Regional Social Capital and the Entrepreneurial Establishment Process: A Multi-Level Study

We assess the relationship between regional social capital and individuals’ propensity to transition through the entrepreneurial establishment process. We predict that regional social capital reduces entrepreneurs’ liabilities of smallness, newness, and outsidership. Conceptualizing and measuring entrepreneurship as a sequential four-staged process for 22,878 individuals living in 110 regions across 22 European countries, we find that regional social capital is relevant for individuals who want to become entrepreneurs and seek to gather the required resources and knowledge to formally establish a venture. Our analysis highlights the importance of assessing entrepreneurship as an individual-level process which is embedded in its regional context.