Social capital of entrepreneurs and small firm performance: A meta-analysis of contextual and methodological moderators

Despite a surge of studies examining the role of social capital in the entrepreneurial process, no quantitative assessments exist of the empirical evidence to date. To resolve seemingly conflicting results, we conducted a meta-analysis of the link between entrepreneurs' personal networks and small firm performance and identify new moderators affecting this relationship. Analyses of 61 independent samples indicated that the social capital–performance link was positive and significant (r_c = .211). Effect sizes of weak ties were smaller than those of structural holes, while network diversity had the largest positive effect on performance. Results also showed that the social capital–performance link depends on the age of small firms, the industry and institutional contexts in which they operate, and on the specific network or performance measures used. Based on these findings, we develop recommendations for future research on the contingent value of social capital for small firms.     

Economic geography and emerging market clusters: A co-evolutionary study of local and non-local networks in Bangalore

The presence of network ties within location plays a significant role in organization and evolution of clusters. This has proven to be particularly true for clusters specializing in knowledge intensive industries, where the organization of resources – people and technology – has been a primary driver for firm and regional performance. With the help of a longitudinal case study of the Bangalore IT cluster in India, we investigate the effect of local and non-local network ties on its evolution. We argue that networks – both local and non-local – play an important role in the development of cluster. We propose a non-linear relationship between cluster evolution phases and the type of network ties most prominent. Our study also outlines the role that embedding, expansion, and extension of ties plays in transitioning cluster from one phase to the other. The consideration of non-local ties is rather nascent in the cluster literature and promises to enhance the understanding of how clusters develop at both levels – policy as well as firm.     

SUPPLY CHAIN CAPITAL: THE IMPACT OF STRUCTURAL AND RELATIONAL LINKAGES ON FIRM EXECUTION AND INNOVATION

Firms invest millions of dollars annually in developing their supply chains, with the broad goal of increasing their own performance. However, despite the significant resources deployed for supply chain development, the extent to which initiating, maintaining, and managing supply chain relationships contributes to firm success remains unclear. The current article provides conceptual development supporting the valuation of firm‐to‐firm supply chain connections from the perspective of the focal firm. Based on the social network and economics literatures, the article introduces the concept of supply chain capital, which comprises the value of both the structural configuration and relationship content of the firm's supply chain network. Following theoretical development, a non‐exhaustive set of propositions are constructed illustrating multiple ways that supply chain capital can be accrued and exploited for firm‐level benefit. Managerial recommendations for investment in supply chain capital are included, as are future directions for research in the area of supply chain networks.     

Retailing and the period leading up to the Great Recession: a model and a 25-year financial ratio analysis of US retailing

Today, more than ever, retailers need to analyze the key solvency (liquidity) and efficiency financial ratio measures that affect how well their firms perform and to engage in long-term activities that will lead to improved results. Clearly, the recent ‘Great Recession’ has had a significant negative impact on retailers worldwide. Yet, an important question remains largely answered: Was the retail industry a major contributor to the events leading up to the economic crisis or was it an affected bystander shaken by the recession? This paper addresses the question for US retailing, the largest retail economy in the world. Although there has been considerable research on some aspects of the performance of the industry and individual firms, no prior studies exist that comprehensively examine the financial ratio performance of the totality of US retailing over time. Here, the financial performance of US retailers in 54 different sectors is analyzed for the 1982–2007 period using a model and data derived from Dun & Bradstreet's annual Industry Norms & Key Business Ratios. Results show that for many financial measures – such as the current ratio, liabilities to net worth, return on sales (profit margin), return on assets, financial leverage, and return on net worth – US retailing's financial performance has been in a steady decline for decades. The model introduced here is largely validated.     

Understanding the Development of IOS-Based Trading Partner Relationships: A Structural Model with Empirical Validation

This study develops a research model that explains the interorganizational system (IOS) network development process in the buyer-supplier relationship. Particular attention is paid to the antecedents and consequences of two types of influence strategies— exercising power and offering IOS support—that a buyer firm often uses in increasing IOS usage with its suppliers. The research model is empirically tested with data obtained through a field survey from a sample of 233 suppliers, each exchanging electronic data interchange (EDI) documents with a nationally known retailing buyer in the United States. We find that the buyer's decision to offer EDI-related support to a supplier is negatively associated with the transaction volume with the supplier but positively with the supplier's IT capabilities as well as the supplier's transaction-specific investments made toward the relationship with the buyer. On the other hand, the buyer's decision to exercise power to a supplier is found to be negatively associated with the transaction volume between the trading partners. Our findings also indicate that offering EDI support, rather than exercising power, is more effectual in inducing greater EDI usage between the trading partners. Finally, the buyer's EDI support is found to be positively associated with suppliers' perceived benefits of using EDI in the relationship that, in turn contributes to more voluntary use of EDI with the buyer.     

Resilience: Lessons from banks that have braved the economic crisis—And from those that have not

Resilience – a firm's ability to adapt, endure, quickly bounce back, and then thrive despite a catastrophic event – addresses diverse managerial constructs including performance (Carmeli & Markman, 2011). Our exploratory study expands this line of research by making two contributions: first, we develop and test a new revelatory measure for resilience – VOLARE – combining financial performance measures with volatility data. Then, applying this new measure to the financial industry, from 2002 to 2011, we identify highly resilient international financial services firms (IFSFs; e.g., banks) and compare them with less resilient IFSFs. Second, we assess three factors – bank size, home-market solidity, and product and market complexity – that the literature has traditionally shown to be highly predictive of banks’ performance. Consistent with our expectations, the results corroborate that VOLARE is complementary to, but distinct from, traditional financial measures of firm performance. We explain these deviations from traditional studies and suggest further research topics.     

Taking stock of social capital research: its application in service-oriented firms

Abstract

Notwithstanding the substantial literature on social capital produced in recent years, there have been fewer attempts to examine social capital within the services industry. Our contribution highlights existing research on social capital particularly on the application and outcomes of social capital in the context of service-oriented firms in the Asia Pacific region. We structure our analysis of existing research around the different approaches of social capital studies – either egocentric or sociocentric approach and the focus on the creation and outcomes of social capital. The analysis on the different perspectives of social capital research contributes to our further understanding in the areas of social capital and services industry in the Asia Pacific. The implications for theory and management practice are noted.     

Proposal for modeling social robot acceptance by retail customers: CAN model + technophobia

Acceptance of social robots (SRs) in retail is a new field of research in marketing arising from the dilemma between the potential benefits of SRs and the possibility that shoppers will reject them. The main aim of this paper is to advance in the modeling of new technology (NT) acceptance by proposing an extension of the integrative Cognitive-Affective-Normative (CAN) model that improves its explanatory and predictive power by including technophobia (TE) with a view to understanding SR acceptance in retail. The CAN + TE model is tested with a sample of 1069 individuals, resulting in an R² of 0.73, surpassing the explanatory power of classical models. Emotions – specifically, pleasure – and TE are found to be the biggest drivers of SR acceptance for retail customers, followed by performance expectancy and social influence. Arousal and effort expectancy have no significant effect. These findings have theoretical implications for NT modeling and practical implications for reviving retail – which has been hit hard by the pandemic – opening research lines in both contexts related to the future of SRs.     

The delisting of products by retail buyers

The main aim of the research reported here is to identify any patterns in the delisting behaviour of retail buyers, where a delisted product is defined as one which is removed from sale by a retailer but which continues to be sold by other retailers. The influence of the retail buyer in the marketing of consumer products has become ever more significant. Much academic research into retail buying has aimed at identifying criteria that affect purchasing decisions but few generalizable findings have emerged due to the context‐specific nature of such decision making. In this research a specific context is chosen, that of the de‐selection or delisting of products, a topic that has received little attention to date.

The results of interviews with 125 buyers, working for large and small retailers, on their reasons for 290 examples of product delistings are reported. The influence of more detailed contextual variables such as the buyer's age, experience and qualification, the product type, and the source of the product are examined together with a number of reasons for delisting the product. Many of these contextual variables, particularly the size of the retail business and whether the buyer had experience of working in a retail outlet, correlated widely with the relative importance of decision variables. Buyers working for smaller retailers tended to delist because of low sales volumes. Nett profitability, the reason why products should be delisted, was rarely cited as a major criterion.

More detailed analysis of the data set using factor and cluster analysis revealed that delisting decisions could be categorized into two types, each defined by combinations of contextual and decision variables. The most important variables in distinguishing between the two types of decisions were the buyer's age and experience as a buyer (contextual variables) and the decision criteria of nett margin being too low or the selling price to the retailer being too high. Younger, less experienced buyers were more likely to delist products because of low nett margins and high buying prices. Older, more experienced buyers were likely to delist for reasons other than these. The implications for retailers and for their suppliers of both the major and minor findings from the study are discussed.     

Evaluating and Managing Brand Repurchase Across Multiple Geographic Retail Markets

Many companies manage their business on a geographic basis and evaluate marketing metrics and managers correspondingly. Here, using a multi-level dataset from the U.S. retail gasoline industry, we demonstrate inherent differences in the levels of brand repurchase across territories. Furthermore, we show that the effects of factors that may improve repurchase—customer satisfaction and customers’ relational investments—are moderated by market share at the territorial level. Relational investments have relatively more effect on repurchase in territories where a brand's market share is higher, while customer satisfaction has relatively more effect in territories where a brand's market share is lower. These findings imply that one size does not fit all for either evaluating or managing brand performance at a territorial level.     

The dynamics of online word-of-mouth and product sales—An empirical investigation of the movie industry

There are growing interests in understanding how word-of-mouth (WOM) on the Internet is generated and how it influences consumers’ purchase decisions at retail outlets. A unique aspect of the WOM effect is the presence of a positive feedback mechanism between WOM and retail sales. We characterize the process through a dynamic simultaneous equation system, in which we separate the effect of online WOM as both a precursor to and an outcome of retail sales. We apply our approach to the movie industry, showing that both a movie's box office revenue and WOM valence significantly influence WOM volume. WOM volume in turn leads to higher box office performance. This positive feedback mechanism highlights the importance of WOM in generating and sustaining retail revenue.     

Crime,community social capital and entrepreneurship: Evidence from Australian communities

Crime is an anti-social blight on communities that increases the cost of doing business, including for entrepreneurs. Drawing on Australian longitudinal data, this study examines the links between crime rates and the propensity for entrepreneurship within communities. We do so by matching propensity for entrepreneurship with types of crime found at the community level where crime occurs. We find that higher total crime rates, crimes against the person and property crime, significantly lower the propensity for entrepreneurship in communities. We also show that the core facets of community social capital – trust, membership in voluntary organizations and support and cooperation – mediate this relationship.Executive summaryWe comprehensively examine whether higher community crime rates – crime on people and crime on property – cause lower rates of entrepreneurship. Entrepreneurship research extensively examines how gaining social capital, defined as the social resources one gains within one's community, promotes entrepreneurship. This study considers whether a pervasive community dynamic in crime impedes entrepreneurship. Specifically, we show that the two main kinds of crime – people and property – inhibit entrepreneurship.We show the facets of community social capital that mediate the relationship between crime and entrepreneurship. We inform the role of community-based social capital in promoting entrepreneurship (Kwon et al., 2013) by considering how higher crime lowers social capital and in turn entrepreneurship. We show that core facets of relational social capital – trust, voluntary membership in community bodies, support, and cooperation – mediate the relationship between crime and entrepreneurship. Likewise, communities with more robust reserves of social capital are better able to withstand crime and promote entrepreneurship.Examining the link between crime and entrepreneurship allows us to contribute to the literature on entrepreneurship and social capital. We discuss the various ways in which crime diminishes social capital to shape entrepreneurship. In our framework that is predicated on theory on community social capital, crime creates distrust because it causes citizens to be wearier and more suspicious of each other, impeding sharing of ideas and knowledge for ventures. Crime impedes the efficacy and membership of community-based organizations that allow entrepreneurs to network. Crime reduces the support available for founders to start and sustain businesses in focal communities, as individuals seek opportunities and resources outside their communities. Crime diminishes the extent to which people take pride in and identify with their communities, as evidenced by voluntary membership in community organizations. Crime reduces collaboration because it leads to self-protective behaviors, including flight from high-crime communities, that hinder norms of reciprocity. Crime reduces cooperation as criminals are more likely to resort to coercion, as enforced by monitoring and violence, to solve business problems.Findings rely on a comprehensive database of crime rates across Australian postcodes. Crime is typically a localized phenomenon – it affects business outcomes in local communities. We obtain community-level crime rates from each Australian state and territory police force or relevant government agencies and match these data with entrepreneurship rates by postcode. Our primary identification strategy follows Dustmann and Fasani (2016), who estimate the effect of local area crime on mental health in the United Kingdom (UK). This identification strategy removes the effects of residential sorting and correlates crime with time-varying unobserved entrepreneurship determinants if there is no endogenous migration from local crime. The main findings are robust to instrumenting for local area crime to which movers are exposed and for historical abortion rates in the state or territory where the individual lives, as well as a number of other approaches to obtaining causal inference.The article holds considerable practical relevance for policymakers seeking to promote community entrepreneurship. Our study is highly relevant to community leaders and policymakers working to boost local entrepreneurship. Findings strongly suggest that efforts to reduce crime are a primary mechanism to protect social capital within communities and, therefore, entrepreneurship. Policy initiatives dedicated to creating and expanding social ventures would a) boost entrepreneurship and social capital and b) mitigate the detrimental effects of crime on entrepreneurship (Wry and York, 2017).     

A Transaction Utility Approach for Bidding in Second-Price Auctions

In both the Vickrey and eBay auctions, bidding the reservation price is the optimal strategy within the conventional utility framework. However, in practice, buyers tend to bid less than their reservation prices, and bid multiple times, thus increase their bids, in the course of an auction. In this paper, we show that both underbidding and multiple bidding behaviors can be consistent with utility maximization, if buyer's utility incorporates a transaction utility (reference price dependent) component. Transaction utility is based on the difference between the buyer's reference price and actual price paid; it captures the perceived value of the deal. More specifically, we show that the optimal bid is lower than the reservation price, but higher than the reference price. Furthermore, buyer may re-bid (above the prior optimal level) if the reference price is revised upon observing a higher current price.     

Diana: a symbol of women entrepreneurs’ hunt for knowledge,money, and the rewards of entrepreneurship

This article discusses the questions and issues that prompted the founding of the Diana Project, a multi-university research program aimed at identifying factors that support and enable high growth in women-led ventures. Despite the fact that women business owners comprise a significant portion of the economy, women face challenges in acquiring the resources needed to expand their businesses. This article details both the myths and realities associated with women’s entrepreneurship in their quest for growth. In particular, we examine the strategies that women entrepreneurs use to position their firms for growth, especially those strategies related to growth capital. Our results show that women seeking venture capital (VC) have degrees, graduate degrees, and experience that should not preclude them from obtaining financing. We also found that even though women-led businesses are frequently clustered in industries less attractive to financiers, women seeking equity funding are in the appropriate industries. Further, women spend a considerable amount of time using both formal and informal networks in their search for capital and in seeking capital. Because of the importance of the VC industry as a provider of growth capital and its reliance on its network for investment referrals, we also examined the participation and role of women as decision-makers in industry. Women’s participation in the VC industry has not kept pace with industry growth, and women have exited the industry at a faster rate than men, thus creating a significant barrier for women entrepreneurs in that it is less likely that their networks will overlap with the financial supplier networks, despite any effort they may expend networking and seeking capital.

Relationship Between Competitive Intensity,Internal Resources,and Firm Performance: Evidence from Indian ITES Industry

The purpose of this article is to investigate how competitive intensity impacts the relationship between crucial firm resources (human capital, organizational capital, management capability) and firm performance. Using a sample of 105 service providers from the Indian information technology–enabled services (ITES) industry, I find that competitive intensity positively moderates the relationship between firm resources and firm performance such that the relationships become stronger when competitive intensity is high than when it is low. Results imply that top managers' evaluation of the performance implications of internal firm resources are significantly shaped by the perceptions of intensity of competition encountered by their firms. © 2013 Wiley Periodicals, Inc.     

Extranet Use and Building Relationship Capital in Interfirm Distribution Networks: The Role of Extranet Capability

Firms are turning toward e-business technologies to increase efficiency and effectiveness and, thereby, acquire competitive advantage. We focus on interfirm distribution networks (IDNs) connected by extranets. Our thesis is that IDNs behave like alliances. As such, the network leader in the IDN may have an organizational capability related to developing and managing IDNs. This extranet capability is posited to positively influence three relationship capital resources (trust, information exchange, and communication quality), which, in turn, influence positively five network performance outputs (responsiveness, financial performance, efficiency, effectiveness, and innovativeness). Based on data from 175 new car sales managers, empirical tests of the hypotheses provide support for the posited explanation of IDN performance.     

Factors influencing consumers' purchase decision-making in O2O business model: Evidence from consumers' overall evaluation

Online-to-offline (O2O) has become a rapidly growing e-commerce model worldwide, but the factors influencing consumers' purchase decision-making have not been examined well. After exploring the working mechanism of the O2O model, we extract eleven indexes of consumers' overall evaluation in the O2O model with Crawlzilla and R techniques. Social network analysis (SNA) is adopted to build social networks reflecting consumers' overall evaluation in the O2O model. Based on the modified social network and the extracted subgraph, this study (N = 768) reveals consumers' overall evaluation behavior patterns in the O2O model by calculating network density, central potential, edge betweenness. The results show that shoppers overall evaluate the eleven indexes, especially perceived product quality, online product price, promotion intensity, business reputation, and product brand, which reflects the significant associations between the indexes. Among all the eleven evaluation indexes, perceived product quality, online product price, and business reputation dominate consumers’ decision-making behavior. When making purchase decisions, consumers not only overall consider online product price, perceived product quality, and business reputation but also balance perceived product quality, business reputation, and promotion intensity. Finally, we make some suggestions on marketing strategy for e-commerce companies.     

Modeling Dependencies in Brand Choice Outcomes Across Complementary Categories

We build an econometric model of a household's contemporaneous brand choice outcomes in complementary product categories. This model explicitly captures cross-category dependencies in brand choice outcomes of a household. Such dependencies have not been modeled in existing multi-category demand models.Our model accommodates cross-category dependencies that arise on account of three component effects: (1) complementarity due to the additional utility that a household derives from the joint purchase of brands in complementary categories, (2) marketing spillovers due to the effects of brands’ prices in one category affecting the households’ latent utilities for brands in the complementary category, (3) unobserved dependencies due to correlations in households’ latent utilities for brands across categories.We estimate our proposed multi-category brand choice model using scanner panel data on cake mix and frosting categories. We find that complementarity accounts for the vast majority of the estimated cross-category effects in demand. We also find that as much as 55 percent of the total retail profit impact of price promotions arise on account of brand-level (focus of our study), as opposed to category-level (focus of previous studies), dependencies in household demand. Finally, we propose an easily interpretable visual representation – Largess and Free-Ride Plot – of cross-category price elasticities that summarizes the differential abilities of brands to influence, or be influenced by, brands in the complementary category.     

Increasing Shopper Trust in Retailer Technological Interfaces via Auditory Confirmation

This research examines the effects of sounds made by retail technological interfaces – self-checkout kiosks, credit card readers, mobile apps, websites – at point-of-sale. We propose that such sounds, retail transaction auditory confirmation (RTAC), increase trust in technological interfaces by providing auditory confirmation that stages of the checkout process have been successfully executed. Increased trust in technological interfaces leads to positive downstream consequences in the form of satisfaction and purchase intention. Visual and auditory distraction in the retail environment reduces trust, even when visual confirmation is provided, but synchronously provided audio-visual confirmation attenuates the negative effects of environment distraction.