneurship. However, in societies where kinship ties play a significant role, policy design may be suboptimal if spillover effects are not accounted for. This paper examines the role of family ties in shaping entrepreneurship and the effectiveness of business support measures during economic crises. Using a randomized controlled trial in Kenya, I find that entrepreneurs with larger families coped better with the crisis. However, when external funding was available, strong family ties reduced the positive effects on entrepreneurship.The analysis identifies mutual assistance, crowding-out effects, and managerial interference as key mechanisms. These findings highlight the dual role of family networks, acting as both a safety net and a constraint, with implications for the design of business support policies in developing economies.

Keywords: Entrepreneurship; kinship networks; private transfers; social norms; business support; crisis; field experiment; Kenya. (search for similar items in EconPapers)
JEL-codes: C93 L26 O12 O15 Z13 (search for similar items in EconPapers)
Date: 2025-11
New Economics Papers: this item is included in nep-ent, nep-exp, nep-net, nep-sbm and nep-soc
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Persistent link: https://EconPapers.repec.org/RePEc:cmf:wpaper:wp2025_2529

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