Abstract:
In Africa, social capital (SC) is an important resource for the informal
economy. It substitutes the limited formal business support systems as
factor inputs for enterprise development. This article investigates the
effect of Burt’s structural holes theory of social capital in the context of
the Ethiopian informal economy. Data were collected from street entrepreneurs
in Addis Ababa using multiple name generators constructed on
the basis of entrepreneurs’ frequent interaction with people related to
resources needed for entrepreneurial activities. Social network analyses
and statistical procedures of instrumental variables estimation were used
to analyse the data. By controlling the potential endogeneity problem
between structural holes and enterprise outcomes, the findings of the
study show that entrepreneurs’ dense network structure, which lacks
structural holes, has a significant negative effect on entrepreneurial outcome.
Accordingly, policies that aim at supporting informal entrepreneurs
