Performance Spillover Effects in Entrepreneurial Networks: Assessing a Dyadic Theory of Social Capital

Abstract

We study how social capital induces performance spillover effects in an industry network of entrepreneurs building their own hydroelectric micro-power plants. Most of them are farmers and novices living in rural areas. There is a link between social capital and performance at firm level. By expanding the level of analysis to dyads, we find that entrepreneurs lacking social capital can compensate for this through cohesion with colleagues rich in social capital. Entrepreneurs can also benefit by mimicking the networking patterns of successful colleagues, gaining access to equivalent resources developed in the niche.

Entrepreneurship and mutuality: social capital in processes and practices

“…This is problematic because while some rightly portray social capital as offering advantages (Nahapiet and Ghoshal, 1998;Adler and Kwon, 2002;Davidsson and Honig, 2003;Gedajlovic et al, 2013); others have found social capital suppressing entrepreneurship when a dominant group restricts outside access to information, influence and the benefits of the collective (Light and Dana, 2013, p.603). This has been further exasperated by perceptions which too often describe the manifestation of social capital rather than social capital itself (Anderson, Park and Jack, 2007) As the broader theoretical construct to which networking and embeddedness relate, social capital is broadly perceived as an asset that exists in social relations and networks (Burt, 1992;Aarstad et al, 2010). It has been described as the "sum of the actual and potential resources embedded within, available through and derived from the network of relationships possessed by individuals or social units" (Nahapiet and Ghoshal, 1998, p.243) -an instrumental, enabling factor (DeClercq et al, 2013).…”

Does Trust Matter for Entrepreneurship: Evidence from a Cross-Section of Countries

“…Some other authors have shown that trust facilitates the creation of enterprises, (e.g., Mueller, (2006) [43], Davidsson and Honig, (2003) [44], Rodríguez and Santos, (2007) [45], Clarke and Chandra, (2011) [46] and Deakins et al (2007) [47]), whereas others suggest that trust promotes access to other resources (e.g., Baron and Markmann, (2003) [48], Runyan et al, (2006) [49], Honig et al, (2006) [50] and Packalen, (2007) [51]). Trust has also been found to be indispensable to the birth of new enterprises (e.g., Geindre (2009) [52] and Aarstad et al, (2010) [53]) and also for the growth and development of small-l and medium-sized enterprises (e.g., Bosma et al (2004) [54], Mosek et al (2007) [55], Han, (2007) [56] and Coviello and Cox, (2007) [57]). While certainly informative and relevant, most of these previous studies linking trust to entrepreneurship have utilized a microeconomic or management framework.…”

The process of embedding a small firm in its industrial context

“…Our study found that symbolic capital could be shared among staff members in a similar fashion as social capital (Aarstad et al, 2010). Thus, we propose that future research examine such capital sharing practices in more detail.…”