Social Trust, Connectedness Increases Entrepreneurship in Communities, MU Study Finds

November 25th, 2013

COLUMBIA, Mo. – Previous research has shown a correlation between a community’s level of entrepreneurship and its economic success and positive living conditions. Now, Colleen Heflin, an associate professor in the University of Missouri Truman School of Public Affairs, has found that the higher the level of social trust within a community, the more likely it is the community will support entrepreneurship. Heflin says this research points to the importance of social trust in developing successful communities.

“Social trust is a general trust in the people who live around you, even if you do not know them personally,” Heflin said. “Having this knowledge that social trust leads to higher levels of self-employment is very valuable because now we know that by promoting and facilitating higher levels of trust in a community, we can actually make that community more successful economically.”

Heflin, along with Seok-Woo Kwon, an assistant professor at Temple University, and Martin Reuf, a professor at Duke University, analyzed U.S. Census Bureau data along with two large community surveys, the Social Capital Benchmark Survey and the General Social Survey. They found that communities with higher levels of perceived social trust had many more people who were self-employed as opposed to communities with low levels of social trust. They also found that membership in organizations that were connected to the larger community was also associated with higher levels of entrepreneurship while membership in isolated organizations that lacked a connection to the community was associated with lower levels of entrepreneurship.

“A community’s economic success and positive living conditions seem to ultimately come down to the level of connectedness the people in the community feel they have with each other,” Heflin said. “Social trust plays a big factor because it is hard to feel connected to people whom you do not trust. Likewise, it is difficult for people to take a big risk like self-employment if they do not feel like they can trust those around them to help them succeed.”

The researchers found that these effects were stronger in communities in which residents were predominantly white, native-born residents, and long-term community members. Minorities, immigrants and recent entrants into communities often did not receive the same level of entrepreneurship-boosting effects from increased social trust.

“The best way to increase social trust in communities, particularly those with more minorities and immigrants, is for community leaders to encourage interactions across different economic, racial and cultural groups within a community,” Heflin said. “Involvement in school organizations and other local associations can help bring people together to work toward mutually beneficially goals that improve the community.”

This study was published in the American Sociological Review.