Influence of Socioeconomic and cultural factors on social capital: Trending to rural business development in Ethiopia

Abstract

This study examines the relationship between household characteristics, resource endowments, and social capital in Walmara district, Ethiopia. Data from 300 households were analyzed using econometric models, including Chi-square and F-test, to assess variations in social capital across demographic, cultural and socioeconomic factors. Results reveal that education, family size, aboriginality, business training, and access to information significantly influence social capital; in particular, landholding, livestock, income, access to information had stronger links at P<0.001 level of significance. The family size reflects the role of family networks in fostering bonding and bridging ties. Economic assets like livestock ownership and landholding enhance participation in communal activities, trust, and reciprocity. Land rental practices exhibit context-dependent effects, with high levels of social capital linked to reduced land renting, suggesting potential trade-offs between economic transactions and long term social cohesion. Aboriginality, measured by long-term residency, enhances community participation and trust, while participation in institutional services strengthens individual and collective social capital. Access to information sources demonstrates a dual pattern: personal networks are positively correlated with higher levels of social capital, while reliance on formal associations is linked to lower levels. The findings highlight the multifaceted and context-dependent nature of social capital, emphasizing its role as both a driver and outcome of rural business activities highly influenced by socioeconomic and cultural factors. This highlights trending of social capital on the bases of the crucial role of socio-cultural and economic factors in the social networks commending the need to incorporate social networking into strategies that promote rural business development.

Keywords: Social capital, collective action, rural business, social network, Ethiopia.

DOI: 10.7176/RHSS/16-2-04

Publication date: July 28^th 2026