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Inclusive and Exclusive Social Capital in the Small-Firm Sector in Developing Countries


  • Kurt Annen


This article explores the role of social capital created by social network membership in the small-firm sector in developing countries. Some empirical studies find that social capital hampers economic performance by creating market segmentation and inducing rent-seeking activities. Other studies conclude that social capital is an important prerequisite for productive interaction among small firms. This paper develops a concept of social capital governance which distinguishes between inclusive and exclusive social capital. It argues that inclusive social capital furthers economic performance while exclusive social capital may not. Two case studies are included.

Suggested Citation

  • Kurt Annen, 2001. "Inclusive and Exclusive Social Capital in the Small-Firm Sector in Developing Countries," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(2), pages 319-319, June.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200106)157:2_319:iaesci_2.0.tx_2-4

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    References listed on IDEAS

    1. Denzau, Arthur T & North, Douglass C, 1994. "Shared Mental Models: Ideologies and Institutions," Kyklos, Wiley Blackwell, vol. 47(1), pages 3-31.
    2. Arnott, Richard & Stiglitz, Joseph E, 1991. "Moral Hazard and Nonmarket Institutions: Dysfunctional Crowding Out or Peer Monitoring?," American Economic Review, American Economic Association, vol. 81(1), pages 179-190, March.
    3. DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March.
    4. Bernstein, Lisa, 1992. "Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry," The Journal of Legal Studies, University of Chicago Press, vol. 21(1), pages 115-157, January.
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    Cited by:

    1. Eiji Yamamura, 2011. "How Do Neighbors Influence Investment in Social Capital? Homeownership and Length of Residence," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(4), pages 451-464, November.
    2. Yamamura, Eiji, 2011. "Groups and information disclosure: Olson and Putnam Hypotheses," MPRA Paper 34628, University Library of Munich, Germany.
    3. Van Ha, Nguyen & Kant, Shashi & Maclaren, Virginia, 2006. "Relative shadow prices of social capital for household-level paper recycling units in Vietnam," Ecological Economics, Elsevier, vol. 57(3), pages 520-533, May.
    4. Crespo, Joan & Réquier-Desjardins, Denis & Vicente, Jérôme, 2014. "Why can collective action fail in Local Agri-food Systems? A social network analysis of cheese producers in Aculco, Mexico," Food Policy, Elsevier, vol. 46(C), pages 165-177.
    5. Yamamura, Eiji, 2008. "Comparison of neighborhood trust between generations in a racially homogeneous society: A case study from Japan," MPRA Paper 10218, University Library of Munich, Germany.
    6. Yamamura, Eiji, 2011. "The role of social trust in reducing long-term truancy and forming human capital in Japan," Economics of Education Review, Elsevier, vol. 30(2), pages 380-389, April.
    7. Annen, Kurt, 2013. "Social capital as a substitute for formality: Evidence from Bolivia," European Journal of Political Economy, Elsevier, vol. 31(C), pages 82-92.
    8. Kurt Annen, 2005. "Economic Returns to Social Capital in the Urban Informal Sector in Developing Countries: Micro Evidence from Small Textile Producers in Bolivia," Development and Comp Systems 0511011, EconWPA.
    9. Eiji Yamamura, 2012. "Groups and information disclosure: evidence on the Olson and Putnam hypotheses in Japan," International Journal of Social Economics, Emerald Group Publishing, vol. 39(6), pages 423-439, May.
    10. Giovannetti, E. & Neuhoff, K. & Spagnolo, G., 2005. "Agglomeration in Internet Co-operation Peering Agreements," Cambridge Working Papers in Economics 0505, Faculty of Economics, University of Cambridge.
    11. repec:kap:iaecre:v:17:y:2011:i:4:p:451-464 is not listed on IDEAS
    12. Serra, Teresa & Poli, Elena, 2015. "Shadow prices of social capital in rural India, a nonparametric approach," European Journal of Operational Research, Elsevier, vol. 240(3), pages 892-903.
    13. Antoci, Angelo & Sacco, Pier Luigi & Vanin, Paolo, 2008. "Participation, growth and social poverty: social capital in a homogeneous society," MPRA Paper 13661, University Library of Munich, Germany.
    14. Annen, Kurt, 2003. "Social capital, inclusive networks, and economic performance," Journal of Economic Behavior & Organization, Elsevier, vol. 50(4), pages 449-463, April.
    15. Annen, Kurt, 2006. "Social Capital in the Urban Informal Sector in Developing Countries – Micro Evidence from Small Textile Producers in Bolivia," Documentos de trabajo 3/2006, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    16. Yamamura, Eiji, 2008. "The role of social capital in homogeneous society: Review of recent researches in Japan," MPRA Paper 11385, University Library of Munich, Germany.
    17. Kurt Annen, 2011. "Lies and slander: truth-telling in repeated matching games with private monitoring," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 37(2), pages 269-285, July.
    18. Van Ha, Nguyen & Kant, Shashi & Maclaren, Virginia, 2008. "Shadow prices of environmental outputs and production efficiency of household-level paper recycling units in Vietnam," Ecological Economics, Elsevier, vol. 65(1), pages 98-110, March.

    More about this item

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure


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