In this issue we feature 7 current papers on the theme of social capital, chosen by Fabio Sabatini (Università degli Studi di Roma “La Sapienza”):

1. Measuring Income Inequality in Social Networks By Stark, Oded; Bielawski, Jakub; Falniowski, Fryderyk
2. Reassessing the Relationship between Trust and Growth By Roth, Felix
3. Spatial heterogeneity in the effect of regional trust on innovation By Bischoff, Thore Sören; Runst, Petrik; Bizer, Kilian
4. Rein in pandemic by pricing vaccine: Does social trust matter? By Upasak Das; Rupayan Pal; Udayan Rathore; Bibhas Saha
5. Is Generalized Trust Stable over Time? By Roth, Felix
6. Asserting and transcending ethnic homophily: how entrepreneurs develop social ties to access resources and opportunities in socially contested environments By Busch, Christian; Mudida, Robert
7. Entrepreneurs’ Networking Styles and Normative Underpinnings during Institutional Transition By Chenjian Zhang; Tao Wang; David Ahlstrom

1. Measuring Income Inequality in Social Networks

   By:	Stark, Oded (University of Bonn); Bielawski, Jakub (University of Krakow); Falniowski, Fryderyk (University of Krakow)
   Abstract:	We present a new index for measuring income inequality in networks. The index is based on income comparisons made by the members of a network who are linked with each other by direct social connections. To model the comparisons, we compose a measure of relative deprivation for networks. We base our new index on this measure. The index takes the form of a ratio: the network's aggregate level of relative deprivation divided by the aggregate level of the relative deprivation of a hypothetical network in which one member of the network receives all the income, and it is with this member that the other members of the network compare their incomes. We discuss the merits of this representation. We inquire how changes in the composition of a network affect the index. In addition, we show how the index accommodates specific network characteristics.
   Keywords:	income inequality in networks, relative deprivation in networks, an index of income inequality in networks, compositional changes of networks
   JEL:	D31 D63 I31 L14
   Date:	2023–12
   URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp16666&r=soc

2. Reassessing the Relationship between Trust and Growth

   By:	Roth, Felix
   Abstract:	This paper analyzes the intertemporal variation of trust on economic growth. Constructing a unique global country panel dataset and applying a system-generalized method of moments (SYSGMM) estimation approach to a sample of 75 market economies over a 40-year time span (1980-2019), this paper finds evidence of a causal curvilinear (inverted U-shape) relationship between trust and growth. This relationship corroborates earlier panel data results but challenges findings that posit a general positive relationship between trust and growth. Only a minority of global economies can attain a position close to or above the optimum threshold for trust and growth. Most economies, in fact, fall well below that threshold, and for them, it is incumbent upon their policymakers to consider trust-building measures in order to achieve higher growth. In countries that are close to the optimum threshold, however, such policies can likely be neglected. In fact, in countries where trust levels exceed the optimum, an increase in trust might even hamper growth.
   Keywords:	Trust, Growth, Intertemporal Variation, Panel Analysis, Curvilinear (inverted U-shape) Relationship, Causality
   JEL:	C33 O43 O47 O50 Z13
   Date:	2024
   URL:	http://d.repec.org/n?u=RePEc:zbw:uhhhdp:14&r=soc

3. Spatial heterogeneity in the effect of regional trust on innovation

   By:	Bischoff, Thore Sören; Runst, Petrik; Bizer, Kilian
   Abstract:	Previous studies have found that generalized trust positively affects innovation at the country and regional level. We extend this literature by arguing that there are four reasons to believe that the trust-innovation relationship is heterogeneous across geographic space. First, there is a saturation effect where regions in the lower half of the trust distribution are more likely to benefit from an increase in trust than regions in the upper half. Second, trust is more important in regions with less developed innovation capacities as it fosters cooperation and knowledge transfer, which is known to be especially relevant in lagging regions. Third, generalized trust and institutional trust can serve as substitutes: when institutional trust is low, generalized trust can be used as an alternative facilitator of cooperation. Finally, as smaller firms lack the legal capacities for sophisticated contractual arrangements and therefore resort to informal cooperation, the trust-innovation relationship is stronger in regions with a large share of small firms. Our results mostly support the small-firm and lower-trust region hypothesis. These findings underline the fact that regional innovation systems work differently and different mechanisms of cooperation can be leveraged to achieve innovation success depending on the regional characteristics.
   Keywords:	Innovation, trust, regional innovation systems
   JEL:	D02 D83 O12 O18 O31
   Date:	2023
   URL:	http://d.repec.org/n?u=RePEc:zbw:ifhwps:280972&r=soc

4. Rein in pandemic by pricing vaccine: Does social trust matter?

   By:	Upasak Das (Global Development Institute, University of Manchester); Rupayan Pal (Indira Gandhi Institute of Development Research); Udayan Rathore (Oxford Policy Management); Bibhas Saha (Durham University Business School)
   Abstract:	In this paper, we explore the role of Generalized Social Trust (GST) in promoting public health during pandemics. We theorize and empirically test the effect of GST on individual's likelihood (LTP) and willingness to pay (WTP) for vaccines of different efficacy. Using survey data from Madhya Pradesh, India, which was collected just before the COVID-19 vaccine rollout in 2021, we find a positive role of GST in promoting LTP and WTP for different vaccine variants. Our identification strategy relies on exogeneous variation in out-group trust of neighbors of respondents as instrument variables. The findings are robust to multiple internal validity checks. Importantly, we find that when efficacy of the vaccine falls, the marginal effects of GST on LTP and WTP increase. The finding suggests that when an individual with higher GST faces a higher chance of infecting others through availability of lower efficacy vaccine, she is less likely to free ride and thus pay more at the margin.
   Keywords:	Social trust, Vaccine efficacy, COVID-19, Outer-group trust, Willingness to Pay
   JEL:	I12 H23 H51 Z13 I18
   Date:	2023–06
   URL:	http://d.repec.org/n?u=RePEc:ind:igiwpp:2023-008&r=soc

5. Is Generalized Trust Stable over Time?

   By:	Roth, Felix
   Abstract:	Using a unique international database on generalized trust - constructed from more than 1, 000 individual national surveys containing more than 1 million individual observations - covering 142 countries across the world for the 41-year time period from 1980 to 2020, this paper finds strong evidence that generalized trust at the country level is not stable over time. In fact, the paper finds a pronounced intertemporal variation of generalized trust over time in many countries across the globe. The paper's findings lend greater credibility to the theory of "experiential" trust over that of "cultural" trust, which leads the author to argue for using standard and dynamic panel estimation approaches in future analyses of generalized trust outcomes.
   Keywords:	Generalized Trust, Intertemporal Variation, Stability, Panel Data, Causality
   JEL:	C23 O47 O50 Z13
   Date:	2024
   URL:	http://d.repec.org/n?u=RePEc:zbw:uhhhdp:15&r=soc

6. Asserting and transcending ethnic homophily: how entrepreneurs develop social ties to access resources and opportunities in socially contested environments

   By:	Busch, Christian; Mudida, Robert
   Abstract:	Research Summary In socially contested settings, it is often difficult to connect with (diverse) others, and it is unclear how entrepreneurs in these contexts may develop the social ties that previous research has shown to be valuable. We studied this subject matter in Kenya, an ethnically fractionalized society that recently experienced the decentralization of government, which required entrepreneurs to deal with both in-group and out-group ethnicities. We conducted an inductive case study of four Nairobi-based companies and captured the creative tactics that they used to transcend ethnic homophily (by defocusing from ethnicity and reframing the in-group) while also asserting ethnic homophily (by signaling tribal affiliation and leveraging others' ethnicity). We contribute to a deeper understanding of how and why entrepreneurs in socially contested settings develop social ties. Managerial Summary Entrepreneurs in socially contested settings rely on social networks to access resources and opportunities. However, it is unclear how entrepreneurs in these settings develop and use these networks. We studied this question in an ethnically fractionalized setting that recently experienced the decentralization of government: Kenya. Entrepreneurs who previously provided information technology (IT) services to the central government had to deal with both own-tribe and other-tribe contacts to receive new contracts. We studied four Nairobi-based IT firms that operated across a variety of counties and analyzed the creative tactics that entrepreneurs in this context use to cross ethnic divides while also working with own-tribe contacts. This contributes to our collective understanding of how and why entrepreneurs in socially contested settings develop diverse social ties to access resources and opportunities.
   Keywords:	case study; emerging economies; networks; resource acquisition; Sub-Saharan Africa
   JEL:	J1 L81
   Date:	2023–12–08
   URL:	http://d.repec.org/n?u=RePEc:ehl:lserod:121150&r=soc

7. Entrepreneurs’ Networking Styles and Normative Underpinnings during Institutional Transition

   By:	Chenjian Zhang; Tao Wang (EM - emlyon business school); David Ahlstrom
   Abstract:	"Existing network research has mainly adopted functional and/or structural approaches to study the instrumental goals behind entrepreneurs' networking as well as the influence of personal position on access to resources and eventual performance. The variety of entrepreneurs' networking styles and their normative underpinnings have not been adequately explored. Contextualized in China, this study asks: How do entrepreneurs' understandings of social norms shape their networking styles? Through an inductive comparison of two entrepreneur generations in China, we identify three networking styles: guanxi-oriented networking, market-based networking, and mixed networking. We theorize that three types of norms shape these styles: market-inferred norms, dyadically formed norms, and identity-induced norms. This study provides new insights into the understanding of Chinese entrepreneurs' distinctive networking styles and their normative underpinnings. Further, it suggests implications both for the wider study of entrepreneurs' networking behaviors in transition economies, and for practitioners wishing to enhance their network building in China."
   Keywords:	Chinese entrepreneurs, Networking, Norms, Guanxi, Institutional transition
   Date:	2022–01–07
   URL:	http://d.repec.org/n?u=RePEc:hal:journl:hal-04325764&r=soc

This nep-soc issue is ©2023 by Fabio Sabatini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.

General information on the NEP project can be found at http://nep.repec.org. For comments please write to the director of NEP, Marco Novarese at <[email protected]>. Put “NEP” in the subject, otherwise your mail may be rejected.

NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.