Social Capital and Founder, Team, and Firm Networks in Entrepreneurship

Abstract

Entrepreneurial activity is facilitated by the ties that connect founders and their venture to a broader network of actors. This insight on the value of social capital has been enriched by a large body of research that builds on core concepts of network content, governance, and structure. Network content refers to the resources, information and social support that is exchanged or flows between actors. Governance encompasses the mechanisms that organize and regulate the exchange. Network structure refers to broader patterns created from the relationships between actors. With these building blocks, key findings that have emerged over 30 years of research can be organized into two domains: how networks influence entrepreneurial outcomes and how networks develop over the entrepreneurial process. Core findings regarding the performance consequences of social capital underscore its benefits while identifying limitations due to decreasing returns to growing and maintaining a large network or to contingencies tied to the stage of the venture’s growth. Our understanding of the sources of network evolution and the resulting patterns have also developed significantly. As a motor of network change, scholars have emphasized the goal-oriented behavior of the entrepreneur, but recognize social relationships also engender mutual concern, obligation, and emotional attachment. From a focus on founder and founding team ties to start-up, small firm networks, the literature now spans multiple levels and accounts for contextual variation between industries and institutional environments. Advances within each of these domains of inquiry have led to rich insights and greater conceptual complexity. Future research opportunities will arise that leverage cross-fertilization of the process and performance research streams.