Abstract
Given the importance of social capital in entrepreneurial success and growth, understanding how it can be exploited for optimal performance of the venture becomes critical. While the Government of Kenya, in recognition of the importance of entrepreneurial ventures in driving the economy, has put in both structural and affirmative measures towards enhancement of social capital and support for entrepreneurs, performance of these businesses still remains significantly low. The objectives of this study were to discuss the key constructs, variables and perspectives underlying the conceptualization of social capital and performance, and the arising controversies. Additionally, the study sought to discuss key methodological issues emerging from existing empirical studies, highlight critical knowledge gaps emanating from critical review of the literature and suggest a robust conceptual framework to guide a further study that would address the highlighted knowledge gaps. This study is anchored on the social capital theory which strongly considers social capital as an essential form of capital; one that no business can ignore and expect to survive or thrive. Other supporting theories include the contingency theory, economic theory, anthropological theory and innovation theories. Among the major gaps identified by this study include methodological gaps; most studies reviewed used descriptive design which is known to be the weakest in establishing cause and effect relationships. Some of the studies had very small sample sizes, known to potentially increase errors. Other gaps include contextual gaps; most of the studies considered established businesses where operations tend to be more standardized and innovation is adequately funded, unlike the low income areas where resources are often limited. Conceptual gaps were identified among studies that used direct relationships. For a broader and deeper appreciation of the relationship between social capital and performance, this study recommends conceptualization of a future study whereby the mediating effect of innovation and the moderating effect of operating business environment are considered, preferably within a low income area with less established / informal businesses within the service sector.
Highlights
Social capital has emerged as a multi-faceted element that has become relevant among developed and developing countries alike (World Bank, 2011)
While knowledge is a critical component without which innovation may not take place, (Lowik et al, 2012), it is transmitted through interactions among connectors (Kanter, 1988 in Björk, 2011)
According to Adler and Kwon (2000), when analyzing social networks as a component of social capital, one must consider three elements namely the opportunity i.e. the varied dealings likely to materialize from shared ties, the impetus that consists of trust as well as the necessary drive to proceed, and the ability i.e. the real ability of individual contacts to yield the desired outcome
Summary
Social capital has emerged as a multi-faceted element that has become relevant among developed and developing countries alike (World Bank, 2011) It is considered as comprising of a reserve of social norms, standards, ideals, attitudes, trusts, responsibilities, connections, associates, public engagements, information flows, as well as bodies that promote co-operation and collaboration towards shared gains while enhancing socio-economic advancement of the actors. Vol 14, No 8; 2019 as evidenced by Grossman and Helpman (1991), and Aghion and Howitt (1992), the higher the output of innovative productions, the higher the per capita income; which is an economic indicator of firm growth and performance This common ground on the importance of social capital has made it critical for entrepreneurs, development economists and policy makers alike to want to appreciate how it can be formed, measured, applied and exploited for optimal gains. The promise of social capital, as a centre-piece and anchor that influences information flow and innovation while controlling the business operating environment for optimal firm performance, makes it an inimitable asset for the entrepreneur, and makes further research and study of social capital both exciting and revolutionary
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