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Social capital effects on the discovery and exploitation of entrepreneurial opportunities

Abstract

Social capital refers to social networks and the norms of reciprocity, cooperation and trust associated with them. It can be studied at different levels of analysis. As previous literature suggests, social capital has aspects at both the individual and collective levels. However, theory development and empirical research have focused on separate, sometimes diverging levels. In an attempt to address this, this research examines the simultaneous influence of individual and regional social capital on the discovery and exploitation of entrepreneurial opportunities using individual-level data from the Global Entrepreneurship Monitor linked with regional-level data on social capital. The results show that individuals from regions with higher social capital are more likely to discover and to exploit entrepreneurial opportunities. Moreover, individuals having networks with other entrepreneurs are also more likely to identify a business opportunity and to become an entrepreneur. Also, we found that social capital at individual level had a greater effect than social capital at regional level in the two stages of the entrepreneurial process.

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Notes

  1. 1.

    A dichotomous variable constructed from replies to the question, “Do you know a person who started a business in the past 2 years?” It takes value 1 when the individual replies in the affirmative and value 0 otherwise.

  2. 2.

    Experts gave their opinions on a scale of five points to five questions on the existence of opportunities in their Autonomous Community: (1) In my Autonomous Community (AC) there are many very good opportunities for creating new firms; (2) In my AC there are more good opportunities for creating new enterprises than people willing to take them up; (3) In my AC there has been a considerable increase in the number of opportunities for creating new businesses in the last five years; (4) In my AC it is easy for people to devote themselves to exploiting entrepreneurial opportunities. (5) In my AC there are many good opportunities for creating new, fast-growing businesses.

  3. 3.

    A dichotomous variable constructed from replies to the question, “Are you thinking of setting up a new business even if it is only a one-man business or with just a few others in the next three years, including any form of self-employment? It takes value 1 when the individual replies in the affirmative and value 0 otherwise.

  4. 4.

    In the GEM project, a second stage in the exploitation of opportunities is identified, covering between 3 and 42 months of the new business; it is usually referred to as a baby business.

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Acknowledgments

The authors are grateful for financial support from the Spanish Ministry of Science and Technology (ECO2012-35439).

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Correspondence to Nuria González-Álvarez.

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Nieto, M., González-Álvarez, N. Social capital effects on the discovery and exploitation of entrepreneurial opportunities. Int Entrep Manag J 12, 507–530 (2016). https://doi.org/10.1007/s11365-014-0353-0

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Keywords

  • Regional social capital
  • Individual social capital
  • Discovery and exploitation of entrepreneurial opportunities
  • GEM