Does social capital pay off? The case of small business resilience after Hurricane Katrina

Abstract

Abstract This article uses objective and subjective measures of small business resilience and multiple categories of social capital pay‐offs to answer two main questions. Does social capital pay off after a natural disaster; and if it does, what type of social capital has the greatest impact on small business resilience? The pay‐off from bridging social capital—receiving support from the community—is what drives both objective and subjective resilience post‐Katrina. The results also show linking capital—support from institutions—can improve economic resilience. Our results provide evidence social capital is a key asset for long‐term resilience for small businesses. Business owners with links to the community and institutions—with more social capital—will be better off when facing a natural disaster.