Social Networks and Entrepreneurship. Evidence from the Antioquian Industrialization

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This paper explores the relationship between social networks and entrepreneurship by constructing a dynamic social network from archival records. The network corresponds to the elite of a society in transition to modernity, late 19th- and early 20th-century Antioquia (Colombia).

I exploit the timing of unexpected deaths as a source of exogenous variation of individuals’ network position. I find that individuals better connected at a global level (i.e. more important as bridges in the entire network) were more involved in entrepreneurship. However, I do not find individuals better locally connected (i.e. with a denser immediate network) to be more involved in entrepreneurship. I provide quantitative evidence on the performance of the firms and narratives on the behavior of the entrepreneurs who created them to indicate that these results can be explained by the requirement of complementary resources that entrepreneurship had. These resources were spread out in society and markets worked poorly enough to canalize them to entrepreneurs. Thus, networks operated as substitutes for markets in the acquisition of resources. Hence, this paper highlights how individuals with network positions that favor the combination of a broad set of resources can have a comparative advantage in entrepreneurship."