Can Social Capital Explain Business Performance in Denmark?

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Wang , C & Steiner, PhD , P B 2019 , ' Can Social Capital Explain Business Performance in Denmark? ' , Empirical Economics , vol. 59 , no. 4 , pp. 1-20 .

Title: Can Social Capital Explain Business Performance in Denmark?
Author: Wang, Cong; Steiner, PhD, Prof. Bodo
Contributor: University of Helsinki, Department of Economics and Management
Date: 2019-10
Language: eng
Number of pages: 20
Belongs to series: Empirical Economics
ISSN: 0377-7332
Abstract: Motivated by the limited evidence on the positive link between social capital and firm performance, this paper explores this potential driver of firm performance at the firm rather than macro-level by employing a novel approach: we capture social capital at a community level rather than focus on the narrow aspect of entrepreneurs’ own social network. Using principal component analysis to aggregate various trust, norm and network-related variables to construct social capital variables with more than 150,000 firm-level observations for firm performance variables, this paper identifies an overall positive and significant effect of social capital on firm performance in Denmark. These effects are robust to firm-level social capital measures, different sampling years and alternative measures of firm performance (return on asset, current ratio, solvency ratio and profit margin) and network perspectives (Putnam and Olson).
Subject: 512 Business and Management
social capital
firm performance
Border regions
Rural-urban divide

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