Entrepreneurship, Social Capital and Governance
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Entrepreneurship, Social Capital and Governance

Directions for the Sustainable Development and Competitiveness of Regions

Edited by Charlie Karlsson, Börje Johansson and Roger R. Stough

This book highlights the role of entrepreneurship, social capital and governance for regional economic development. In recent decades, many researchers have claimed that entrepreneurship is the most critical factor in sustaining regional economic growth. However, most entrepreneurship research is undertaken without considering the fundamental importance of the regional context. Other research has emphasized the role of social capital but there are substantial problems in empirically relating measures of social capital to regional economic development.
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Chapter 7: Social capital and entrepreneurship: an empirical analysis of the role of social capital in self-employment

Soogwan Doh and Edmund J. Zolnik


In the aftermath of the Industrial Revolution, the world economy has evolved into a knowledge-based economy driven by rapidly changing technologies and markets. In this new economy, ‘knowledge is our most powerful engine of production’ (Marshall, 1965, quoted in Cooke and Leydesdorff , 2006, p. 6). The interrelationships of knowledge, innovation and economic development have spurred efforts to better understand how knowledge contributes to economic development both within and between regions. This has, in turn, increased interest in how knowledge is created and transferred both within and between regions (Crosby, 2000; Dakhli and de Clercq, 2004). The key elements of the knowledge economy include: actors’ knowledge; intellectual property (patents); and actors’ social networks (Lakshmanan, 1994; Castells, 1998; Miller, 2005; Westlund, 2006).2 Some, like Smilor and Wakelin (1990), call these elements ‘smart infrastructure’ (p. 53) because they link talent, technology, capital and know-how. Thus the knowledge economy makes new demands on individuals’ qualifications that affect their relationship with their employers (Westlund, 2006). In addition, individuals in the knowledge economy are owners of the core production factor. Knowledge is non-productive if individuals don’t use it. It also has attributes of a public good given that it is imperfectly excludable and therefore subject to spillovers (Romer, 1990; Fisher and Varga, 2003; Westlund, 2006). Endogenous growth and knowledge spillover theory are fundamentally based on these characteristics of knowledge. These two approaches presume that knowledge is produced, used and exchanged differently in different social systems.

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