Entrepreneurship and Social capital in rural Denmark 1800-1914
Why do we find entrepreneurship within larger groups? This question has challenged the social sciences since Olson (1965) showed that it does not pay an individual to provide collective goods voluntarily, if the individual economic gain from doing this is negative. However, the fact that larger groups actually do organize in local areas cannot be explained in strict economic terms. In an attempt to fill this gap in literature, we offer another solution, namely the presence of social incentives called 'social capital'. Social capital is derived from regular face-to-face, co-operative relations among larger groups in local areas. Such relations, we argue, are initiated by writing down formal "rules of the game", which are sanctioned effectively. This suggestion seems to be confirmed by empirical evidence from rural Denmark 1800-1900. During this period, written rules in the form of the formal founding statutes of co-operative associations enhanced informal peasant co-operation and stocks of beneficial social capital of an inclusive nature. As an outcome of this process, entrepreneurs voluntarily organized larger groups which provided collective goods locally, thus contributing to economic growth in former poor, rural areas.
Revue Belge De Geographie, 2001, Vol 3, p. 231-46
Social capital; Entrepreneurship; Rural poverty; Denmark; Economic growth