Working Paper: CEPR ID: DP15813
Authors: Paul Castaneda Dower; Theodore Gerber; Shlomo Weber
Abstract: This paper addresses whether kinship networks promote or impede entrepreneurship in the Kyrgyz Republic. We conducted a survey of firm managers/entrepreneurs about their business networks, resources they receive from and provide to their contacts, their firm’s performance,and the business environment they face. Our data indicate that receiving help from kin connections increases profitability, while providing help to kin decreases it. While kin-reliant firms grow slower than firms with a lower degree of kin assistance, the former grow faster than firms that do not have access to business networks. In addition, kin connections and firm performance are unrelated for firms that have adopted best business practices. Our results demonstrate that directly measuring both receipt and provision of help from/to kin helps resolvethe ambiguity of findings in the broader literature regarding the net effects of kin networks on firm performance: the two forms of network use are positively correlated, yet have opposite effects.
Keywords: kinship networks; firm performance; Kyrgyz Republic
JEL Codes: O12; O14; O17; P23; Z13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Receiving help from kin connections (F35) | Increased profitability (L21) |
| Providing help to kin (D64) | Decreased profitability (G32) |
| Best business practices (M14) | No significant relation to performance with kin connections (Y80) |
| Kin-reliant firms (L22) | Slower growth than firms with less kin assistance (D25) |
| Kin-reliant firms (L22) | Faster growth than firms without access to business networks (D85) |