thesocialdimensionsofentrepreneurship.docVIP

The Social Dimensions of Entrepreneurship Amir N. Licht and Jordan I. Siegel* Abstract Schumpeter’s canonical depiction of the entrepreneur as an agent of social and economic change implies that entrepreneurs are especially sensitive to the social environment. We extract teachings from several disciplines while adopting a primary perspective based on institutional economics to consider the social dimensions of entrepreneurship. The level and modes of entrepreneurial activity are affected by the surrounding culture and by legal rules. Entrepreneurs may partially overcome institutional deficiencies by relying on social networks that facilitate reputational bonding as a means for resource-sharing. This version: August 31, 2004 JEL Codes: L1, L2, M13, P1, Z1 Keywords: Entrepreneurship, social institutions, culture, law, social networks, reputation. INTRODUCTION In a pioneering book chapter whose title foreshadowed the present chapter’s theme, Shapero and Sokol (1982: 83) averred that ‘[t]he social and cultural factors that enter into the formation of entrepreneurial events are most felt through the formation of individual value systems. More specifically, in a social system that places a high value on the formation of new ventures, more individuals will choose that path …. More diffusely, a social system that places a high value on innovation, risk-taking, and independence is more likely to produce entrepreneurial events than a system with contrasting values.’ Subsequent research reviewed in this chapter has largely vindicated Shapero and Sokol’s proposition, although the interrelations between entrepreneurship and various social dimensions now seem more complex. The Entrepreneur: an Individual portrait Some seventy years ago, Schumpeter (1934: 93-94), the patron saint of all entrepreneurs (Solow 1994), depicted the motives of the entrepreneur as follows: First of all there is the dream and the will to found a private kingdom, usually, though not nec