Social Capital and Entrepreneurship: Analyzing the Impact of Trust on Decision to Start a Business

This study considers the reciprocity between entrepreneurship and social capital in particular trust. Why should we study such a phenomena as entrepreneurship? The key point is that the entrepreneurial activity is a vital force in an economy. Hence it is essential to identify the determinants of entrepreneurship in order to create a business-friendly environment. Two types of trust are considered – personal and institutional trust. The dataset includes the answers of over 28,000 individuals from 15 European countries and is analyzed by employing multilevel modelling. The obtained results showed that there is a statistically significant positive reciprocity between generalized trust, trust in parliament and the probability to become an entrepreneur and also there is the negative relationship between trust in police and the likelihood to start an enterprise.