The Causal Mechanisms of Social Capital in Social Entrepreneurship

Abstract

Social entrepreneurship is a multilevel phenomenon emerging from dynamic interactions between agency and structures at institutional, individual and community levels. Social entrepreneurs must bridge gaps between different individuals, organisations, industries, societal sectors through networking. However, little effort has been made to develop theories to explain how social networks/capital work and little empirical evidence has been provided. This paper aims to close this gap by developing a critical realist analysis of the role of social capital in social entrepreneurship. We draw on social capital theory and critical realism and propose that social capital is the inherent causal power embedded in social networks. As a causal power, social capital may or may not be actualised and, when actualised, it enables entrepreneurial actions to create social value. Through a multiple-case study that involves 45 semi-structured interviews, we identify three mechanisms – sparking, manifesting and scaling – through which social entrepreneurs use their social capital to obtain information, knowledge, market access, business resources, power and influence. These mechanisms enable entrepreneurial actions to create social and economic value. This paper develops our understanding of SE as a multi-level phenomenon by analysing the relations between individual networks and social capital, organisational resources and social sector market. It also extends social capital theory by exploring social capital in SE and highlighting its enabling effects on entrepreneurial actions.