Community and Entrepreneurship: A Complex Relationship
Tallahassee, Fla. — The greater the level of trust amongst individuals in a community, the greater chance entrepreneurs have of successfully starting a business.
That’s according to first-of-its-kind research from Reggie Harris, a former doctoral student in Florida State University’s College of Business.
Research found that trust is the most important contributing factor in a community’s social capital when an individual is trying to launch an organization. Existing research has previously studied the social capital of entrepreneurs, but not how a community’s social capital effects the individual entrepreneur’s relationships, and how that can affect them starting a business.
A community’s social capital is defined as “…a resource [adhering to a specific geography] reflecting the character of social relations within a community…” It is composed of social trust, isolated associations, and connected associations (Kwon, Heflin, Ruef, 2013: 3).
“Entrepreneurs should pay attention to both the economic and social dynamics of their communities,” says Harris. “If an individual is in a community with a high level of social trust, then he or she is more likely to be able to launch a business successfully.”
The research focused strongly on the relationship ties an individual entrepreneur has within a community, and how that effects the knowledge they have of launching and operating a business. Strong ties are to those with whom the entrepreneur has a close or personal relationship, and weak ties are to those with whom the entrepreneur has a more distant relationship.
“People you are close to are going to be more likely to help you with your business, but most of the time you already know many of the same things that they know,” said Harris. “People you’re less unfamiliar with are more likely provide you with new information, but due to a lack of a relationship they are less likely to help you.”
Therefore, research found that having a mix of both strong and weak ties was most beneficial to entrepreneurs. Although it was the case overall that an entrepreneur’s network should consist of more strong ties than weak, individuals had greater success when a combination of both ties were present.
This is why trust was found to be the most important factor for entrepreneurs amongst the three aspects of a community’s social capital. Without trust entrepreneurs have fewer strong ties overall, and it becomes harder for them to form new relationships with weak ties in their community.
Other variables that affected an individual’s social capital within a community were identity, education and income. Research showed it was easier for individuals who were educated and wealthy to succeed in launching a business even if the social trust within their community was low.
Reggie is confident his research will be helpful to aspiring entrepreneurs and community leaders alike.
“I want to help people to be able to successfully start a business,” said Harris. "I'm hoping decision makers will develop public policy that cultivates social trust realizing that trust leads to greater prosperity within their community."
Reggie presented his dissertation to College of Business faculty members Bruce T. Lamont, R. Michael Holmes, David Maslach and Charles Hofacker in July 2017. He will receive his Ph.D. in December 2018 and is currently Assistant Professor of Management in Samford University’s Brock School of Business. His research was funded in part by the Jim Moran Institute for Global Entrepreneurship, part of FSU’s College of Business.
About the Jim Moran Institute for Global Entrepreneurship
The Jim Moran Institute for Global Entrepreneurship cultivates, trains and inspires entrepreneurial leaders through world-class executive education, applied training, public recognition and leading-edge research.
Jim Moran was an automotive pioneer and an entrepreneur at heart, who at the age of seven, sold soda pop at sandlot baseball diamonds in Chicago. With a career that spanned more than six decades, he built an amazing chronicle of achievements in the automobile industry.
His vision for Jim Moran Institute was to provide opportunities that would help others become more successful business owners. A 1995 contribution from Jim and Jan Moran and JM Family Enterprises established the Jim Moran Institute for Global Entrepreneurship at the Florida State University College of Business. Since 2011, further enhancements to the Jim Moran Institute and its outreach have been made possible by Jan Moran and The Jim Moran Foundation.
For more information, visit jmi.fsu.edu.