Small Business Economics

, Volume 40, Issue 2, pp 435–458 | Cite as

The interplay of human and social capital in shaping entrepreneurial performance: the case of Vietnam

  • Enrico SantarelliEmail author
  • Hien Thu Tran


This study investigates the effects of human capital, social capital and their interaction on the performance of 1,398 Vietnamese new-born firms. Operating profit is used as the measure of success. Human capital is captured by individual-level professional education, start-up experience, and learning. Whereas the first two dimensions of human capital are measured with traditional indicators, we define learning as the ability to accumulate knowledge to conduct innovation activities (new product introduction, product innovation and process innovation). Social capital is measured as benefits obtained from personal strong-tie and weak-tie networks. Key findings are threefold: (i) human capital strongly predicts firm success, with learning exhibiting a statistically significant positive association with operating profit, (ii) benefits from weak ties outweigh those from strong ties, (iii) interaction of human capital and social capital displays a statistically significant positive effect on new-firm performance.


Human capital Social capital Entrepreneurship Performance of entrepreneurial firms Vietnam 

JEL Classifications

L26 L25 L14 J24 O53 



We are grateful to two reviewers for their helpful suggestions. Enrico Santarelli acknowledges financial support from University of Bologna (RFO 2009).


  1. Abramovitz, M. (1989). Thinking about growth. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  2. Aldrich, H., & Reese, P. R. (1993). Does networking pay off? A panel study of entrepreneurs in the research triangle. In N. S. Churchill, et al. (Eds.), Frontiers of entrepreneurship research 1993. Boston: Babson College.Google Scholar
  3. Aldrich, H., & Zimmer, C. (1986) Entrepreneurship through social networks. In D. Sexton & R. Smilor (Eds.), The art and science of entrepreneurship. New York: Ballinger.Google Scholar
  4. Almus, M., & Nerlinger, A. (1999). Growth of new technology-based firms: Which factors matter? Small Business Economics, 13, 141–154.CrossRefGoogle Scholar
  5. Banerjee, A., & Munshi, K. (2004). How efficiently is capital allocated? Evidence from the knitted garment industry in Tirupur. Review of Economic Studies, 71, 19–42.CrossRefGoogle Scholar
  6. Barney, J. B. (1995). Advanced strategic management. Reading, MA: Addison-Wesley.Google Scholar
  7. Barney, J. B., Wright, M., & Ketchen, D. J., Jr. (2001). The resource-based view of the firm: Ten years after 1991. Journal of Management, 27, 625–641.CrossRefGoogle Scholar
  8. Barro, R. J., & Sala-i-Martin, X. (1995). Economic growth. New York: McGraw-Hill.Google Scholar
  9. Bates, T. M. (1994). Social resources generated by group support networks may not be beneficial to Asian immigrant-owned small businesses. Social Forces, 72, 671–689.Google Scholar
  10. Bates, T. (1997). Race, self-employment, and upward mobility: An illusive American dream. Washington, DC: Woodrow Wilson Center Press.Google Scholar
  11. Bates, T., & Servon, L. (2000). Viewing self-employment as a response to lack of suitable opportunities for wage work. National Journal of Sociology, 12, 23–55.Google Scholar
  12. Bartjargal, B. (2000). Social capital and entrepreneurial performance in Russia: A panel study. William Davidson Institute Working Papers Series No. 352. University of Michigan.Google Scholar
  13. Baum, J. A. C., & Silverman, B. S. (2004). Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology startups. Journal of Business Venturing, 19, 411–436.CrossRefGoogle Scholar
  14. Becker, G. S. (1964). Human capital: A theoretical and empirical analysis. New York: Columbia University Press.Google Scholar
  15. Birley, S. (1985). The role of networks in the entrepreneurial process. Journal of Business Venturing, 1, 107–117.CrossRefGoogle Scholar
  16. Bosma, N. S., Van Praag, C. M., Thurik, A. R., & De Wit, G. (2004). The value of human and social capital investments for the business performance of startups. Small Business Economics, 23, 227–236.CrossRefGoogle Scholar
  17. Brown, B., & Butler, J. E. (1995). Competitors as allies: a study of entrepreneurial networks in the U.S. wine industry. Journal of Small Business Management, 3, 57–66.Google Scholar
  18. Bruderl, J., & Preisendorfer, P. (1998). Network support and the success of newly founded businesses. Small Business Economics, 10, 213–225.CrossRefGoogle Scholar
  19. Bruderl, J., Preisendorfer, P., & Zielger, R. (1992). Survival chances of newly founded business organizations. American Sociological Review, 57, 227–242.Google Scholar
  20. Brush, C. G., Greene, P. G., & Hart, M. M. (2001). From initial idea to unique advantage: the entrepreneurial challenge of constructing a resource base. Academy of Management Executive, 15, 64–78.CrossRefGoogle Scholar
  21. Burt, R. S. (2001). Structural holes versus network closure as social capital. In N. Lin, K. Cook, & R. S. Burt (Eds.), Networks and organizations (pp. 31–56). New York: Walter de Gruyter.Google Scholar
  22. Calabrese, T., Baum, J. A. C., & Silverman, B. (2000). Canadian biotechnology start ups, 1991–1997: The role of incumbents’ patents and strategic alliances in controlling competition. Social Science Research, 29, 503–534.CrossRefGoogle Scholar
  23. Cohen, W., & Levinthal, D. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35, 128–153.CrossRefGoogle Scholar
  24. Coleman, J. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, 95–120.CrossRefGoogle Scholar
  25. Cooper, R. G. (1984). How new product strategies impact on performance. Journal of Product Innovation Management, 1, 5–18.Google Scholar
  26. Cooper, A. C., Gimeno-Gascon, F. J., & Woo, C. Y. (1994). Initial human and financial capital as predictors of new venture performance. Journal of Business Venturing, 9, 371–395.CrossRefGoogle Scholar
  27. Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18, 301–331.CrossRefGoogle Scholar
  28. Deeds, D., DeCarolis, D., & Coombs, J. E. (1998). Firm-specific resources and wealth creation in high technology ventures: Evidence from newly public biotechnology firms. Journal of Business Venturing, 12, 31–46.CrossRefGoogle Scholar
  29. Dencker, J. C., Gruber, M., & Shah, S. K. (2009). Individual and opportunity factors influencing job creation in new firms. Academy of Management Journal, 52, 1125–1147.CrossRefGoogle Scholar
  30. Ellerman, D. (1996). Entrepreneurship development in transitional economies. Washington, DC: World Bank.Google Scholar
  31. Evans, D., & Leighton, L. (1989). Some empirical aspects of entrepreneurship. American Economic Review, 79, 519–535.Google Scholar
  32. Florin, J., Lubatkin, M., & Schulze, W. (2003). A social capital model of high growth ventures. Academy of Management Journal, 46, 374–384.CrossRefGoogle Scholar
  33. Fukuyama, F. (1995). Trust: The social virtues and the creation of prosperity. New York: Free Press.Google Scholar
  34. Gimeno, J., Folta, T. B., Cooper, A. C., & Woo, C. Y. (1997). Survival of the fittest? Entrepreneurial human capital and the persistence of underperforming firms. Administrative Science Quarterly, 42, 750–783.CrossRefGoogle Scholar
  35. Glaeser, E. L., Laibson, D., & Sacerdote, B. (2002). An economic approach to social capital. Economic Journal, 112, F437–F458.CrossRefGoogle Scholar
  36. Granovetter, M. (1973). The strength of weak ties. American Journal of Sociology, 78, 1360–1380.CrossRefGoogle Scholar
  37. Greve, A., & Salaff, J. W. (2003). Social networks and entrepreneurship. Entrepreneurship: Theory and Practice, 28, 1–22.CrossRefGoogle Scholar
  38. Gustafsson, R., & Autio, E. (2011). A failure trichotomy in knowledge exploration and exploitation. Research Policy, 40, 819–831.CrossRefGoogle Scholar
  39. Hamilton, B. (2000). Does entrepreneurship pay? An empirical analysis of the returns to self-employment. Journal of Political Economy, 108, 604–631.CrossRefGoogle Scholar
  40. Harrison, R. T., & Leitch, C. M. (2005). Entrepreneurial learning: Researching the interface between learning and the entrepreneurial context. Entrepreneurship Theory and Practice, 29, 351–371.Google Scholar
  41. Hebert, R., & Link, A. (1988). The Entrepreneur: Mainstream views and radical critiques. 2nd ed. Westport, CT: Greenwood Publishing Group.Google Scholar
  42. Hoang, H., & Antoncic, B. (2003). Network-based research in entrepreneurship: A critical review. Journal of Business Venturing, 18, 165–187.CrossRefGoogle Scholar
  43. Holmes, T. J., & Schmitz, J. A. (1996). Managerial tenure, business age and small business turnover. Journal of Labor Economics, 14, 79–99.CrossRefGoogle Scholar
  44. Honig, B. (2001). Human capital and structural upheaval: A study of manufacturing firms in the West Bank. Journal of Business Venturing, 16, 575–594.Google Scholar
  45. Hultink, E. J., & Robben, H. S. J. (1995). Measuring new product success: The difference that time perspective makes. Journal of Product Innovation Management, 12, 392–405.CrossRefGoogle Scholar
  46. Jarillo, J. C. (1989). Entrepreneurship and growth: The strategic use of external resources. Journal of Business Venturing, 4, 133–147.CrossRefGoogle Scholar
  47. Johannisson, B. (1988). Business formation: A network approach. Scandinavian Journal of Management, 4, 83–99.CrossRefGoogle Scholar
  48. Jovanovic, B. (1982). Selection and the evolution of industry. Econometrica, 50, 649–670.CrossRefGoogle Scholar
  49. Kirzner, I. (1997). Entrepreneurial discovery and the competitive market process: An Austrian approach. Journal of Economic Literature, 35, 60–85.Google Scholar
  50. Knack, S., & Keefer, P. (1997). Does social capital have an economic payoff? A cross-country investigation. Quarterly Journal of Economics, 112, 1251–1288.CrossRefGoogle Scholar
  51. Koch, B. J. (2005). Social capital in China: An experimental approach. Paper presented at the 100th Annual Meeting of the American Sociological Association (ASA). Accessed 21 August 2008.
  52. Lerner, M., & Almor, T. (2002). Relationships among strategic capabilities and the performance of women-owned small ventures. Journal of Small Business Management, 40, 109–125.CrossRefGoogle Scholar
  53. Lerner, M., Brush, C. G., & Hisrich, R. D. (1995). Factors affecting performance of Israeli women entrepreneurs: An examination of alternative perspectives. In W. B. Bygrave et al. (Eds.), Frontiers of Entrepreneurship Research 1995. Boston: Babson College.Google Scholar
  54. Levinthal, D. A., & March, J. G. (1993). The myopia of learning. Strategic Management Journal, 14, 95–112.Google Scholar
  55. Light, I. (1984). Immigrant and ethnic enterprise in North America. Ethnic and Racial Studies, 7, 195–216.CrossRefGoogle Scholar
  56. Littunen, H. (2000). Networks and local environmental characteristics in the survival of new firms. Small Business Economics, 15, 59–71.CrossRefGoogle Scholar
  57. MacCrimmon, K. R., & Wehrung, D. A. (1990). Characteristics of risk taking executives. Management Science, 36, 422–435.CrossRefGoogle Scholar
  58. Malerba, F. (2007). Innovation and the dynamics and evolution of industries: Progress and challenges. International Journal of Industrial Organization, 25, 675–699.CrossRefGoogle Scholar
  59. Miguel, E., Gertler, P., & Levine, D. I. (2005). Does social capital promote industrialization? Evidence from a rapid industrializer. The Review of Economics and Statistics, 87, 754–762.CrossRefGoogle Scholar
  60. Minniti, M., & Bygrave, W. B. (2001). A dynamic model of entrepreneurial learning. Entrepreneurship: Theory and Practice, 25, 5–16.Google Scholar
  61. Norton, W. I., & Moore, W. T. (2006). The influence of entrepreneurial risk assessment on venture launch or growth decisions. Small Business Economics, 26, 215–226.CrossRefGoogle Scholar
  62. Ostgaard, T. A., & Birley, S. (1996). New venture growth and personal networks. Journal of Business Research, 36, 37–50.CrossRefGoogle Scholar
  63. Paldam, M., & Svendsen, G. T. (2000). Missing social capital and the transition in Eastern Europe. Working Paper #00-5. Aarhus: Aarhus School of Business, Department of Economics.Google Scholar
  64. Parker, S. C., & Van Praag, C. M. (2006). Schooling, capital constraints, and entrepreneurial performance: The endogenous triangle. Journal of Business and Economic Statistics, 24, 416–431.CrossRefGoogle Scholar
  65. Pennings, J. M., Lee, K., & Van Witteloostuijin, A. (1998). Human capital, social capital, and firm dissolution. Academy of Management Journal, 41, 425–440.CrossRefGoogle Scholar
  66. Peters, M., & Brush, C. (1996). Market information scanning activities and growth in new ventures: A comparison of service and manufacturing businesses. Journal of Business Research, 36, 81–89.CrossRefGoogle Scholar
  67. Piazza-Georgi, B. (2002). The role of human and social capital in growth: Extending our understanding. Cambridge Journal of Economics, 26, 461–479.CrossRefGoogle Scholar
  68. Pickles, A. R., & O’Farrell, P. N. (1987). An analysis of entrepreneurial behaviour from male work histories. Regional Studies, 21, 425–444.CrossRefGoogle Scholar
  69. Putnam, R. (1993). Making democracy work: Civic traditions in modern Italy. Princeton: Princeton University Press.Google Scholar
  70. Rand, J., & Tarp, F. (2007). Characteristics of the Vietnamese business environment: Evidence from a SME survey in 2005. A study prepared under component 5: Business Sector Research of the Danida Funded Business Sector Program Support (BSPS).Google Scholar
  71. Rand, J., & Tarp, F. (2009). Credit constraints and determinants of the cost of capital in Vietnamese manufacturing. Small Business Economics, 29, 1–13.CrossRefGoogle Scholar
  72. Ravasi, D., & Turati, C. (2005). Exploring entrepreneurial learning: A comparative study of technology development projects. Journal of Business Venturing, 20, 137–64.Google Scholar
  73. Reuber, A. R., & Fischer, E. (1994). Entrepreneur’s experience, expertise, and the performance of technology based firms. IEEE Transactions on Engineering Management, 41, 365–374.CrossRefGoogle Scholar
  74. Reuber, A. R., & Fisher, E. (1999). Understanding the consequences of founders’ experience. Journal of Small Business Management, 37, 30–45.Google Scholar
  75. Reynolds, P. D. (1993). High performance entrepreneurship: What makes it different? In N. C. Churchill, et al. (Eds.), Frontiers in entrepreneurship research 1993. Boston: Babson College.Google Scholar
  76. Reynolds, P. D., & White, S. B. (1997). The entrepreneurial process: Economic growth, men, women, and minorities. Westport, CN: Quorum Books.Google Scholar
  77. Rogers, W. (1993). Regression standard errors in clustered samples. Stata Technical Bulletin, 13, 19–23.Google Scholar
  78. Rooks, G., Szirmai, A., & Sserwanga, A. (2009). The interplay of human and social capital in entrepreneurship in developing countries: The case of Uganda. WIDER Research paper No. 2009/09. Helsinki: UNU-WIDER.Google Scholar
  79. Sanders, J., & Nee, V. (1996). Immigrant self-employment: The family as social capital and the value of human capital. American Sociological Review, 61, 231–249.CrossRefGoogle Scholar
  80. Santarelli, E., Carree, M., & Verheul, I. (2009). Unemployment and firm entry and exit: An update on a controversial relationship. Regional Studies, 43, 1061–1073.CrossRefGoogle Scholar
  81. Santarelli, E., & Tran, H. T. (2011). Growth of incumbent firms and entrepreneurship in Vietnam. Working Paper # 785. Bologna: University of Bologna, Department of Economics. Growth and Change (forthcoming).Google Scholar
  82. Santarelli, E., & Vivarelli, M. (2007). Entrepreneurship and the process of firm’s entry, survival, and growth. Industrial and Corporate Change, 16, 455–488.CrossRefGoogle Scholar
  83. Say, J. B. (1803/1971). A treatise on political economy of the production, distribution and consumption of wealth. New York: A.M. Kelley.Google Scholar
  84. Schiller, B. R., & Crewson, P. E. (1997). Entrepreneurial origins: A longitudinal inquiry. Economic Inquiry, 35, 523–531.CrossRefGoogle Scholar
  85. Schumpeter, J. A. (1934). The theory of economic development: An inquiry into profits, capital credit, interest and the business cycle. Cambridge, MA: Harvard University Press.Google Scholar
  86. Shane, S. (2000). Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11, 448–469.CrossRefGoogle Scholar
  87. Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25, 217–226.Google Scholar
  88. Smeltzer, L. R., Van Hook, B. L., & Hutt, R. W. (1991). Analysis and use of advisors as information sources in venture startups. Journal of Small Business Management, 29, 10–20.Google Scholar
  89. Sonnentag, S., & Frese, M. (2002). Performance concepts and performance theory. In S. Sonnentag (Ed.), Psychological management of individual performance: A handbook in the psychology of management in organizations (pp. 3–25). Chichester: Wiley.CrossRefGoogle Scholar
  90. Storey, D. J. (1994). Understanding the small business sector. London: International Thomson Business Press.Google Scholar
  91. Stuart, T. E., Hoang, H., & Hybels, R. (1999). Interorganizational endorsements and the performance of entrepreneurial ventures. Administrative Science Quarterly, 44, 315–349.CrossRefGoogle Scholar
  92. Szirmai, A. (2008). Explaining success and failure in development. UNU-MERIT Working Paper #2008-013. Maastricht: UNU-MERIT.Google Scholar
  93. Taylor, M. (1999). Survival of the fittest? An analysis of self-employment duration in Britain. Economic Journal, 109, 140–155.CrossRefGoogle Scholar
  94. Timmons, J. A. (1994). New venture creation (4th ed.). Irwin, IL: Burr Ridge.Google Scholar
  95. Tran, A. N. (2010). Corruption, political systems and human development. In A. K. Rajivan & R. Gampat (Eds.), Perspectives on corruption and human development (pp. 268– 320). Bangalore: Macmillan Publishers.Google Scholar
  96. Tran-Nam, B., & Pham, Ch. D. (Eds.). (2003). The Vietnamese economy: Awakening the dormant dragon. London: Routledge Curzon.Google Scholar
  97. Van der Sluis, J., Van Praag, C. M., & Vijverberg, W. (2003). Entrepreneurship selection and performance: A meta-analysis of the impact of education in industrialized countries. The World Bank Economic Review, 19, 225–261.CrossRefGoogle Scholar
  98. Van Praag, C. M. (2003). Business survival and success of young small business owners. Small Business Economic, 21, 1–17.Google Scholar
  99. Van Praag, C. M. (2005). Successful entrepreneurship: Confronting economic theory with empirical evidence. Cheltenham: Edward Elgar.Google Scholar
  100. Van Praag, C. M., & Cramer, J. S. (2001). The roots of entrepreneurship and labor demand: Individual ability and low risk aversion. Economica, 269, 45–62.CrossRefGoogle Scholar
  101. Venkataraman, S. (1997). The distinctive domain of entrepreneurship research. In Advances in Entrepreneurship, Firm Emergence and Growth, Vol. 3 (119–138). Greenwich, CT: JAI Press.Google Scholar
  102. Westhead P., Ucbasaran, D., & Wright, M. (2005). Decisions, actions and performance: Do novice, serial, and portfolio entrepreneurs differ? Journal of Small Business Management, 43, 393–417.Google Scholar
  103. Yoon, I. (1991). The changing significance of ethnic and class resources in immigrant business: The case of Korean immigrant businesses in Chicago. International Migration Review, 25, 303–331.CrossRefGoogle Scholar
  104. Zahra, S.A., & George, G. (2002). International entrepreneurship: The current status of the field and future research agenda. In M. Hitt, R. Ireland, M. Camp, & D. Sexton (Eds.), Strategic leadership: creating a new mindset (pp. 255–288). London: Basil Blackwell.Google Scholar
  105. Zimmer, C., & Aldrich, H. (1987). Resource mobilization through ethnic networks: Kinship and friendship ties of shopkeepers in England. Sociological Perspectives, 30, 422–445.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC. 2012

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of BolognaBolognaItaly
  2. 2.Centre of Commerce and ManagementRMIT International UniversityHanoiVietnam

Personalised recommendations