Advertisement

Small Business Economics

, Volume 46, Issue 3, pp 407–423 | Cite as

Complementary or compensatory? A contingency perspective on how entrepreneurs’ human and social capital interact in shaping start-up progress

  • Thorsten Semrau
  • Christian Hopp
Article

Abstract

Entrepreneurs can profit from both their human and social capital. However, research on how the two types of capital interact in shaping relevant outcomes has produced inconclusive results. Attempting to explain the inconsistencies in previous findings, we suggest that the relationship between entrepreneurs’ human and social capital is neither fundamentally complementary nor fundamentally compensatory; instead, the nature of this relationship is contingent on the type of support derived from the network. Our analyses, based on 474 solo nascent entrepreneurs from the PSED II, support our reasoning. While we find nascent entrepreneurs’ human capital and their financial social capital to positively interact in shaping start-up progress, we observe a negative interaction between nascent entrepreneurs’ human capital and their informational social capital. Implications for theory and practice are discussed.

Keywords

Entrepreneurship Nascent entrepreneurs Start-up progress Human capital Social capital Interaction Contingency perspective 

JEL Classifications

M13 L26 

Notes

Acknowledgments

Earlier versions of this manuscript were presented at the 17th Annual Interdisciplinary Entrepreneurship Conference 2013 in Koblenz, Germany, and at the 74th Annual Meeting of the Academy of Management 2014 in Philadelphia, PA, USA.

Compliance with ethical standards

Conflict of interest

The authors declare that they have no conflict of interest.

References

  1. Aldrich, H. (1999). Organizations evolving. London: SAGE.Google Scholar
  2. Aldrich, H. E., & Martinez, M. A. (2001). Many are called, but few are chosen: An evolutionary perspective for the study of entrepreneurship. Entrepreneurship: Theory & Practice, 25(4), 41.Google Scholar
  3. Alexy, O., Block, J., Sandner, P., & Ter Wal, A. J. (2012). Social capital of venture capitalists and start-up funding. Small Business Economics, 39(4), 835–851.CrossRefGoogle Scholar
  4. Austin, P. C. (2011). An introduction to propensity score methods for reducing the effects of confounding in observational studies. Multivariate Behavioral Research, 46(3), 399–424.CrossRefGoogle Scholar
  5. Baron, R. A., & Tang, J. (2009). Entrepreneurs’ social skills and new venture performance: Mediating mechanisms and cultural generality. Journal of Management, 35(2), 282–306.CrossRefGoogle Scholar
  6. Bates, T. (2005). Analysis of young, small firms that have closed: Delineating successful from unsuccessful closures. Journal of Business Venturing, 20(3), 343–358.CrossRefGoogle Scholar
  7. Batjargal, B. (2007). Internet entrepreneurship: Social capital, human capital, and performance of Internet ventures in China. Research Policy, 36(5), 605–618.CrossRefGoogle Scholar
  8. Batjargal, B. (2010). The effects of network’s structural holes: Polycentric institutions, product portfolio, and new venture growth in China and Russia. Strategic Entrepreneurship Journal, 4(2), 146–163.CrossRefGoogle Scholar
  9. Bhagavatula, S., Elfring, T., van Tilburg, A., & van de Bunt, G. G. (2010). How social and human capital influence opportunity recognition and resource mobilization in India’s handloom industry. Journal of Business Venturing, 25(3), 245–260.CrossRefGoogle Scholar
  10. Birley, S. (1985). The role of networks in the entrepreneurial process. Journal of Business Venturing, 1(1), 107–117.CrossRefGoogle Scholar
  11. Bosma, N., van Praag, M., Thurik, R., & de Wit, G. (2004). The value of human and social capital investments for the business performance of startups. Small Business Economics, 23(3), 227–236.CrossRefGoogle Scholar
  12. Bowey, J. L., & Easton, G. (2007). Entrepreneurial social capital unplugged: An activity-based analysis. International Small Business Journal, 25(3), 273–306.CrossRefGoogle Scholar
  13. Brüderl, J., & Preisendörfer, P. (1998). Network support and the success of newly founded businesses. Small Business Economics, 10(3), 213–225.CrossRefGoogle Scholar
  14. Burt, R. S. (1992). Structural holes: The social structure of competition. Cambridge, MA: Harvard University Press.Google Scholar
  15. Burt, R. S. (1997). The contingent value of social capital. Administrative Science Quarterly, 42(2), 339–365.CrossRefGoogle Scholar
  16. Chell, E., & Baines, S. (2000). Networking entrepreneurship and microbusiness behaviour. Entrepreneurship & Regional Development, 12(3), 195–215.CrossRefGoogle Scholar
  17. Colombo, M. G., & Grilli, L. (2005). Founders’ human capital and the growth of new technology-based firms: A competence-based view. Research Policy, 34(6), 795–816.CrossRefGoogle Scholar
  18. Colombo, M. G., & Grilli, L. (2010). On growth drivers of high-tech start-ups: Exploring the role of founders’ human capital and venture capital. Journal of Business Venturing, 25(6), 610–626.CrossRefGoogle Scholar
  19. Dahlqvist, J., & Wiklund, J. (2012). Measuring the market newness of new ventures. Journal of Business Venturing, 27(2), 185–196.CrossRefGoogle Scholar
  20. Davidsson, P. (2006). Nascent entrepreneurship: Empirical studies and developments. Foundations and Trends in Entrepreneurship, 2(1), 1–76.CrossRefGoogle Scholar
  21. Davidsson, P., & Gordon, S. (2012). Panel studies of new venture creation: A methods-focused review and suggestions for future research. Small Business Economics, 39(4), 853–876.CrossRefGoogle Scholar
  22. Davidsson, P., & Honig, B. (2003). The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3), 301–331.CrossRefGoogle Scholar
  23. Deeds, D. L., & Hill, C. W. L. (1996). Strategic alliances and the rate of new product development: An empirical study of entrepreneurial biotechnology firms. Journal of Business Venturing, 11(1), 41–55.CrossRefGoogle Scholar
  24. Dimov, D. (2010). Nascent entrepreneurs and venture emergence: Opportunity confidence, human capital, and early planning. Journal of Management Studies, 47(6), 1123–1153.CrossRefGoogle Scholar
  25. Elfring, T., & Hulsink, W. (2003). Networks in entrepreneurship: The case of high-technology firms. Small Business Economics, 21(4), 409–422.CrossRefGoogle Scholar
  26. Florin, J., Lubatkin, M., & Schulze, W. (2003). A social capital model of high-growth ventures. Academy of Management Journal, 46(3), 374–384.CrossRefGoogle Scholar
  27. Gartner, W. B. (1985). A conceptual framework for describing the phenomenon of new venture creation. Academy of Management Review, 10(4), 696–706.Google Scholar
  28. Greve, A., & Salaff, J. W. (2003). Social networks and entrepreneurship. Entrepreneurship: Theory & Practice, 28(1), 1–22.Google Scholar
  29. Hanlon, D., & Saunders, C. (2007). Marshaling resources to form small new ventures: Toward a more holistic understanding of entrepreneurial support. Entrepreneurship: Theory & Practice, 31(4), 619–641.Google Scholar
  30. Hoang, H., & Antoncic, B. (2003). Network-based research in entrepreneurship: A critical review. Journal of Business Venturing, 18(2), 165–187.CrossRefGoogle Scholar
  31. Holtz-Eakin, D., Joulfaian, D., & Rosen, H. S. (1994). Sticking it out: Entrepreneurial survival and liquidity constraints. Journal of Political Economy, 102(1), 53.CrossRefGoogle Scholar
  32. Honig, B., & Karlsson, T. (2004). Institutional forces and the written business plan. Journal of Management, 30(1), 29–48.CrossRefGoogle Scholar
  33. Ireland, R. D., Hitt, M. A., & Sirmon, D. G. (2003). A model of strategic entrepreneurship: The construct and its dimensions. Journal of Management, 29(6), 963.CrossRefGoogle Scholar
  34. Johnson, R. E., Groff, K. W., & Taing, M. U. (2009). Nature of the interactions among organizational commitments: Complementary, competitive or synergistic? British Journal of Management, 20(4), 431–447.CrossRefGoogle Scholar
  35. Johnson, P., Parker, S., & Wijbenga, F. (2006). Nascent entrepreneurship research: Achievements and opportunities. Small Business Economics, 27(1), 1–4.CrossRefGoogle Scholar
  36. Kim, P. H., & Aldrich, H. E. (2005). Social capital and entrepreneurship. Foundations and Trends in Entrepreneurship, 1(2), 1–52.Google Scholar
  37. Kim, P., Aldrich, H., & Keister, L. (2006). Access (not) denied: The impact of financial, human, and cultural capital on entrepreneurial entry in the United States. Small Business Economics, 27(1), 5–22.CrossRefGoogle Scholar
  38. Kim, P. H., Longest, K. C., & Lippmann, S. (2015). The tortoise versus the hare: Progress and business viability differences between conventional and leisure-based founders. Journal of Business Venturing, 30(2), 185–204.CrossRefGoogle Scholar
  39. Klyver, K., & Schenkel, M. T. (2013). From resource access to use: Exploring the impact of resource combinations on nascent entrepreneurship. Journal of Small Business Management, 51(4), 539–556.CrossRefGoogle Scholar
  40. Li, M. (2013). Using the propensity score method to estimate causal effects: A review and practical guide. Organizational Research Methods, 16(2), 188–226.CrossRefGoogle Scholar
  41. Liao, J., & Welsch, H. (2005). Roles of social capital in venture creation: Key dimensions and research implications. Journal of Small Business Management, 43(4), 345–362.CrossRefGoogle Scholar
  42. Mosey, S., & Wright, M. (2007). From human capital to social capital: A longitudinal study of technology-based academic entrepreneurs. Entrepreneurship: Theory & Practice, 31(6), 909–935.Google Scholar
  43. Newbert, S., & Tornikoski, E. (2012). Supporter networks and network growth: A contingency model of organizational emergence. Small Business Economics, 39(1), 141–159.CrossRefGoogle Scholar
  44. Ozgen, E., & Baron, R. A. (2007). Social sources of information in opportunity recognition: Effects of mentors, industry networks, and professional forums. Journal of Business Venturing, 22(2), 174–192.CrossRefGoogle Scholar
  45. Rauch, A., Frese, M., & Utsch, A. (2005). Effects of human capital and long-term human resources development and utilization on employment growth of small-scale businesses: A causal analysis. Entrepreneurship Theory and Practice, 29(6), 681–698.Google Scholar
  46. Renko, M. (2013). Early challenges of nascent social entrepreneurs. Entrepreneurship: Theory and Practice, 37(5), 1045–1069.Google Scholar
  47. Reynolds, P. D. (2011). Informal and early formal financial support in the business creation process: Exploration with PSED II data set. Journal of Small Business Management, 49(1), 27–54.CrossRefGoogle Scholar
  48. Rotefoss, B., & Kolvereid, L. (2005). Aspiring, nascent and fledgling entrepreneurs: An investigation of the business start-up process. Entrepreneurship & Regional Development, 17(2), 109–127.CrossRefGoogle Scholar
  49. Semrau, T., & Werner, A. (2012). The two sides of the story: Network investments and new venture creation. Journal of Small Business Management, 50(1), 159–180.CrossRefGoogle Scholar
  50. Semrau, T., & Werner, A. (2014). How exactly do network relationships pay off? The effects of network size and relationship quality on access to start-up resources. Entrepreneurship: Theory and Practice, 38(3), 501–525.Google Scholar
  51. Shane, S., & Venkatraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217–226.Google Scholar
  52. Short, J. C., McKelvie, A., Ketchen, D. J., & Chandler, G. N. (2009). Firm and industry effects on firm performance: A generalization and extension for new ventures. Strategic Entrepreneurship Journal, 3(1), 47–65.CrossRefGoogle Scholar
  53. Sigmund, S., Semrau, T., & Wegner, D. (2015). Networking ability and the financial performance of new ventures: Moderating effects of venture size, institutional environment, and their interaction. Journal of Small Business Management, 53(1), 266–283.CrossRefGoogle Scholar
  54. Stam, W. (2010). Industry event participation and network brokerage among entrepreneurial ventures. Journal of Management Studies, 47(4), 625–653.CrossRefGoogle Scholar
  55. Stam, W., Arzlanian, S., & Elfring, T. (2014). Social capital of entrepreneurs and small firm performance: A meta-analysis of contextual and methodological moderators. Journal of Business Venturing, 29(1), 152–173.CrossRefGoogle Scholar
  56. Starr, J. A., & MacMillan, I. C. (1990). Resource cooptation via social contracting: Resource acquisition strategies for new ventures. Strategic Management Journal, 11(4), 79–92.Google Scholar
  57. Ucbasaran, D., Westhead, P., & Wright, M. (2008). Opportunity identification and pursuit: does an entrepreneur’s human capital matter? Small Business Economics, 30(2), 153–173.CrossRefGoogle Scholar
  58. Unger, J. M., Keith, N., Hilling, C., Gielnik, M. M., & Frese, M. (2009). Deliberate practice among South African small business owners: Relationships with education, cognitive ability, knowledge, and success. Journal of Occupational and Organizational Psychology, 82(1), 21–44.CrossRefGoogle Scholar
  59. Unger, J. M., Rauch, A., Frese, M., & Rosenbusch, N. (2011). Human capital and entrepreneurial success: A meta-analytical review. Journal of Business Venturing, 26(3), 341–358.CrossRefGoogle Scholar
  60. Van Gelderen, M., Thurik, R., & Bosma, N. (2006). Success and risk factors in the pre-startup phase. Small Business Economics, 26(4), 319–335.CrossRefGoogle Scholar
  61. Vissa, B., & Chacar, A. S. (2009). Leveraging ties: The contingent value of entrepreneurial teams’ external advice networks on Indian software venture performance. Strategic Management Journal, 30(11), 1179–1191.CrossRefGoogle Scholar
  62. Watson, J. (2007). Modeling the relationship between networking and firm performance. Journal of Business Venturing, 22(6), 852–874.CrossRefGoogle Scholar
  63. Yoo, J.-K. (2000). Utilization of social networks for immigrant entrepreneurship: A case study of Korean immigrants in the Atlanta Area. International Review of Sociology, 10(3), 347–363.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.University of CologneCologneGermany
  2. 2.RWTH Aachen UniversityAachenGermany

Personalised recommendations