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Entrepreneurship, Social Capital and Institutions: Evidence from Italy

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  • Marco Percoco

Abstract

A large body of literature has argued that social capital (i.e. ‘good culture’) reduces transaction costs and boosts investment by households and firms. It probably also reduces systemic risk, so that the choice of becoming an entrepreneur becomes less risky and more profitable. In this paper I test this hypothesis on a set of Italian cities. In particular, I present some econometric evidence on the correlation between social capital and entrepreneurship. To tackle the issue of endogeneity I use instruments related to the institutional past of the cities in my sample, finding support for the hypothesis that social capital is important for entrepreneurship, although my results are difficult to generalize to other contexts, given the specificity of Italy in terms of cultural heterogeneity. RÉSUMÉ Une grande partie des communications et de la littérature soutient que le capital social (la « bonne culture ») réduit les coûts des transactions et encourage les investissements par les foyers et les entreprises. De même, il permet probablement de réduire le risque systémique, de sorte que la décision de devenir un entrepreneur devient à la fois moins risquée et plus rentable. Dans la présente communication, je mets cette hypothèse à l’épreuve dans un certain nombre de villes d'Italie. En particulier, je présente certaines données économétriques sur la corrélation entre le capital social et l'entreprenariat. Pour résoudre le problème de l'endogénéité, j'utilise des instruments portant sur le passé institutionnel des villes de mon échantillon, et de trouve des éléments à l'appui de mon hypothèse, d'après laquelle le capital social est important pour l'entreprenariat, bien que les résultats obtenus soient difficiles à généraliser dans d'autres contextes, en raison de la spécificité de l'Italie sur le plan de l'hétérogénéité culturelle. EXTRACTO Gran cantidad de bibliografía ha debatido que el capital social (es decir, ‘buena cultura’) reduce los costes de las transacciones y estimula la inversión por parte de particulares y empresas. Probablemente, también reduce el riesgo sistémico, de modo que la elección de ser empresario implica un menor riesgo y es más rentable. En este estudio, ensayo esta hipótesis en un grupo de ciudades italianas. En particular, presento cierta evidencia econométrica sobre la correlación entre el capital social y el espíritu empresarial. Para tratar la cuestión de endogeneidad empleo instrumentos relacionados con el pasado institucional de las ciudades de mi muestra, encontrando apoyo para la hipótesis de que el capital social es importante para el espíritu empresarial; aunque mis resultados son difíciles de generalizar en otros contextos, debido a las particularidades de Italia en cuanto a heterogeneidad cultural.

Suggested Citation

  • Marco Percoco, 2012. "Entrepreneurship, Social Capital and Institutions: Evidence from Italy," Spatial Economic Analysis, Taylor & Francis Journals, vol. 7(3), pages 339-355, September.
  • Handle: RePEc:taf:specan:v:7:y:2012:i:3:p:339-355
    DOI: 10.1080/17421772.2012.694144
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    File URL: http://hdl.handle.net/10.1080/17421772.2012.694144
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    References listed on IDEAS

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    1. Nicholas Bloom & Raffaella Sadun, 2012. "The Organization of Firms Across Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 127(4), pages 1663-1705.
    2. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2010. "Civic Capital as the Missing Link," NBER Working Papers 15845, National Bureau of Economic Research, Inc.
    3. Riccardo Crescenzi & Luisa Gagliardi & Marco Percoco, 2011. "The Bright Side of Social Capital: How 'Bridging' Makes Italian Provinces More Innovative," SERC Discussion Papers 0096, Spatial Economics Research Centre, LSE.
    4. Marco Percoco, 2014. "Path dependence, institutions and the density of economic activities: Evidence from Italian cities," Papers in Regional Science, Wiley Blackwell, vol. 93(1), pages 53-76, March.
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    Citations

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    Cited by:

    1. Savioli, Marco & Patuelli, Roberto, 2016. "Social capital, institutions and policymaking," Economics Discussion Papers 2016-26, Kiel Institute for the World Economy (IfW).
    2. Marco Percoco, 2015. "Entrepreneurship, Family Ties, and Land Inequality: Evidence from Italy," Growth and Change, Wiley Blackwell, vol. 46(3), pages 443-457, September.
    3. Marco Percoco, 2013. "Geography, institutions and urban development: Italian cities, 1300–1861," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(1), pages 135-152, February.
    4. repec:eee:tefoso:v:132:y:2018:i:c:p:156-164 is not listed on IDEAS
    5. Guido Alfani & Marco percoco, 2014. "Plague and long-term development: the lasting effects of the 1629-30 epidemic on the Italian cities," Working Papers 508, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    6. repec:bla:ausecr:v:50:y:2017:i:4:p:412-426 is not listed on IDEAS

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