ABSTRACT
This chapter focuses on the role of social capital in small business development. It provides a systematic review of the existing research on the relationship between social capital and business start-up. It also explores how the relationship between social capital and local bonds of trust and reciprocity influences the activity of small businesses using data for US counties. The chapter outlines a basic model to understand how social capital affects firm costs and discusses the empirical strategy to address the anticipated problems of identification. The role of small business development within community economic development has been the subject of many academic, policy, and advocacy studies. Increasingly, community economic development scholars and practitioners are looking to small business development to improve the local economy. Community economic development practitioners found that they could be more effective at promoting sustainable economic development by working with new business start-ups and businesses that were already within the community and were seeking to expand.
