Linking network, human capital and the extended competence network to business start-up: a multilevel approach

Abstract: The paper reveals multilevel mechanisms that guide the process of starting a business. The study uses a multilevel approach testing for the influence of human capital, social capital and the extended competence network on the propensity to engage in business start-up activities. The study uses data from a survey conducted amongst 10.419 inhabitants in Norway and data describing the extended competence network in the municipality (n = 427) in which the respondent resides. Human capital is measured as achieved level of education, social capital as personal knowledge of other entrepreneurs, while the extended competence network is measured as the percentage of the population of working age in the municipality in which the respondent resides holding a bachelor or master degree. The study indicates a link between personal educational level and personal knowledge of other entrepreneurs and the propensity to engage in business start-up activities. There is also evidence to support the claim that an extended competence network in the nearby spatial area influences the individual’s propensity to engage in business start-up activities. Possible reasons for this link are then discussed.