Social Capital and Small Business Competitiveness: Evidence from Cross-Section Tourism Data

Abstract

The paper analyses the effect of social capital generation processes and, in particular, network business relations, on the competitive performance of tourism enterprises. Drawing from an evolutionary perspective, we measure the performance of firms through measuring their productive efficiency. The applied methodology involves a two-stage Data Envelopment Analysis model based on which, a non-parametric production function is estimated in order to measure each firm’s technical and scale efficiency level, at the first stage, while at the second stage, various Tobit models are estimated in order to identify the role of three distinct types of networks as determinants of differential levels of technical and scale efficiency. Overall, analysis indicates that the effect of networking activity upon performance is a complex issue structured by the nature of networks, their focus, the local/extra-local setting they are developed at, and the ability of firms to manage knowledge for building successful entrepreneurial decisions.