Regional Level Social Capital and Business Survival Rates

Abstract

Using two alternative metrics of social capital, we explore how community structure influences the five-year survival rates of businesses started in 2000. Employing a family of spatial estimators to derive a set of global estimates and Geographically Weighted Regression (GWR), we find strong evidence that community-level social capital has a positive influence on business survival rates. Results suggest that while social capital is important in understanding business survival rates, relationships vary significantly across space. From, a policy perspective, it would be a mistake to treat social capital as a uniform asset where one approach fits all communities.