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The economic value of local social networks

The economic value of local social networks
The economic value of local social networks
The idea that local social capital yields economic benefits is fundamental to theories of agglomeration, and central to claims about the virtues of cities. However, this claim has not been evaluated using methods that permit confident statements about causality. This paper examines what happens to firms that become affiliated with one highly-connected local individual defined as a “dealmaker.” We adopt a quasi-experimental approach, which examines firms which added exactly one new individual to their firm combining difference-in-differences and propensity score matching to address selection and identification challenges,. The results indicate that, when compared to a control group, firms who link to one highly-connected local dealmaker are rewarded with substantial gains in employment and sales.
1468-2702
1101–1122
Kemeny, Thomas
b9e4ac0c-bc73-4905-8229-f970518cde88
Feldman, Maryann
22200c3b-2030-429f-b11b-e252d5cd7e1b
Ethridge, Frank
37d5b7ca-a86b-4c5d-b447-c26ee17d5b74
Zoller, Ted
84beef47-9d32-477b-b126-36dbb8c0210e
Kemeny, Thomas
b9e4ac0c-bc73-4905-8229-f970518cde88
Feldman, Maryann
22200c3b-2030-429f-b11b-e252d5cd7e1b
Ethridge, Frank
37d5b7ca-a86b-4c5d-b447-c26ee17d5b74
Zoller, Ted
84beef47-9d32-477b-b126-36dbb8c0210e

Kemeny, Thomas, Feldman, Maryann, Ethridge, Frank and Zoller, Ted (2016) The economic value of local social networks. Journal of Economic Geography, 16 (5), 1101–1122. (doi:10.1093/jeg/lbv043).

Record type: Article

Abstract

The idea that local social capital yields economic benefits is fundamental to theories of agglomeration, and central to claims about the virtues of cities. However, this claim has not been evaluated using methods that permit confident statements about causality. This paper examines what happens to firms that become affiliated with one highly-connected local individual defined as a “dealmaker.” We adopt a quasi-experimental approach, which examines firms which added exactly one new individual to their firm combining difference-in-differences and propensity score matching to address selection and identification challenges,. The results indicate that, when compared to a control group, firms who link to one highly-connected local dealmaker are rewarded with substantial gains in employment and sales.

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More information

Accepted/In Press date: 16 October 2015
e-pub ahead of print date: 3 December 2015
Published date: 1 September 2016
Organisations: Economy, Society and Space

Identifiers

Local EPrints ID: 382981
URI: https://eprints.soton.ac.uk/id/eprint/382981
ISSN: 1468-2702
PURE UUID: 9a472833-fe86-4205-92f7-327c2e53089f

Catalogue record

Date deposited: 09 Nov 2015 09:07
Last modified: 09 Dec 2019 19:49

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