Microfinance and entrepreneurship: the enabling role of social capital amongst female entrepreneurs

Abstract

PurposeThis paper examines mechanisms through which social capital strengthens microfinance impact on fostering female entrepreneurial success. Specifically, the study focuses on how, and to what extent, resources embedded in social networks determine MF impact on entrepreneurial success.Design/methodology/approachSurvey data were collected from 276 female micro-institutions entrepreneurs using multi-stage stratified random sampling across 80 MF institutions in three South-Western Nigerian states. Hypotheses were tested using ordinal regression analysis.FindingsThe study found that relational and network social capital had a positive and significant influence on female entrepreneurial success. Specifically, intra-group trust and productive network ties amongst female entrepreneurs in poor communities predicated the positive impact of MF on entrepreneurial success. Also, resources embedded in networks are more positively correlated to education level and marital status. Furthermore, MF could have more positive impact for borrowers with sustainable relationships with loan officers who organise MF provisions and understand the entrepreneurs’ context.Originality/valueThe research provides empirical evidence for the relationship dynamics between female entrepreneurs and MF institutions, by emphasising the importance of deploying different forms of social capital in sustaining MF impact on female entrepreneurial success.