Evaluating entrepreneurship through the lens of institutional quality and social capital theory

Abstract

This paper investigates how the structural domain of social capital and institutional quality explains the current and expected entrepreneurial behavior. Based on the literature of social capital and institutional theory this article aims to examine the strength of the relationship between the degree of trust, norms, networks, and associations within a society with governance quality. By using a quantitative methodology, the data collected through the Global Competitiveness Index for 72 businesses in Albania are processed by conducting descriptive statistics and correlation analysis. The study intention is to explain the impact of perceived assessment for country institutions at entrepreneurial action in order to create a social relationship in society based on trust, norms, and networks. The results showed the significance of perceived trust and quality at public and private institutions as important predictors of entrepreneurship behaviors toward market or network orientations.

Keywords

• Trust
• Entrepreneurship
• Networks
• Social capital
• Institutional Quality

Supporting Institution

European University of Tirana

References

1. 1) Ahlerup, P., Olsson, O., Yanagizawa, D., 2009. Social capital vs institutions in the growth process. European Journal of Political Economy 25 (1), 1–14.
2. 2) Coleman J. (1990), Foundations of social theory, Cambridge MA : Belknap.
3. 3) Fukuyama F. (1995), Trust: The social values and the creation of prosperity, New York: The Free Press.
4. 4) G. T. Lumpkin, Gregory G. Dess (1996), Clarifying the Entrepreneurial Orientation Construct and Linking it to Performance, Academy of Management Review, Jg. 21 (1), S. 135-172
5. 5) Gittell R and Vidal A (1998) Community Organizing: Building Social Capital as a Development Strategy. Thousand Oaks, CA: Sage.
6. 6) Granovetter, M., 2005. The impact of social structure on economic outcomes. Journal of Economic Perspectives 19 (1), 33–50.
7. 7) Knack S. & P. Keefer (1997), Does social capital have an economic payoff? Quarterly Journal of Economics 112:1251-1288.
8. 8) Mike W. Peng (2003), Institutional Transitions and Strategic Choices, The Academy of Management Review Vol. 28, No. 2 (Apr., 2003), pp. 275-296

9. 9) Masahiko Aoki. Endogenizing institutions and institutional changes. Journal of Institutional Economics, 3(1):1–31, 2007.
10. 10) North DC (1992) Transaction costs, institutions, and economic performance. International Centre for Economic Growth, San Francisco, Occasional Paper No 30, p 33
11. 11) North DC (2003) Markets. In: Mokyr J (ed) The Oxford encyclopedia of economic history. Oxford University Press (e-reference edition), Oxford
12. 12) Organization for Economic Co-operation and Development (2007), OECD Insights: Human Capital, “How what you know shapes your life”, Chapter 6 “A Bigger Picture” (102-105), OECD Publishing Amazon.com
13. 13) Putnam R. (1993b), The prosperous community. Social capital and public life., The American Prospect 4(13):35-42, (www.prospect.org/print/V4/13/putnam-r.thml)
14. 14) Putnam R. (2000), Bowling alone: the collapse and revival of American community, Simon & Schuster.
15. 15) Rothstein, Bo and Stolle, Dietlind. (2008), “The State and Social Capital: An Institutional Theory of Generalized Trust”, Comparative Politics. 40, (441-459), 10.5129/001041508X12911362383354
16. 16) Klaus Schwab (2018), WEF, GCI Report for the year 2016 -2017,http://www3.weforum.org/docs/GCR20162017/05FullReport/TheGlobalCompetitivenessReport2016-2017_FINAL.pdf
17. 17) Woolcock M. & D. Narayan (2000), Social capital: implications for development theory,research and policy, The World Bank Research Observer, 15(2):225-249.
18. 18) Woolcock M. (1998), Social capital and economic development, Theory and Society 27(2):151-208.
19. 19) Zak, P.J., Knack, S., 2001. Trust and growth. Economic Journal 111, 295–32