Private sector development and the entrepreneurial activity that drives it are central to economic growth. To function well, the private sector requires institutions that clearly define property rights and enforce contracts. In Central Asia, there is a broad consensus that kin ties are important in shaping and/or providing an alternative to formal institutions designed to support the private sector.
In this research, we ask whether kinship networks help promote entrepreneurship or impede its development. We will conduct a survey of firm managers/entrepreneurs about the nature of their family and friendship networks, what kinds of business and non-business resources they receive from and provide to their various contacts as well as measures of their firms’ performance and business environment. With this information, we can examine whether kinship ties are promoting or hindering entrepreneurship, capital accumulation and growth. Incorporating the role of kinship or even leveraging kin-ties could improve institutional policy design.
Broader motivation for the research
The policy relevance of our study is potentially immense. Our study will be the first of its kind in Kyrgyz Republic and policymakers will pay attention to our findings. The study will also serve as the basis for similar studies to be eventually conducted in Kazakhstan, Tajikistan, and (possibly) Uzbekistan and Turkmenistan. In terms of policy recommendations, our study could illuminate key trade-offs that strong kinship ties present as firms make decisions to grow and innovate as well as serve to identify triggers that exacerbate or ameliorate the impact of kin-based mechanisms such as inter or intra-family rivalry or informal enforcement on entrepreneurial behavior and economic growth. Policy interventions could then be designed and hopefully tested on the basis of their influence on these trade-offs and triggers.
Paul Castañeda Dower, University of Wisconsin-Madison