Der Artikel „Does forced solidarity hamper investment in small and micro enterprises?” (von Michael Grimm, Renate Hartwig und Jann Lay) wurde vom Journal of Comparative Economics zur Publikation angenommen.
The purpose of this paper is to empirically investigate whether family and kinship ties used for redistribution and mutual assistance reduce the ability to invest in enterprise capital. To guide the empirical analysis, we start from a theoretical model in which entrepreneurs have to decide whether they want to invest and rely on themselves or whether they share their income with their family and kin, hence forgo investment opportunities, but are insured against business and household-related shocks. A sanction that is imposed if sharing is refused, may force entrepreneurs to comply even if from their individual perspective investing would be the better alternative. Predictions derived from that model are tested empirically using data from small and micro entrepreneurs in Burkina Faso. We find empirical support for our theoretical model. Redistributive pressure and risk aversion increase the probability of staying in the risk sharing network and this is associated with significantly lower investment as pressure increases. In contrast less risk averse entrepreneurs that step out of such networks show clearly higher investment levels and have substantially larger stocks of capital. Family pressure does not affect their investment decisions. The results suggest that the provision formal risk management devices to entrepreneurs and their kin might be an effective means of spurring investment in small and micro enterprises as it would soften sharing obligations which may disproportionally harm those who are economically successful.