ACC JOURNAL 2019, Volume 25, Issue 2 DOI: 10.15240/tul/004/2019-2-003
SOCIAL CAPITAL AND ENTREPRENEURSHIP IN A REGIONAL CONTEXT
Eva Fuchsová1; Jitka Laštovková2; Michaela Jánská3
Jan Evangelista Purkyně University in Ústí nad Labem,
The Faculty of Social and Economic Studies,
1,3 Department of Economics and Management,
2 Department of Social Work,
Pasteurova 3544/1, 400 96 Ústí nad Labem, Czech Republic
e-mail: firstname.lastname@example.org; email@example.com; firstname.lastname@example.org
The article is focused on the connection between the willingness to do business and individual
capital in the context of the Ústí Region as an example of a disadvantaged region. Social
capital is divided into bonding capital, related with family and friendship relations, and
mobilizing capital, related to the instrumental solution of situations with the help of social
relations. The article has used a secondary analysis of data gained thanks to a questionnaire
survey, which was representative of inhabitants of the Ústí Region. The results showed that
the willingness to do business was connected with mobilizing social capital, while bonding
social capital did not play any role. The analysis, however, also includes other variables as the
role of the social capital differs, for instance, regionally: people with a higher education are
more willing to do business, and the same also applies to people declaring a willingness to
leave the region. The complexity of the variables related to the low level of willingness to do
business cannot be reduced to mobilizing social capital. However, it is also necessary to
reflect its significant role.
Entrepreneurship; Self-employment; Mobilizing social capital; Bonding social capital;
This article will focus on connections between the willingness to do business, the social
capital of inhabitants of the Ústí Region and other factors that could influence the decision to
do business in the region, which can be an economically disadvantaged market in the
framework of the Czech Republic.
In terms of theory, social capital can be divided into social and individual capital. The social
approach sees social capital as characteristics of a social organisation including its
trustworthiness, reciprocity, norms and networks. They contribute to better efficiency of the
operation of society and simplify the coordination of joint activities (Putman, 2001).
Individual social capital is a personal source for an individual embedded in their social
networks, which can be activated through relations in networks (Lin, 2002). These relations
are activated primarily in situations when an individual feels a need to get information or
strives for a shift on a social scale. This means that social capital is a competitive advantage
when fulfilling personal goals. (Coleman, 1988). The individual social capital can be further
divided into bonding, or interaction, capital (available social sources) and mobilisation
capital, i. e. the “mobilisation” of the sources, where the first type is a constitutional part of
both the individual and the social capital (Šafr & Sedláčková, 2006).
The term “social capital” was originally a sociological term used to describe aspects of social
stratification. Currently, however, it is used in all social sciences. In terms of economic
literature, social capital as a topic was introduced by Becker (1997). He considers it one part
of human capital; it experiences amortisation, and its effects show a characteristic of an
externality (Becker, 1997). The influence of individual social capital on an improvement in
(economic) power is also researched (Foley & O'Connor, 2013), as well as the access to
tangible and intangible resources and the multiplicative effects of social capital on business
(Debrulle, Maes, & Sels, 2014). In the framework of economic discourse, it is possible to see
social capital in view of know-how distribution with a focus on the information asymmetry
and related opportunities for businessmen, where the main barrier for a successful
appreciation of social capital and related know-how lies in distribution channels, which can be
eliminated by building a diversified portfolio of social relations (Klyver, Evald, & Hindle,
2011). In economy, social capital is approached also as a tool reducing transaction costs
(Estrin, Mickiewicz, & Stephan, 2013) and making it possible to resolve problems,
contributing to the reduction of risks and simplifying the decision-making process (Bowey &
The social capital has also been researched in the regional context. A study focused on
peripheral regions in Switzerland has shown that local firms’ ability to compete was
significantly strengthened by their social capital. A positive impact was recorded particularly
for the knowledge of the local environment and political individuals with decision-making
rights (Habersetzer, Grèzes-Bürcher, & Boschma, 2019). The existence of the social capital is
a basic prerequisite for the establishment of agriculture cooperatives (Apparao, Garnevska, &
Shadbolt, 2019) and business in rural areas, however, it seems that a higher rate of the social
capital does not lead to an increased business activity in more urbanized localities ( Sun et al.,
Despite proliferation of approaches to social capital in economic theory, the authors agree on
the basic determination of the term as an investment in social relations with an expectation of
future market revenues. Questionnaires or experiments, such as Putman’s social capital index
(Putman, 2001), summation index ISC, generators of names and positions, and more, are
usually used to measure the individual social capital.
However, professional papers also describe other determinants for business activities. The
most frequent ones include the unemployment rate (Apergis & Payne, 2016), the business
cycle (Scholman, van Stel, & Thurik, 2015), the interest rate development (Chowdhury,
Desai, & Audretsch, 2018), or combinations of some of the above-mentioned factors. Foreign
direct investments and the business environment described, for instance, by the economic
freedom index or the number of administrative operations necessary for the establishment of a
business also play an important role in starting a business. The further growth of a company is
significantly influenced by circumstances of its establishment, i.e. if it was established due to
need (in a situation when employment was not an option) or due to an identified opportunity,
where the latter is a stimulus for greater expansion (Dvouletý, 2018), (Farlie & Fossen, 2018).
When researching the influence of social capital on the willingness to do business, it is also
necessary to reflect the factors that could have influence on the regional level, i.e. the rate of
unemployment, the volume of foreign direct investments and the share of people already
doing business. The Ústí Region is the fifth most populated region in the Czech Republic,
thanks to the total number of 820,789 inhabitants. The unemployment rate is among the
highest, currently at 4.7% (the national average reaches 2%) and there is 1.8 applicants per
one available job. It is characteristic for the Ústí Region that people frequently move to
Prague and the Central Bohemia Region. There is also a higher rate of internal migration
activity in the region due to the geographic settlement patterns. However, the overall
migration balance was positive in the last two years as it was improved thanks to the positive
foreign balance of migration. The number of inhabitants, however, decreases due to the
negative population growth (CZSO, 2018).
The foreign direct investment is only very loosely integrated in the Ústí Region’s economy, as
only 2.4% is allocated for the Ústí Region. This also impacts the slow rate of upgrading
current production capacities. The register of economic entities for the Ústí region showed
176,111 entities as of the end of last year. This figure included 139,325 self-employed people.
This was a below-average value compared to the national average. The share of self-
employed people of the total number of economically active people reached only slightly
below-average values within the Czech Republic. Only nearly 50% of the registered people
really execute activities as self-employed persons (Bisnode, 2017), and the number of active
entrepreneurs has been gradually decreasing since 2013. Compared to the current period, the
number of entrepreneurs was 6.5 percentage points up in the years 2009 - 2012. The
educational structure in the region does not reach the average for the Czech Republic, and
primarily, the share of people with a university degree lags behind the national average by 7
percentage points (the year 2017). In terms of business in the Czech Republic, men show a
significantly higher share compared to women, and there are two male entrepreneurs per one
female. This proportion is more favourable for women in the Ústí Region (CZSO, 2018).
1 Methods of Research
The goal of the research is to identify the role of individual social capital in relation to the
willingness to do business and uncover relations tied to the decision either to do business or to
consider business activities. With regard to the character of required results, the authors used
the possibility of a secondary analysis of data received in the framework of the survey
Development Potential of the Ústí Region executed on a sample of 1,362 respondents. It was
a quota sampling among inhabitants of the Ústí Region aged 20 – 70 years. Quotas
determined variables: age, gender, education, economic activity, the size of a municipality
and the structural division of a region. The sample is representative, and it is thus possible to
generalise the results of the questionnaire survey to all inhabitants of the Ústí Region. The
data was collected in March and April 2018 by face-to-face structured interviews (non-
standardised questionnaire). The questionnaire was of an omnibus survey nature. However,
only questions focused on the willingness to do business and the dimensions of the individual
social capital were intentionally chosen for the purpose of researching the influence of the
social capital on business.
The individual social capital in this research was operationalized on two levels – its bonding
form as relations to family and friends and faith in help from them and the mobilisation form
as instrumental possibilities of help in important situations.
The data were processed with the software SPSS. The authors used exploratory factor analysis
and then created summation indices and used multinomial logistic regression.
2 Results of the Research
To be able to deal with the problem of the willingness to do business in the context of social
capital and other variables, it is necessary to mention how business activity or the
consideration of being involved in some kind of business is distributed across the population.
More than two thirds of people (68%) completely reject the idea. 8% of respondents actually
do or did business, and 9% of the respondents have admitted considering doing business
(categories I seriously considered that and Sometimes I think that were merged). A total of
15% of respondents have chosen the answer It came to my mind, however, I have not
considered it seriously.
Social capital, measured as a rate of consent with statements characterising particular shapes
of social relations and networks, after the factor analysis application really confirmed the
logic of the division to two kinds of social capital. The first factor is formed by parts
connected with the instrumental involvement of social relations when solving different life
situations and problems. It represents mobilizing social capital. The second factor connects
parts of the bonding part of the social capital (relations among relatives and friends).
Summation indices were used in the framework of particular factors (the suitability of their
use was verified by Cronbach’s alpha), and mobilizing social capital was divided into strong
(“I have always or nearly always someone to turn to“), medium, weak, or none (“I have no
one to turn to in the given situation“). The bonding family capital reached different values in
absolute figures, and all respondents have shown at least some, so the authors used a different
labelling – above average, average, and below-average.
Source: authors’ own calculations
Fig. 1: Willingness to do business depending on social capital
Such adjusted social capital was put in relation with the willingness to do business or to
consider it, as monitored in the questionnaire. When involving particular parts or both factors,
the influence of the bonding social capital was insignificant. However, it was possible to see a
statistically significant (p-value 0.00) relation with the mobilizing capital. Figure 1 shows that
the higher the value of the mobilisation social capital is, the more frequently respondents are
willing to consider doing business. The value of the correlation coefficient reaches 0.2, i.e. a
medium strength of relation.
NONE WEAK PARTIAL STRONG
willingness to self-employment
extent of social capital
mobilizing social capital bonding social capital
Source: authors’ own calculations
Fig. 2: Relation of the mobilizing social capital with the willingness to do business in
particular districts of the Ústí Region (value of correlation coefficient)
The survey also showed that the influence of the mobilizing social capital on the willingness
to do business was different in particular districts (see Figure 2). The correlation shows the
highest figures in the districts of Litoměřice and Děčín, where the Kendall’s tau coefficient
exceeds 0.3, so the correlation is medium high. Each of the districts has a different character
of infrastructure. The district of Litoměřice is close to Prague and shows a high development
potential, while the district of Děčín has a character of social and regional exclusion (poor
infrastructure, low population density). Mobilizing social capital has different roles. It is
rather a necessity and expression of a higher level of control over one’s economic situation in
the case of the district of Děčín, while in the district of Litoměřice it is rather about the
perception of a competitive advantage related to the geographic proximity of the economic
centre. On the other hand, it is apparent that there is practically no individual social capital in
districts characterised by large industrial enterprises and opportunities for employees, such as
in Ústí nad Labem, Most and Chomutov. People decided to do business based on different
factors there (Kendall’s tau coefficient at 0.1).
Additional variables influence the process of making decisions about doing business.
A statistical significance (p-value 0.00) was, for instance, registered for the relation with
considerations about moving out of the region, which could be a statement about flexibility
and also personal dissatisfaction with the situation in the region by respondents mentioning a
higher willingness to do business.
A multinomial logistic regression was processed in relation to considerations about what other
influences enter into the process of making decision about doing business. It included, as
independent variables, not only social capital, but also gender, level of education,
involvement in the local politics, size of municipality and region. This also proved that
bonding social capital does not relate to making decisions about doing business nor to the size
of a municipality. Neither involvement in local politics nor the gender of respondents have
proven a relation with the willingness to do business, even though in terms of already active
entrepreneurs, the share of male and female entrepreneurs is significantly uneven with
a significant dominance of men. The category of education plays its role; more educated
people, who show also a higher mobilizing social capital, consider doing business more often.
In the case of the mobilizing social capital, it was necessary to adjust the effect of the
category I already do or did business first, as the mobilizing social capital can be either the
cause or the result of the activity. However, it is possible to find a higher rate of social capital
also among those rejecting the idea, so it is possible to talk about a correlation.
All executed statistical analyses very convincingly prove the fact that social capital is divided
into two completely independent parts in the case of the willingness to do business. They are
bonding social capital, whose influence can be completely ignored in this regard, and
mobilizing social capital, which is, on the other hand, very important in the process of
decision-making concerning business activities. This can be interpreted as the main influence
of the activity of individuals, contrary to their social status determined by their origin. The
role of mobilizing capital can be different, as it is shown, for instance, by the regional
diversification. However, it is without doubt that “useful acquaintances” in different fields of
life unquestionably strengthen the willingness to do business.
A higher willingness to do business in the district of Děčín provides evidence of a relation
with factors other than social capital. The greater willingness to do business in the district of
Děčín is caused rather by structural causes related with the region than by the rate of social
capital. The results also indicate that a low level of willingness to do business is also
influenced by the current favourable situation in the labour market. Even though the
unemployment rate in the Ústí Region is more than two times higher than the national
average, it is still at its long-term low. Business is thus perceived as an alternative to a more
preferred employment, and people are not as interested in self-employment in the
environment of a higher offer of employment opportunities. This also explains the fact of why
many business entities do not grow, because business caused by “need” does not have such
growth potential, contrary to the use of opportunities on the market, as it has also been proven
by other papers (Dvouletý, 2018).
The fact that doing business is most often considered by those thinking about leaving the
region can be interpreted on two levels. It can be either individual potential including
flexibility, a will for a change on any level of life, or maybe dissatisfaction with the
conditions of life in the region, which is more visible in more self-confident and independent
respondents. Or it can be outer, socio-economic, factors, i.e. that conditions for business in the
region are not considered favourable (for instance, due to lower foreign direct investments), or
do not reflect the change of the business environment, whose relation with a particular locality
decreases and makes geographic flexibility possible for entrepreneurs (for instance in relation
with the development of online business).
Even though the business segment has an important position in the Ústí Region, its role could
be rather weaker in the future. There is no motivation for business activities in the situation
where economic growth is followed by decreasing unemployment. It is possible to expect
higher interest in doing business if the situation changes. However, the growth will be low.
The remaining newly emerging enterprises based on ideas and developed social relations are
threatened by a possible relocation to some other region of the Czech Republic. This could
make worse the already unfavourable trend of departures of the educated population (brain
drain), the level of which is currently significantly lower compared to other regions. A lower
level of attractiveness of the region for foreign direct investments is a factor making the
business activity weaker. The question is: Will the Ústí Region be able to find a way to make
conditions for entrepreneurs attractive enough to prevent further outflow of economically
active and self-supporting inhabitants?
Project No. 45202 015 2008-45 was supported by grant within student grant competition at
UJEP - Jan Evangelista Purkyně University in Ústí nad Labem.
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Ing. Eva Fuchsová; Mgr. Jitka Laštovková, Ph.D.; Ing. Michaela Jánská, PhD.
SOCIÁLNÍ KAPITÁL A PODNIKÁNÍ V REGIONÁLNÍM KONTEXTU
Článek je zaměřen na souvislost mezi ochotou podnikat a individuálním kapitálem v kontextu
Ústeckého kraje jako příkladu znevýhodněného regionu. Sociální kapitál se dělí na
dluhopisový kapitál spojený s rodinnými a přátelskými vztahy a mobilizující kapitál
související s instrumentálním řešením situací pomocí sociálních vztahů. Příspěvek využil
sekundární analýzu dat získaných pomocí dotazníkového šetření, které bylo reprezentativní
pro obyvatele Ústeckého kraje. Výsledky ukázaly, že ochota podnikat byla spojena
s mobilizací sociálního kapitálu, zatímco propojení sociálního kapitálu nehrálo žádnou roli.
Analýza však také zahrnuje další proměnné, protože role sociálního kapitálu se liší například
v regionech: lidé s vyšším vzděláním jsou ochotni podnikat a totéž platí i pro lidi, kteří
deklarovali ochotu opustit region. Komplex proměnných souvisejících s nízkou úrovní ochoty
podnikat nelze omezit na mobilizaci sociálního kapitálu. Je však také nutné zohlednit jeho
SOZIALES KAPITAL UND UNTERNEHMEN IN REGIONALEM KONTEXT
Dieser Beitrag befasst sich mit dem Zusammenhang zwischen der Bereitschaft zum
Unternehmen und dem individuellen Kapital im Kontext des Aussiger Bezirks (Ústecký kraj)
welcher als Beispiel einer benachteiligten Region dient. Das Sozialkapital gliedert sich in
Schuldscheinkapital, welches mit Familien- und Freundschaftsbeziehungen im
Zusammenhang steht, und in mobilisierendes Kapital, das mit der instrumentellen Lösung der
Situationen mit Hilfe sozialer Beziehungen zu tun hat. Der Beitrag macht sich die
Sekundäranalyse der Daten zunutze, welche mit Hilfe einer Fragebogenuntersuchung
eingebacht wurden. Diese Untersuchung war für die Einwohner des Aussiger Bezirks
repräsentativ. Die Ergebnisse zeigen, dass die Unternehmensbereitschaft mit der
Mobilisierung des sozialen Kapitals verbunden ist, wohingegen die Einbindung des sozialen
Kapitals bislang keine Rolle gespielt hat. Die Analyse umfasst jedoch auch weitere Variable,
da die Rolle des sozialen Kapitals in den einzelnen Regionen unterscheidet: Menschen mit
einer höheren Bildung sind bereit zu unternehmen, und das Gleiche gilt für Leute, die bereit
sind, die Region zu verlassen. Der Komplex der mit der niedrigen Unternehmensbereitschaft
zusammenhängenden Variablen lässt sich nicht auf die Mobilisierung und das soziale Kapital
beschränken. Es ist jedoch notwendig, dessen bedeutende Rolle zu berücksichtigen.
KAPITAŁ SPOŁECZNY I PRZEDSIĘBIORCZOŚĆ W KONTEKŚCIE REGIONALNYM
Artykuł poświęcony jest zależności pomiędzy chęcią prowadzenia działalności gospodarczej
a indywidualnym kapitałem w kontekście samorządowego kraju usteckiego, będącego
przykładem zdefaworyzowanego regionu. Kapitał społeczny dzieli się na kapitał wiążący
związany z relacjami rodzinnymi i przyjacielskimi oraz kapitał mobilizujący związany
z instrumentalnym rozwiązywaniem sytuacji przy pomocy więzi społecznych.
W opracowaniu wykorzystano wtórną analizę danych pozyskanych w drodze badań
ankietowych, które były reprezentatywne dla mieszkańców kraju usteckiego. Wyniki
pokazały, że chęć prowadzenia działalności gospodarczej była związana z mobilizacją
kapitału społecznego, natomiast więzi kapitału społecznego nie odgrywały żadnej roli.
Analiza obejmuje także inne zmienne, ponieważ rola kapitału społecznego różni się
przykładowo w regionach: ludzie z wyższym poziomem wykształcenia są bardziej chętni do
prowadzenia działalności gospodarczej i to samo dotyczy osób, które deklarowały chęć do
wyjechania z regionu. Zespół zmiennych związanych z niskim poziomem chęci do
prowadzenia biznesu nie można ograniczyć do mobilizacji kapitału społecznego. Należy
jednak uwzględnić jego ważną rolę.