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Social Networks and Entrepreneurship. Evidence from a Historical Episode of Industrialization

Javier Mejia ()

No 20180020, Working Papers from New York University Abu Dhabi, Department of Social Science

Abstract: This paper explores the relationship between social networks and entrepreneurship by constructing a dynamic social network from archival records. The network corresponds to the elite of a society in transition to modernity, characterized by difficult geographical conditions, market failures, and weak state capacity, as in late 19th- and early 20th-century Antioquia (Colombia). With these data, I estimate how the decision to found industrial firms related to the position of individuals in the social network. I find that individuals more important bridging the network (i.e. with higher betweenness centrality) were more involved in industrial entrepreneurship. However, I do not find individuals with a denser network to be more involved in this type of activity. The rationale of these results is that industrial entrepreneurship was a highly-complex activity that required a wide variety of complementary resources. Networks operated as substitutes for markets in the acquisition of these resources. Thus, individuals with network positions that favored the combination of a broad set of resources had a comparative advantage in industrial entrepreneurship. I run several tests to prove this rationale.

New Economics Papers: this item is included in nep-bec, nep-cdm, nep-ent, nep-his, nep-net, nep-sbm, nep-soc and nep-ure
Date: 2018-09, Revised 2018-09
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