Interpretation of the results and research outlook

Three crucial issues for research on smallholder innovation could be identified during the case study. First, it is necessary to differentiate between diverse dimen-sions of social capital and innovation when studying endogenous development.

Second, it has to be assessed to what degree the modification of the existing social structures by external agents can be harmful or beneficial. Third, SNA can help to gain a better understanding of the complex relations between social capital and innovation and how these can contribute to fostering sustainable develop-ment projects. Methods of SNA and the increasing availability of detailed data enable advancement in the understanding of socioeconomic development in local communities and the efficiency of external intervention. Exploratory SNA (e.g.

Wasserman and Faust 1994; De Nooy et al. 2005), in combination with econo-metric methods, can reveal the structural patterns and roles of agents which would otherwise be overlooked by common qualitative approaches, interviews and confirmatory analysis. In the case investigated here – which can be assumed to be representative of many other agricultural communities in developing countries – an NGO which is active in the region has become the key player in the local information network. By sampling the relevant data indirectly (i.e. available

household data), this decisive actor and its influence on the network structure as well as on the individual indicators would have been missed.

The positive and negative issues concerning NGOs are highly disputed within the development community. However, this study suggests that external intervention and development projects might gain significantly from applying network-based analysis to the social capital and innovation capabilities within the respective communities both at the beginning and at the end of their projects.

This would allow an identification and evaluation of endogenously grown social structures as well as the internal and external boundaries, which might hamper or promote the success of the project. Such information would help in the design of more efficient projects and minimize the negative impact of external intervention on endogenously grown structures and competencies. However, to develop best practices for network analysis and the promotion of endogenous development, a better understanding of the complex interrelations between the different dimen-sions of human capital, social capital and innovation is needed. The analysis here indicates that an individual’s innovation capacity is determined by both internal and external linkages. It is important to note that investigating the network roles and position of local innovators, taking different types of both local and external ties into account, is still scarcely explored (e.g. Giuliani and Bell 2005). Indeed, although the qualitative importance of cooperation and participation as well as the role of innovation have been emphasized by the literature on local develop-ment (Mytelka 2000; Vázquez-Barquero 2002), knowledge of the measuredevelop-ment of different types of innovation and network positions in local agricultural com-munities as well as understanding of the feedbacks between the different types of innovation and the different roles in the local and extra-local networks, has still to be further explored.

5.6 Chapter conclusion

This chapter has focused on the positive, negative and ambiguous effects of social networks. There is a strong bias in the social capital and innovation network lit-erature towards highlighting the positive aspects of social networks, such as the access to information, finance or mutual help and trust. However social networks can also impose constraints to the freedom and agency of the individuals or peo-ple outside the network and lead to inequality reproduction, social differentiation and levelling pressures. Human development and qualitative change policies need to promote the positive, and alleviate and prevent the negative effects of social networks.

The chapter also showed that social capital theory can function as a valuable theoretical bridge between the human development approach and structural eco-nomic change literature. Social capital plays a decisive role for both learning and innovation networks as well as group and external capabilities. The empirical application to a case in Peru revealed that diverse dimensions of social capital have a significant influence on the capabilities of peasant farmers (in poor agricultural

communities) to be active agents of development and introduce novelties into their local production system. Finally, techniques from SNA can help to illustrate and measure the impact of social networks on the capabilities and freedom of the individuals. The next chapter on entrepreneurship shows that social networks are also crucial to the contribution that entrepreneurs can make to economic and human development.

Note

1 This empirical section is based on Hartmann and Arata (2011).

All across the world, from the micro-entrepreneurs in Bangladesh to the high-tech entrepreneurs in the Silicon Valley, people start new businesses or engage in self-employed work. Entrepreneurship has been an important field in economics and business science, at least since Joseph Schumpeter (1912) put forward the concept of entrepreneurs being the key drivers of innovation and economic development.

Several scholars view differences in the frequency and quality of entrepreneurial actions as key factors which explain economic divergence in the global econ-omy (Audretsch and Thurik 2000; Santos 2004; Szirmai et al. 2011). The key question in economics has been how entrepreneurship contributes to economic growth. Other questions have arisen as a result of the rise of microfinance and the concept of social-entrepreneurship, questions concerning issues such as what effect entrepreneurship has on people’s social choices and human capabilities or what entrepreneurship means for the freedom and well-being of the entrepreneur and for society (Bornstein 2004; Yunus 2007; Gries and Naude 2010). Learning from the traditional approaches of Schumpeter (as well as taking recent network-based entrepreneurship research into account) can be helpful in addressing such questions.

As Schumpeter pointed out in his Theory of Economic Development (1912), entrepreneurship is a driver of creative destruction processes and the creator of new sectors and hence occupational choices. It therefore has positive and nega-tive effects on the well-being and capabilities of people through its impact on structural change and economic diversification (Chapter 4). Recent approaches have added to the picture of entrepreneurship by focusing on the embeddedness of entrepreneurs in social networks, showing how they make use of and create social networks (Chapter 5). However, these insights do not sufficiently explain what entrepreneurship means from a human development perspective and do not provide a theoretical framework which is able to analyse, distinguish and evaluate the effects of different types of entrepreneurship, such as micro-entrepreneurship and/or social entrepreneurship, on human development and social welfare.

The human development approach pinpoints ‘human agency’ as a core objec-tive of human development, alongside well-being and justice (Sen 1998a;

Alkire 2010). Following this approach, people and groups should be enabled as agents rather than as patients of development. The agency goal is related

6 Entrepreneurship and human