Social networks and self-employment

This article applies social network concepts, developed in sociology, to the analysis of the self-employment decision. Theory suggests that if one’s social network provides social support so as to reduce the costs of self-employment, those with more effective social networks may possess a greater incentive to attempt self-employment, ceteris paribus. Empirical investigation of this hypothesis is conducted using a unique new data set, the Wisconsin Entrepreneurial Climate Study, which allows analysis of self-employment in a social context. Results illustrate that the individual self-employment choice is highly influenced by the size and composition of the social network and that women receive less influential social support for entrepreneurial activity than men receive, a finding that may provide an explanation for gender differences in self-employment likelihood.