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Community social capital andentrepreneurship: analyzing the linksHernan ‘Banjo’ Roxasa & Fara Azmata

a School of Management and Marketing, Deakin University, 221Burwood Highway,Melbourne 3125, AustraliaPublished online: 25 Feb 2014.

To cite this article: Hernan ‘Banjo’ Roxas & Fara Azmat (2014) Community social capitaland entrepreneurship: analyzing the links, Community Development, 45:2, 134-149, DOI:10.1080/15575330.2014.880495

To link to this article: http://dx.doi.org/10.1080/15575330.2014.880495

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Community social capital and entrepreneurship: analyzing the links

Hernan ‘Banjo’ Roxas* and Fara Azmat

School of Management and Marketing, Deakin University, 221 Burwood Highway,Melbourne 3125, Australia

This study examines the effects of community social capital on entrepreneurialintentions (EIs) in rural communities in a developing country. Entrepreneurship, inthe form of business start-ups, is widely recognized as an integral component of localeconomic development programs designed to address poverty and limited livelihoodopportunities, especially among poor and marginalized communities in rural areas indeveloping countries. Using a survey of 496 individuals residing in five ruralcommunities in the Philippines, and drawing from the theory of planned behaviorand social capital theory, we examine the direct and indirect effects of communitysocial capital (CSC) on an individual’s EIs. The findings show that CSC largelyinfluences EI by shaping an individual’s perceived self-efficacy (PSE) to engage inentrepreneurship, perceived desirability of entrepreneurship (PDE), and perceivedsocial norms toward entrepreneurship (PSNE). High levels of PSE, PDE, and PSNEhave a positive influence on an individual’s EI. These findings offer more nuancedexplanations of how social capital within a community can facilitate entrepreneurshipas a means of community economic development. Implications of the findings andareas for future research are discussed.

Keywords: entrepreneurship; social capital; community; entrepreneurs; theory ofplanned behavior

Introduction

Local economic development has become an increasingly important pillar of communitydevelopment programs (Nel & McQuaid, 2002; Walzer, 2011). In order to generateself-employment and expand livelihood opportunities, government-led local economicdevelopment programs, such as training and business assistance programs, have becomepopular. This approach to community development (Matarrita-Cascante & Brennan,2012) views entrepreneurship as a mechanism facilitating self-reliant, local coping,endogenous, and “bottom-up” local community development (Nel & McQuaid, 2002).Entrepreneurship programs encouraging business start-ups are, therefore, widely recog-nized as an integral component of local economic development programs to addresspoverty and limited livelihood opportunities, especially among poor and marginalizedcommunities in rural areas (Korsching & Allen, 2004; Walzer, 2011).

Although entrepreneurship as a topic has gained much attention, the role of the localcommunity in fostering and supporting entrepreneurship among its residents remainsunder-researched. Little empirical evidence exists that explains how the characteristicsof a local community in a rural area can stimulate or inhibit entrepreneurship. Thisstudy aims to fill the void in the literature by focusing on community social capital

*Corresponding author. Email: banjo.roxas@deakin.edu.au

© 2014 Community Development Society

Community Development, 2014Vol. 45, No. 2, 134–149, http://dx.doi.org/10.1080/15575330.2014.880495

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(CSC) and its effect on the entrepreneurial intentions (EIs) of individuals residing in fivelocal communities in the Philippines. Social capital is one of the characteristics of acommunity that is described as the “sum of resources, actual or virtual, that accrue toan individual or a group by virtue of possessing a durable network of more or lessinstitutionalized relationships of mutual acquaintance and recognition” (Bourdieu &Wacquant, 1992, p. 119). The extant literature on the role of social capital as a catalystof entrepreneurial development underscores the importance of social ties, managerialrelationships, and formal and informal networks in facilitating, nurturing, and expandingentrepreneurship to start a new business (Besser & Miller, 2013; Kwon & Arenius,2010). Despite social capital laying the foundations of a society and being an importantcommunity-level construct (Onyx & Bullen, 2000), research relating to the linksbetween social capital at the societal or community level and entrepreneurship has notreceived enough academic attention (Kwon & Arenius, 2010).

Against this background, we examine the relationships between social capital withina community and the intentions of individuals in the community to engage in entrepre-neurship. We integrate the research streams of social capital and EIs, and draw on thetheory of planned behavior to investigate the direct and indirect effects of social capitalat the community level on an individual’s intentions to engage in entrepreneurship. Thisstudy makes three major contributions to the community development literature byoffering more nuanced explanations on the effects of community social capital onentrepreneurial development. First, the study posits that community social capital canfacilitate or inhibit EIs. Using Onyx and Bullen’s (2000) community-level social capitalmeasurement scale, the study measures the effects of social capital on the EIs ofindividuals within a community. Secondly, the study further unveils the effects ofcommunity social capital on EIs by drawing on the theory of planned behavior (Ajzen,1991). The study examines the direct effects of social capital on an individual’sperceptions and attitudes towards entrepreneurship, which consequently influence EIs.Finally, the study investigates these social capital–entrepreneurship linkages in thecontext of rural communities in a developing country where there is paucity of researchabout the role of social capital and entrepreneurial development.

We have structured the article as follows. First, we frame our study in the existingliterature on community social capital and entrepreneurship development. Then, weconsider the context in the broader literature of community social capital, the theory ofplanned behavior, and EIs to develop our conceptual model and hypotheses. Next, weexplain our data collection method and approach. This is followed by the presentationof our research findings. We conclude with implications for researchers, policy-makers,and practitioners, and suggest avenues for future research.

Theoretical background

Linking community social capital and entrepreneurship

There is an abundance of literature about the causes, facilitators, barriers, and benefitsof entrepreneurship (Korsching & Allen, 2004; Lee, 2009). There is, however, a paucityof research in the literature on the nature and extent of the influence of the characteris-tics of a local community on the propensity or proclivity of an individual to engage inentrepreneurship. In particular, there is a dearth of research that examines the role ofsocial capital within a community in fostering and facilitating entrepreneurship as partof the overall approach of local economic development in rural areas, particularly in thecontext of developing countries such as the Philippines. In the Philippines, the incidence

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of poverty, unemployment, and limited livelihood opportunities, especially in far-flungcommunities in the rural areas, underscores the need to find alternative ways to addresssocial and economic development in poor and marginalized rural communities.

For the purpose of this study, we view a local community as a geographic localityof people sharing locally available resources for survival and prosperity (Flora & Flora,1993; Matarrita-Cascante & Brennan, 2012). Social capital theory (Putnam, 2000)suggests that the networks of relationships constitute a valuable resource for the conductof social and economic activities. We focus on social capital at the community level tomeasure the extent to which social capital can facilitate or inhibit the intentions ofindividuals residing in the community to engage in entrepreneurship. Community-levelsocial capital describes the actual and potential resources that are accessible to individu-als through the web of social relationships, networks, shared norms, and trust that facili-tate coordination and cooperation for mutual benefit within a community (Bourdieu &Wacquant, 1992; Putnam, 2000). In this study, we draw from the work of Onyx andBullen (2000) to measure four facets of CSC, namely, participation in local community(PLC), feelings of trust and safety (FTS), neighborhood connections (NC), and familyand friends’ connections (FFC). These four facets of CSC have been recognized to bevalid and reliable measures of social capital at the community level (Onyx & Bullen,2000), which fit the purposes of the current study.

CSC has been shown to have a significant influence on an individual’s decision toengage in entrepreneurship. Networking is regarded as an essential conduit for attainingbusiness goals at start-up, and for venture development and monitoring businessprogress (Lee, 2009). De Carolis, Litzky, and Eddleston (2009) suggest that theintention to engage in entrepreneurship is influenced by an individual’s CSC, which canfacilitate access to critical resources including capital, markets, knowledge, and govern-ment assistance, as well as social and psychological support. In a study of distressedrural communities in the United States, Ring, Peredo, and Chrisman (2009) noted thecritical role of CSC in overcoming resource and market limitations, identifying entrepre-neurial opportunities, facilitating resource exchanges, and gaining access to markets andinstitutional support mechanisms. Entrepreneurship is likely to flourish in a communitywith strong entrepreneurial social infrastructure (Flora & Flora, 1993) characterized bysymbolic diversity, efficient resource mobilization, and quality networks that facilitatesharing of knowledge and resources. This study builds on the proposition of De Caroliset al. (2009) that the social environment has a significant influence on an individual’sentrepreneurial cognition, which ultimately triggers new venture creation. Hence, wehypothesize:

Hypothesis 1: CSC has direct and positive effects on entrepreneurial intentions.

Theory of planned behavior and EIs

There are several models explaining the nature, antecedents, and effects of EIs (see vanGelderen et al., 2008, for the review). In this study, EI is examined in the context of thetheory of planned behavior (Ajzen, 1991). This theory explains that human behavior isplanned and is preceded by intention toward that behavior (Ajzen & Fishbein, 1980). Itsuggests that intentions, which refer to the degree of commitment toward some futuretarget behavior, robustly predict and explain a plannable social behavior (Ajzen, 1991;Krueger & Carsrud, 1993; Krueger, Reilly, & Carsrud, 2000). EI represents the overallintention of starting a business (Krueger et al., 2000). The entrepreneurial element is

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based on the concept of an entrepreneur, that is, an individual who engages inentrepreneurship by seeking and exploiting opportunities through resource mobilizationand the creation of a new business venture (De Carolis et al., 2009). Because EIsrepresent voluntary and conscious decisions to engage in business, it is reasonable toexamine how such decisions are made by looking at its three major antecedents asexplained below.

Attitudes or perceived desirability of entrepreneurship (PDE) measures an individ-ual’s perception of the positive or negative outcomes of starting a business (Fayolle,2005). Social norms, on the other hand, refer to perceived normative pressure from aspecific reference group toward engaging in or avoiding a particular behavior (Ajzen,1991). Perceived social norms towards entrepreneurship (PSNE), therefore, measure theprevailing social pressures emanating from one’s perception of what important people(e.g. family, friends, etc.), groups, or the general community think of someone whostarts a business (Krueger et al., 2000). Perceived self-efficacy (PSE) measures one’sperception of the feasibility of starting a business such that he/she believes that he/shecan or cannot carry out the act of setting up such a business (Krueger et al., 2000). Itreflects the perceived ease or difficulty of performing a particular behavior successfully.We, therefore, argue that EIs are shaped by an individual’s PDE, PSNE, and PSE(Krueger & Carsrud, 1993).

Previous studies applying the theory of planned behavior reveal that the threeantecedents of EI are influenced by exogenous factors, such as the wider socialenvironment (Krueger et al., 2000; Liñán, Rodriguez-Cohard, & Rueda-Cantuche,2011). In this study, we argue that PDE, PSNE, and PSE are acquired or developedthrough daily interactions of individuals in their local communities. Social norms influ-encing risk-taking, uncertainty avoidance, and fear of failure, as well as access toknowledge about entrepreneurship and resources are all influenced by CSC (Aldridge &Audretsch, 2011). Research suggests that social capital resources – social ties and net-works among individuals and groups – affect the early stages of the entrepreneurial pro-cess, that is, the initial decision to engage in entrepreneurship (Liao & Welsch, 2005).Davidsson and Honig (2003) further argue that social capital assists entrepreneurs byexposing them to new and different ideas and world views, in effect, providing themwith a wider frame of reference, both supportive and nurturing, to a new entrepreneurialidea or venture. We therefore, hypothesize:

Hypothesis 1a: Community social capital (CSC) has a positive influence on an individual’sperceived desirability of entrepreneurship (PDE).Hypothesis 1b: Community social capital (CSC) has a positive influence on an individual’sperceived social norms toward entrepreneurship (PSNE).Hypothesis 1c: Community social capital (CSC) has a positive influence on an individual’sperceived self-efficacy to engage in entrepreneurship (PSE).

We further posit that high levels of PDE, PSE, and PSNE will positively influencean individual’s EI. Positive attitudes toward becoming an entrepreneur suggest strongpositive entrepreneurial interest and desire and are reliable predictors of EI (Davidsson,1995; Krueger & Dickson, 1994). PDE has been shown to increase as expectations ofthe desired outcomes of starting a new business increase (Krueger & Carsrud, 1993).Consequently, EI becomes more intense as PDE increases. Individuals with self-doubtand who believe that they are inefficacious are likely to be preoccupied with theirpersonal deficiencies, tend to envision failure scenarios more than anyone else, and are

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risk-averse (Krueger & Dickson, 1994). We argue that high levels of PSE are anenabling mechanism to entrepreneurial decision-making. The decision to engage in busi-ness and the strong belief that one can effectively deal with the challenges associatedwith such endeavors is a predictor of EI. PSE plays a key role in providing cognitivemotivation toward making entrepreneurial decisions (Liñán et al., 2011). High levels ofPSNE suggest that the prevailing social norms within a community are generallysupportive of entrepreneurial individuals. These social norms include the extent towhich the community tolerates the risk-taking, innovativeness, and failure that arenormally associated with entrepreneurship. Hence, the following hypotheses.

Hypothesis 2a: High level of perceived desirability of entrepreneurship (PDE) is positivelyrelated to a higher level of entrepreneurial intentions (EI).Hypothesis 2b: High level of perceived social norms that favor entrepreneurship (PSNE) ispositively related to a higher level of entrepreneurial intentions (EI).Hypothesis 2c: Higher level of perceived self-efficacy (PSE) is positively related to a higherlevel of entrepreneurial intentions (EI).

Mediating effects of PDE, PSNE, and PSE

The foregoing discussion suggests that PDE, PSNE, and PSE mediate the effects ofCSC on EI, as shown in Figure 1. We argue that having CSC in a community doesnot necessarily lead directly to heightened levels of entrepreneurial interest and inten-tion to start a business. An individual is likely to demonstrate more intense EI onlywhen CSC positively influences an individual’s PDE, PSNE, and PSE. TPB suggeststhat intentions to engage in entrepreneurship are influenced by three major factors,namely, an individual’s positive attitudes toward entrepreneurship, personal belief inone’s capability to engage in entrepreneurship, and one’s perception of social normsfavoring entrepreneurship (Liñán et al., 2011). We argue, however, that these factorsare significantly influenced by the social capital within an individual’s immediatecommunity. Hence, PDE, PSNE, and PSE act as mediating variables, which explainhow CSC influences the EI of individuals in a given community. We posit in thisstudy that:

Hypothesis 3a: PDE mediates the effects of CSC on EI.Hypothesis 3b: PSNE mediates the effects of CSC on EI.Hypothesis 3c: PSE mediates the effects of CSC on EI.

Perceived desirability of entrepreneurship (PDE)Perceived social norms towards entrepreneurship (PSNE)Perceived self-efficacy(PSE)

Entrepreneurial Intentions

(EI)

Community Social Capital (CSC)

---------------------------Participation in the local community (PLC)Feelings of trust and safety (FTS)Neighbourhood connections (NC)Family and friends connection (FFC)

Figure 1. A conceptual model showing the effects of CSC on EIs.

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Methods

Research context, sample, and data collection

We use data from a 2008 survey conducted in five local barangays or local communi-ties, in Southern Mindanao region in the Philippines. We have chosen Mindanao –thesecond largest island in the Philippines – because of the region’s relatively rural set-ting compared to other more urbanized and metropolitan regions in the country. Theregion also demonstrates a unique pattern of socioeconomic development characterizedby an abundance of natural resources and a fast-developing agricultural-industrialsector on one hand, and high unemployment and underemployment rates on the other.Southern Mindanao region (also known as Davao region) is the eleventh largestregion in the archipelago with approximately 4.5 million people (NSCB, 2012), and itis comprised of more than 20 ethnic groups that speak more than 25 dialects. Theregion is divided into four political provinces with more than a 1000 small barangaysequivalent to small villages, districts, or wards. Despite the abundance of naturalresources, the region is one of the poorest in the country with approximately 32% ofthe total population living below the poverty line (NSCB, 2012), which underscoresthe importance of entrepreneurial activities in the region. The rates of unemploymentand underemployment were pegged at around 4% and 21%, respectively, in 2009(NSCB, 2012). The region’s socioeconomic development continues to be underminedby terrorism and armed conflict brought about by Muslim extremist and separatistmovements, communist rebellion, and ethnic/clan-based political warlordism (Briones,2009; Dressel, 2011).

The survey respondents were comprised of residents in the local communities whoparticipated in a two-day entrepreneurship workshop. The workshop included trainingmodules on: entrepreneurial competence development; business opportunity identifica-tion and exploitation; new venture planning, management, and development; and dealingwith local and national business regulations. A survey questionnaire was administeredto 575 participants in five separate workshops (i.e. one for each barangay). There were496 useful responses (86%) to the survey, which formed the basis for this study. Thismethod of convenience sampling suggests the limited generalizability of the findings ofthe current study. We discussed the implications of this particular aspect of the study inthe implications and future research section of the article.

The majority of the respondents in the sample were gainfully employed, eitherfull- or part-time, while a quarter of the sample was unemployed (see Table 1).Respondents within the age range of 26–40 years old comprised 65% of the sample.The average age was 32 years old. More than half of the sample reported some collegeeducation or completed degree qualifications. The sample was evenly distributed interms of gender. Almost half (40%) of the sample reported that they did not haveexperience in business ownership and operation. The majority of the respondentsreported that they have been living in their communities for 10 years or less.

Measurement/variables

We measured the constructs used in this study by adapting items or questions with7-point Likert-type response scales (from 1 = strongly disagree to 7 = strongly agree) thathave been validated in previous studies shown below. A Likert scale is effective incapturing intensity of responses to questions (Likert, 1932) that examine feelings,perceptions, attitudes, and intentions, as has been shown in previous studies related to

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this study (e.g. Krueger et al., 2000; Onyx & Bullen, 2000). The intensity andmagnitude of the constructs used in this study, such as EI and PSE, cannot be measuredadequately by dichotomous response scales (e.g. yes or no). Five items developed byChen, Greene, and Crick (1998) were used to measure EIs. We use four itemsdeveloped by Krueger et al. (2000) to describe PDE. Perceived self-efficacy (PSE) wasmeasured by four items that were also developed by Krueger (1993) to describe theextent of an individual’s belief in their capability to start a business. PSNE wasmeasured by four items developed by Begley and Tan (2001) to describe perceptionsabout the social status of business owners and entrepreneurs in the community. Weadopted 15 items from Onyx and Bullen (2000) to measure community-level socialcapital. These items describe one’s participation in the local community, FTS, NCs, andFFCs. Details of these items are shown in Appendix 1. This study also collected fromthe survey respondents some demographic characteristics that may potentially explainEI. These data include age (in years), gender (male or female), formal education(“Educ” in levels of formal education qualification), business ownership experience

Table 1. Profile of survey respondents in the sample (n = 496).

Variables

Statistics

ƒ %

Age (in years)18–25 95 1926–30 123 2531–40 198 4041–50 57 1151 and older 23 5EducationNo formal education 19 4Elementary level/graduate 53 11High school level/graduate 152 31College level/graduate 258 52Postgraduate (MBA, Master’s degree) 14 3GenderMale 239 48Female 257 52Business experience (no. of years)None 198 40Less than 1 98 201–5 years 182 376–10 years 12 2Over 10 years 6 1Length of residence in community (no. of years)Less than 1 120 241–5 111 226–10 215 4311–20 38 8Over 20 12 2Present source of income or livelihoodNone 169 34Part-time employment 85 17Full-time employment 229 46Own business 13 3

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(“Exper” in years), length of residence in the community at the time of the survey(“Res” in years), and whether currently employed or not (“Employ”).

Data analysis and findings

Structural equation modeling (SEM) is used to test hypotheses H1–H3 aided by thepartial least squares (PLS) routine in the software WarpPLS v. 3 (Kock, 2011). Wefollowed a two-step approach to SEM (Anderson & Gerbing, 1988) by conductingconfirmatory factor analysis (see Appendix 1) in order to examine the validity andreliability of the constructs used in the study and by testing the structural models toexamine the hypothesized relationships of the constructs. The results of the first step ofanalysis show that the relevant constructs have acceptable levels of reliability andvalidity. Table 2 shows the means, standard deviations, and correlations of the variablesused in the succeeding analysis of the structural model–data fit.

The second step requires the development and testing of the structural models inorder to test hypotheses H1–H3. The various path coefficients are summarized inFigure 2. The structural model shows a partial mediation such that PDE, PSNE, andPSE partially mediate the relationships between social capital and EI. PDE, PSNE, andPSE are also shown to have a positive and statistically significant effect on EI, thussupporting H3.This model also suggests that the four facets of social capital have directeffects that cannot be accounted for by the mediating variables in the model.

The four facets of social capital were all statistically significant in explaining 45, 28,and 38%, respectively, of the variations in PDE, PSNE, and PSE; thereby supporting H1

and H1a–1c. On the other hand, PDE, PSNE, and PSE, along with the four facets ofsocial capital and control variables, explained 69% of the variations in EI. The fourfacets of social capital were all positively and statistically significantly related to EI,thereby supporting H2 and H2a–2c. The values of Cohen’s f2 (Cohen, 1992) for each pathranges from .08 (e.g. FTs to EI) to .22 (e.g. FTS to PSNE) suggesting medium to largeeffect sizes. These indicators of effect size suggest that the significant path coefficientsare substantially meaningful in explaining the relationships of the relevant variables inthe model (Cohen, 1992). The Stone-Geisser Q2 measures how well the model and itsparameter estimates reproduce the observed values (Geisser, 1974; Stone, 1974). A Q2

value greater than zero suggests that the model has acceptable predictive validity. TheQ2 is .46 for PDE, .28 for PSNE, .38 for PSE, and .69 for EI, which further supportsthe hypotheses of the study. Among the five control variables, only age, education, andbusiness experience have significant relationships with EI. The results suggest thatyoung respondents with lower educational qualifications, and with experience inbusiness ownership, tend to have higher EI relative to the others.

Discussion

This study examines the effects of community social capital on an individual’s EI, usinga survey of 496 individuals residing in five local communities in the Philippines. Thefindings show that the four facets of CSC have strong positive effects on an individual’sPSE, PDE, and PSNE which, in turn, have positive effects on EI. The findings alsosuggest that NCs and FFCs tend to have a stronger influence on PSE, PDE, and PSNErelative to the other facets of CSC. This particular finding is consistent with those ofprevious studies showing the critical role of bonding and bridging forms of socialcapital in shaping the entrepreneurial proclivity and behavior of individuals (Lee, 2009;

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Table

2.Means,standard

deviations,andcorrelationcoefficients.

Con

structsused

inthestud

yMean

SD

EI

PDE

PSE

PSNE

PLC

FTS

NC

FFC

AGE

EDUC

EXP

RES

Entrepreneurial

intentions

(EI)

5.40

1.25

1Perceived

desirabilityof

entrepreneurship

(PDE)

4.95

1.89

.35*

1Perceived

self-efficacy

(PSE)

4.85

1.70

.32*

.21*

1Perceived

social

norm

stowardentrepreneurship

(PSNE)

4.75

1.85

.21*

.19*

.15*

1

Participationin

thelocalcommun

ity(PLC)

5.40

1.65

.35*

.19*

.21*

.19*

1Feelin

gsof

trustandsafety

(FTS)

5.10

1.40

.24*

.15*

.18*

.11*

.12*

1Neigh

borhoo

dconn

ectio

ns(N

C)

5.25

1.19

.30*

.28*

.31*

.28*

.35*

.29*

1Fam

ilyandfriend

s’conn

ectio

ns(FFC)

5.15

1.25

.16*

.25*

.28*

.26*

.11*

.22*

.11*

1Age

(AGE)

32.50

8.55

−.21*

−.10*

.09

.11

.20*

−.13*

.27*

.15*

1Edu

catio

n(EDUC)

7.25

1.10

−.11*

−.15*

−.09*

.13*

.08

.14

.10

.14*

.15*

1Businessexperience

(EXP)

3.25

1.02

.25*

.16*

.14*

.13*

.10*

.07

.22*

.17*

.15*

−.12*

1Lengthof

residencein

commun

ity(RES)

2.89

1.27

.11

.09

.08

.12*

.17*

.15*

.28*

.09

.18*

.07

.08*

1

*Significant

at.05level.

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Liao & Welsch, 2005). Social networks within the community can equip a would-beentrepreneur with entrepreneurial knowledge, such as business opportunities, markets,and access to resources. These networks can also provide the would-be entrepreneurswith invisible signals about the viability, feasibility, and desirability of an entrepreneur-ial idea, which ultimately helps them to achieve social acceptance and legitimacy. In asimilar vein, the critical roles of family and close friends in starting a business are wellestablished in the entrepreneurship literature, because they are potential sources oftangible (e.g. financial support) and intangible (e.g. information and emotional support)entrepreneurial resources. The study further reports the mediating effects of PSE, PDE,and PSNE on the CSC–EI relationships. CSC does not necessarily and automaticallylead to higher levels of EI. It is only when CSC nurtures an individual’s PSE, PDE, andPSNE that CSC will have an indirect positive influence on EI. This particular findingdemonstrates the macro–micro linkage of social capital theory and the theory of plannedbehavior in explaining EI.

The findings also show the negative coefficients of the level of education and age ofthe individuals in the sample in relation to EI. Individuals with lower levels of formaleducational training tend to have limited employment opportunities in a labordemand-driven country, like the Philippines, where a university degree is highly soughtafter by employers. Individuals with limited employment opportunities may turn toentrepreneurship, such as starting a business, which explains their higher levels of EI.Younger individuals also tend to display higher levels of EI, and this can be attributedto their exposure to a range of entrepreneurial activities and opportunities at an early

Figure 2. The structural model (see Appendix 2 for list of acronyms).

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age. For instance, entrepreneurship-oriented activities are now formally integrated intothe academic curriculum for basic education such as the elementary and high schools inthe Philippines. The school-based exposure to entrepreneurship, coupled with accessibleinformation from mass media (television, print, and the internet), may explain the higherEI of the younger cohorts in the sample. Contrary to our expectation, the unemployedindividuals and the employed individuals did not differ significantly in their levels ofEI. This particular finding suggests that other factors such as attitudes and CSC canbetter explain the development of EI. This study confirms the importance of CSC inpromoting the EI of individuals. The findings offer a more nuanced explanation abouthow CSC influences EI by shaping an individual’s PSE, PDE, and PSNE; thus,contributing to the current discourses on social capital and entrepreneurship.

Implications and future research

The study leads to a number of implications in terms of policies and programs towardcommunity development. First, the findings point to the importance of facilitating theformation and exploitation of CSC as a means of promoting entrepreneurship in localcommunities. Findings suggest that an effective entrepreneurship-driven local economicand community development program should consider social capital as one of thebuilding blocks in promoting the sense of desirability and personal capability of resi-dents in a community to engage in entrepreneurship. For example, entrepreneurshiptraining programs should include modules that allow participants to assess the prevailingsocial norms and values that support or inhibit PDE, PSNE, and PSE. Such an approachwill tease out the psychosocial barriers and enablers of developing EI. As a result, thetraining program can address those barriers and reinforce the enabling factors as thebasic platform for the development of functional knowledge (e.g. management andmarketing) and skills (e.g. basic accounting and financial planning) necessary in startinga business.

Second, the findings emphasize the significance of community programs that buildor expand networking within and across communities, as “social networks are not a nat-ural given and must be constructed through investment strategies” for institutionalizinggroup relations and as a source of other benefits (Portes, 1998, p. 3). These programscould be in addition to conventional business support programs for potential entrepre-neurs in nurturing the entrepreneurial proclivities of individuals who may be otherwiseunderemployed or unemployed. For example, a community-based entrepreneurshipexchange program can be developed where an actual or potential entrepreneur is giventhe opportunity to meet and build linkages with those from within and outside one’simmediate community. This type of program promotes knowledge sharing and builds awider social support network for an aspiring or growing entrepreneur.

Third, the findings also signify the importance of entrepreneurship programs inschools and universities, as well as those conducted by government departments.Therefore, they should not only emphasize the technical aspects of starting a business,such as financing, production, and marketing, but also develop an individual’sentrepreneurial attitudes and self-efficacy and skills on how to initiate the formationof CSC, and on how to take advantage of existing social capital within thecommunity.

Fourth, among the facets of CSC, our findings suggest that NCs and FFCs tend tohave a stronger influence on PSE, PDE, and PSNE. This finding suggests the need forcreation of bridging social capital (with other community members) as well as for

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developing a strong community. The bonding and bridging social capital can be devel-oped using technology, particularly social media such as Facebook in community-levelclubs. Developing the extent of bonding, bridging, and linking ties available to familiesand communities, and how they can be promoted and enhanced, can be a useful tool tointegrate into entrepreneurial training programs.

Fifth, entrepreneurship training programs can have unique benefits to differentsections of the community – underemployed, women, the younger generation, andretired individuals. For instance, developing the EI of the unemployed and those withlow educational qualifications will lead to their understanding of the advantages ofstarting up their own ventures and bringing economic benefits where they have limitedoptions to engage in gainful employment. Similarly, the higher level of EI in theyounger generation is particularly important for community development as it not onlyhelps prevent them from becoming involved in destructive activities such as drugs andviolence, but also aligns with the characteristic of the younger generation’s desire forautonomy, to be creative, and to be their own boss. Developing high EI in women issimilarly important, as being an entrepreneur provides them with additional income tosupport the household.

Finally, as entrepreneurial activities lead to the strengthening of economic growthand development, and enhance both the economic independence of individuals, as wellas the economic development of the community, the findings of the study provideimportant implications for developing countries undergoing the process of transforma-tion and economic development. The findings could also inform policy-makers andinternational development institutes seeking to further promote the emergence ofentrepreneurial activity in developing economies.

The current study recognizes a number of limitations that offer directions to guidefuture research. First, this research builds on the view that CSC is a form of entrepre-neurial capital. It does not take into consideration that various forms of social capitalmay be used to enforce some social codes of conduct that can potentially inhibit innova-tion, risk-taking, pro-activeness, and undermine entrepreneurial behavior (Woolcock &Narayan, 2000). Future studies may explore the probable curvilinear relationshipsbetween CSC and entrepreneurship.

Second, the non-probabilistic method of sampling may limit the generalizability ofthe findings of the study. The significant relationships among the variables relate mainlyto the participants of the entrepreneurship training program. Future studies may furthertest the relevant measurement and structural models to a wider sample based onprobabilistic methods of identifying sample groups from a broader population.

Third, the research design of the study was aimed at describing the significantrelationships, rather than the causal effects, of CSC on the other variables used in thestudy. The authors acknowledge the potential endogeneity issue in the model(Woodhouse, 2006). A longitudinal research design to capture changes in theperceptions about the variables in the model and how these changes affect EI is worthpursuing in the near future.

Fourth, the study offers preliminary empirical evidence about the benefits of CSC inpromoting entrepreneurship in rural communities in a developing country like thePhilippines. A potential extension of the current study will be to examine whether EI,as influenced by PDE, PSNE, PSE, and CSC, ultimately leads to engagement inentrepreneurship, such as starting an actual business.

Finally, EI in particular and entrepreneurship in general, are multi-level andmulti-faceted constructs. In addition to the current study’s focus on a macro-level

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variable (i.e. CSC) and three individual-level variables (PDE, PSNE, and PSE), futurestudies may examine the confounding effects of other external environmental variables(e.g. cultural, institutional, and economic) and individual-level factors, such as entrepre-neurial knowledge and financial resources. Despite the limitations, this study representsan attempt to confirm the effects of CSC on the EI of individuals, a topic that has beenunder-researched to date and acts as a spring board for future research.

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Appendix 1.

The measurement model: constructs and standardized factor loadings.

Constructs and corresponding indicators Standardized factor loadings*

Participation in the local community (PLC) AVE = .73 rho = .92 α = .85I volunteer in helping out my local community (i.e. barangay) .89I regularly attended local community events in the past 12 months .87I am an active member of a local community organization .85In the past 3 years, I have joined community groups to solve someproblems or issues that affect the community

.80

Feelings of trust and safety (FTS) AVE = .75 rho = .93 α = .88I feel safe walking down the streets in our community at night .88Most people in our community can be trusted .89The community where I live has a reputation for being a safeplace

.85

The community where I live feels like home .84

Neighborhood connections (NC) AVE = .75 rho = .94 α = .89

(Continued )

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Appendix 1. (Continued).

Constructs and corresponding indicators Standardized factor loadings*

I can get help from friends in my community when I need it .89If I am taking care of a child and needed to go somewhereurgently, I can ask a neighbor for help

.80

I have visited a neighbor in the past week .85In the past 6 months, I have done a favor for a sick neighbor .84

Family and friends connections (FFC) AVE = .76 rho = .90 α = .88I have regular weekly conversations with friends either face-to-face or through telephone/mobile phone

.88

I talked to (x number of people) yesterday .89I have weekend lunch or dinner with other people outside myhousehold at least once in a month

.82

Perceived desirability of entrepreneurship (PDE) AVE = .77 rho = .93 α = .90How attractive is it for you to start your own business? .86If you started your own business, how would you feel aboutdoing it?

.88

If you started your own business, how tense would you be? .89If you started your own business, how enthusiastic would you be? .86

Perceived self-efficacy (PSE) AVE = .76 rho = .93 α = .91How practical is it for you to start your own business? .88How hard do you think it would be to start your own business? .85If you started your own business, what do you think yourworkload would be?

.88

If you started your own business, how certain of success are you? .87

Perceived social norms toward entrepreneurship (PSNE) AVE = .77 rho = .93 α = .90People look up to those who run/own a business .88Running/owning a business gives high social status .89Starting a business generates respect .88Starting a business brings prestige .85

Entrepreneurial intentions (EI) AVE = .80 rho = .95 α = .92I am interested in setting up my own business .89I have considered setting up my own business .88I am prepared to setup my own business .92I am going to try hard to setup my own business .90How soon are you likely to setup your own business? .89

aAll items used a 7-point Likert-type response scale (i.e. 1 = strongly disagree, 7 = strongly agree).bAVE = average variance extracted; rho = Joreskog’s rho; α = Cronbach’s alphacThe significant (p < .05) standardized factor loadings of items in each construct suggest the convergentvalidity of each construct.dAcceptable AVE values are .50 and above.eCronbach’s α and Joreskog’s rho values should be above .70 as evidence of construct validity.*Structure loadings significant at p < .05.

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Appendix 2.

List of acronyms

CSC Community social capitalEI Entrepreneurial intentionsFFC Family and friends connectionsFTS Feelings of trust and safetyNC Neighborhood connectionsPDE Perceived desirability of entrepreneurshipPLC Participation in the local communityPSE Perceived self-efficacy to engage in entrepreneurshipPSNE Perceived social norms towards entrepreneurshipTPB Theory of planned behavior

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