How does social capital encourage entrepreneurship?

This article examines how social capital shapes entrepreneurial activity by analyzing the strength and diversity of social ties across U.S. counties. Drawing on Granovetter’s theory of weak ties, we assess how economic connectedness and social cohesiveness influence entrepreneurship. Using Non-farm Proprietorships from the U.S. Bureau of Economic Analysis as a proxy for entrepreneurship, along with socioeconomic data and Facebook’s Social Capital Atlas, we apply spatial econometrics to reveal patterns of spatial dependence. Results show that economic connectedness—ties across socioeconomic divides—is positively associated with entrepreneurship, while social cohesiveness—dense in-group ties—is negatively related. Our findings support Granovetter’s hypothesis, demonstrating that diverse networks facilitate access to resources and information vital for entrepreneurial activity.