Social capital and entrepreneurial growth aspiration: a comparison of technology- and non-technology-based nascent entrepreneurs

Abstract

Social capital is broadly described by researchers as an asset embedded in relationships—of individuals, communities, networks or societies [Admin. Sci. Q. 42 (1997) 339; Acad. Manage. Rev. 23 (1998) 242; Organ. Sci. 8 (1997) 109]. This study will build upon Nahapiet and Ghoshal's [Acad. Manage. Rev. 23 (1998) 242] three dimensions of social capital, including the structural, the relational, and the cognitive. The purpose of this research is to investigate (1) how the three dimensions of social capital interact among themselves in technology-intensive new ventures, (2) to what extent the interactions are different from those in the context of non-technology-based new ventures, (3) how the three dimensions of social capital influence the growth aspiration of the technology-based new ventures in a way that is different from non-technology-based ventures. We examined these questions using a data set from Panel Study of Entrepreneurial Dynamics (PSED) [Reynolds, P. (2000). National panel study of US business start-ups: background and methodology. In Databases for the study of entrepreneurship Vol. 4 (153–227) Greenwich, CT: JAI Press/Elsevier]. Results from structural equation modeling suggest that technology-based entrepreneurs benefit more from relational embeddedness—the freer and greater exchange of non-redundant information. Non-technology-based entrepreneurs benefit more from structural embeddedness—the extensiveness of social networks. Each dimension of social capital reinforces the creation of the other dimensions in technology-based new ventures, which in turn, contributes to entrepreneurial growth aspiration. Our findings suggest that the closure [Am. J. Sociol. 94 (1988) S95] and hole arguments [Burt, R.S. (1992). Structural holes. Cambridge, MA: Harvard Business Press; Admin. Sci. Q. 42 (1997) 339] are not as contradictory as they might seem. Implications and future research directions are proposed.