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The Importance of Social Capital in Colombian Rural Agro-Enterprises

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Listed:
  • Johnson, Nancy L.
  • Suarez, Ruth
  • Lundy, Mark

Abstract

This paper characterizes and measures the contribution of social capital to the performance of 50 agroenterprises in Colombia. Using qualitative analysis we document how social capital performs a variety of functions in firms, including providing access information via networks of contacts, reducing transactions costs in contracting via trust, and sustaining capacity for collective action. To estimate social capital's contribution to firm structure and performance, quantitative indicators of firm-level use of social capital are developed based on the number and strength of relationships that firms maintain. Econometric analysis finds that firm-level returns to relationships are high, higher than to physical or human capital. The results suggests that while firms can increase their economic performance by investing in social capital, institutional and technological innovations that ameliorate the effects of the market failures that lead to use of social relationships for business purposes could also improve both equity and efficiency.

Suggested Citation

  • Johnson, Nancy L. & Suarez, Ruth & Lundy, Mark, 2002. "The Importance of Social Capital in Colombian Rural Agro-Enterprises," CAPRi Working Papers 50059, CGIAR, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:ags:capriw:50059
    DOI: 10.22004/ag.econ.50059
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    References listed on IDEAS

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    1. John F. Helliwell & Robert D. Putnam, 1995. "Economic Growth and Social Capital in Italy," Eastern Economic Journal, Eastern Economic Association, vol. 21(3), pages 295-307, Summer.
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    3. Barr, Abigail, "undated". "Collective Action and Bilateral Interaction in Ghanian Entrepreneurial Networks," WIDER Working Papers 295510, United Nations University, World Institute for Development Economic Research (UNU-WIDER).
    4. Barr, Abigail, 2000. "Social Capital and Technical Information Flows in the Ghanaian Manufacturing Sector," Oxford Economic Papers, Oxford University Press, vol. 52(3), pages 539-559, July.
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    Cited by:

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    2. Kruijssen, Froukje & Keizer, Menno & Giuliani, Alessandra, 2007. "Collective Action for Small-Scale Producers of Agricultural Biodiversity Products," CAPRi Working Papers 50002, CGIAR, International Food Policy Research Institute (IFPRI).
    3. Catacutan, Delia & Bertomeu, Manuel & Arbes, Lyndon & Duque, Caroline & Butra, Novie, 2008. "Fluctuating Fortunes of a Collective Enterprise: The Case of the Agroforestry Tree Seeds Association of Lantapan (ATSAL) in the Philippines," CAPRi Working Papers 44349, CGIAR, International Food Policy Research Institute (IFPRI).
    4. Barham, James & Chitemi, Clarence, 2008. "Collective Action Initiatives to Improve Marketing Performance: Lessons from Farmer Groups in Tanzania," CAPRi Working Papers 44347, CGIAR, International Food Policy Research Institute (IFPRI).
    5. Mwangi, Esther & Markelova, Helen, 2008. "Collective Action and Property Rights for Poverty Reduction: A Review of Methods and Approaches," CAPRi Working Papers 44355, CGIAR, International Food Policy Research Institute (IFPRI).

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