Searching for social capital in U.S. microenterprise development programs

Abstract

This paper focuses on the claims and efforts of U.S. microenterprise development programs (MDPs) to build social capital among poor and low income entrepreneurs. MDPs offer business training and lending services to individuals operating very small businesses (with five or fewer employees and less than $20,000 in start-up capital). Advocates suggest that MDPs help promote economic development by building social capital defined as networks among small entrepreneurs and between entrepreneurs and their larger community. We begin our paper with a short review of the varied definitions and claims about the role of social capital in promoting civic and economic empowerment. Then, drawing on interviews with practitioners from 50 programs, we examine the nature and extent of social capital building in U.S. MDPs. We consider the degree to which our sample MDPs directly promoted networks among clients, and between clients and individuals/organizations outside the program. More than half of the programs tried to network clients with each other, but only a few programs focused on building networks between clients and the larger community. From a critical perspective, we discuss more expanded notions of social capital building in poor communities and the barriers to their implementation.