The Combined Effect of Founder' Human and Social Capital on Entrepreneurship

Abstract

This paper is a qualitative study that explores how founders’ human capital interacts with their social capital to shape the nature of the entrepreneurship opportunity identified. Given that we have limited theory on the combined effects of human and social capital, particularly as they relate to differing combinations (low versus high human and social capital), a qualitative approach assists in uncovering the role each plays in influencing novelty of opportunity identification. The data yielded a 2x2 model by which founders were categorized based on low and high levels of human and social capital. The evidence indicated that the nature of the opportunity an entrepreneur identifies is systematically related to his or her business-specific human and instrumentally-based social capital. Differing combinations of human and social capital gave rise to differing levels of novelty in the opportunity pursued. While low levels of both human and social capital resulted in the lowest level of opportunity novelty, high levels of both types of capital were associated with the highest level of opportunity novelty. The findings also supported the notion that the nature of knowledge embedded in human and social capital is not the same, and therefore each yields different novelty benefits. The results of this qualitative analysis provide layered insight into how human and social capital drives novelty of opportunity identified, an important aspect of the firm at start-up.