The Impact of Social Capital on Female Entrepreneurs in Ecuador

Abstract

In Ecuador, the institutional environment is weak and reliable, and women have significantly less economic participation than men. Nevertheless, the level of female entrepreneurship is the highest in the world. In such a context, investigating the role of social networks and how social capital impacts female entrepreneurs working within the food processing industry in Cuenca, Ecuador, is relevant. This thesis uses a pragmatic realist approach to answer the research question based on qualitative data collected during a threeweek field trip. During this period, I interviewed thirteen female entrepreneurs working in the food-processing industry. Adopting Woolcock & Narayan’s synergy view on social capital, this study shows that bonding social capital provides female entrepreneurs with resources such as knowledge, financial capital, emotional support, and labor which they can leverage to run their businesses. It also highlights that misalignment of expectations between the entrepreneurs and their parents can make female entrepreneurs feel unsupported emotionally, feel obliged to give out discounts to their close ones and employ family members that do not contribute to the business. The findings also illustrate that bridging social capital benefits female entrepreneurs by creating loyalty among customers and providing them with access to information. However, it also constrains female entrepreneurs by putting their reputations at risk and making them feel excluded. Another finding of this work is that linking social capital does not impact female entrepreneurs because they do not build relationships with public or private institutions. Female entrepreneurs attribute this to high levels of bureaucracy in the country and the unreliability of institutions. Overall, this thesis reveals how in the absence of strong formal institutions, bonding social capital and, to a lesser extent, bridging social capital has had a significant impact on female entrepreneurs in Ecuador.