The effect of human capital, social capital, and perceptual values on nascent entrepreneurs�� export intentions

This study investigates the influence of human capital, social capital, and cognition on nascent entrepreneurs' export intentions. The results indicate that while human capital and social capital influence the level of intended export, cognitive characteristics, such as self-efficacy and risk aversion, do not seem to influence entrepreneurs' intended level of export. The study makes three original contributions to international entrepreneurship research. The first one is the focus on “Real” Born Globals, i.e. entrepreneurs who express export intentions in the prefounding phase. The second is the focus on the individual-level factors rather than firm-level factors that explain export. Finally, the effect of experience is investigated from a path-dependency perspective rather than a “the-more-the-better” perspective. Our study suggests that it may be productive for researchers to look further into the concept of intention, as entrepreneurs' decision to internationalize presupposes a conscious intention of carrying out the action. Thus, the factors influencing the decision to internationalize may have been present prior to the founding of the venture.     

How outside directors’ human and social capital create value for corporate international investments

Grounded in theories of resource dependence, vicarious and superstitious learning, information processing, and board group literature, this study examines how outside directors’ human and social capital affect the value of corporate foreign direct investments. We employ the event study approach to examine 1210 international investment cases of 836 US firms over a 13-year period. We find significant but distinct non-linear impacts of board members’ human capital (U-shaped effect) and social capital (inverted U-shaped effect). The quality of board capital is also influential, as demonstrated by the effect of directors’ prior foreign investment performance in addition to size and degree of internationalization of interlocked companies. The performance measures of both abnormal announcement returns and operating ROA yield similar results. Our findings highlight the importance of incorporating factors related to board human and social capital for a more comprehensive analysis of the contribution of outside directors to a firm’s international success.     

Disruptive innovation and the creation of social capital in Indonesia’s urban communities

Abstract

Existing research on social capital has primarily focused on examining the outcomes of social capital, whether these are about individual, organizational or even societal outcomes. However, much research is still needed in terms of examining how social capital is created. We contribute to filling this gap by examining the ways in which social capital is created in urban communities in an emerging economy. Social capital, in this study, is viewed as being created as a consequence of an organization’s disruptive innovation. We analyse the context of Go-Jek, a rather newly established service firm in Indonesia, and examine how the disruptive innovation of Go-Jek’s service provision influences the creation of social capital in terms of social connectedness, trust, and shared understanding, in Indonesia’s urban communities.     

Trade,scale or social capital? Technological progress in poor and rich countries

Endogenous growth theory suggests scale and trade as the determinants of total factor productivity (TFP) growth. The literature on social capital suggests that the levels of trust and participation in societies may affect cooperation and innovation. While there is evidence of the role of trade and inconclusive evidence on the role of social capital, previous studies have generally omitted two factors, out of the three mentioned, used small sample sizes and emphasized economic growth rather than technological progress. Our study addresses these shortcomings. We find robust evidence of the role of trade in fostering technological progress which is invariant to TFP proxies and independent of the debate on measuring TFP. Moreover, there is no clear role for scale, and a country rate of TFP growth seems to increase the most the more the country trades with dynamic economies that are different from. We uncover a positive effect of social capital, which is more significant in richer countries, suggesting that other characteristics, such as institutional quality, may be complementary to social capital. The paper's results are robust to different specification and estimation methods.     

The entrepreneur’s mode of entry: the effect of social and financial capital

This article uses a French database of firms set up in 1998 to investigate the determinants of takeovers versus startups as a mode of entry. It focuses on two determinants that previous research has not fully analyzed: social capital and financial capital. Our findings suggest social capital affects the mode of entry. They show that entrepreneurs with social capital are more likely to create new firms from scratch than to take over existing firms. We confirm the effect of financial capital on the mode of entry. Bank loans are more often associated with takeovers than with startups and low initial wealth is more often associated with startups than with takeovers. These results show that finance affects the mode of entry.     

Beyond ‘know-what’ and ‘know-how’ to ‘know-who’: enhancing human capital with social capital in an Australian start-up accelerator

Abstract

This study investigates the enhancement of human capital with social capital in a start-up accelerator and how this integration affects the entrepreneurial learning experience. In particular, it examines the relative importance of the three components ‘know-what’, ‘know-how’ and ‘know-who’. The study involved thematic analysis of semi-structured interviews with participants in an Australian start-up accelerator that is delivered using ideas such as Design Thinking, the Business Model Canvas and Lean Start-up methodology. We find that although the programme emphasised ‘know-what’ and ‘know-how’, ‘know-who’ was most significant for participant learning. The results indicate that mentors and experts were especially helpful in shaping learning and in developing entrepreneurial networks. Moreover, our results show that the processes of ‘know-what’, ‘know-how’ and ‘know-who’ are interrelated – by knowing ‘who’, participants learnt ‘what’ and ‘how to’ through social learning. The research contributes to entrepreneurial learning theory and application particularly in the Asia Pacific context, by providing evidence that ‘know-who’ closes the learning loop for ‘know-what’ and ‘know-how’ as ‘know-who’ can actually provide entrepreneurs with the means to enhance their entrepreneurial self-efficacy.     

What determines success? examining the human,financial, and social capital of jamaican microentrepreneurs

This research examines the performance of 215 informal microenterprises in Jamaica, studying the influence of human capital, social capital, and financial capital of the owners on their business profitability. Understanding the importance of particular relationships that result in successful micro-businesses is important for a number of reasons. First, among many developing countries, the growth of microenterprise provides the most visibly vibrant and growing economic activity. Although considerable effort and resources are being directed toward microenterprise promotion schemes, empirical research on the subject is quite limited. Second, economies in developing countries mirror many of the social and institutional problems existent in urban economically disadvantaged areas of the United States and other developed countries. For these areas, microenterprise may be an essential component of urban renewal and community development. This study helps in identifying important characteristics of social and individual attributes that may be relevant to those attempting to strengthen this subsector. Finally, this study seeks to provide insight into a dimension of microbusiness research for which there are limited data, specifically, the role that social capital plays among practicing entrepreneurs and owners.This research found that different structural environments, even within a singular and small economy, may considerably alter the rates of return to human, social, and financial capital. As a result, the analysis of enterprises includes segmentation according to both the usage, or not, of employees, and the sophistication of the technologies used.Several factors were determined to enhance the profitability of the businesses in all categories. Vocational training, for example, demonstrated consistently strong and positive effects. Mother’s high occupational status (a proxy for socioeconomic status) and years of experience in the business were also consistently positive and strongly associated with increasing profits.Although additional starting capital played an important role for both the businesses with and without employees, increasing amounts failed to differentiate the success of those firms that were already operating in the higher technological tier. Obtaining a small business loan acted in a similar manner, enhancing the profitability of all firms, except those segmented into a high technological tier. One interpretation of this finding is that the role of technological choice is extremely important, and appears to dwarf that of varying amounts of starting capital.Social capital, as operationalized by frequent church attendance and marital status of the owner, was found generally to increase the profitability of the business. The data demonstrate that social networks play an important role in the success of these businesses, and that conditions in the highest tier utilize social capital in a somewhat unique manner.     

Web 2.0, social capital and work performance in service companies: the employees’ view

Web 2.0 networks have provoked a revolution in the last years due to their capacity to modify human relationships, particularly in business contexts. Social capital, as a crucial intangible asset embedded in Web 2.0 networks, can be extremely helpful to build and optimize personal and organizational power or resources. This exploratory study empirically analyzes the use of Web 2.0 networks for work-related purposes under a new perspective: the perception of Spanish service companies’ employees. Results show a reasonable employee use of Web 2.0 applications with work-related purposes, and identify the main benefits from them and relevant differences in their use.     

The influence of individual and firm level social capital of marketing managers in a firm’s global network

Firm success is dependent, to a degree, on a marketing manager’s ability to develop social capital within the firm’s global network. A model is developed employing individual social capital (both internal and external) as the foundation for three types of firm level social capital (i.e., customer, business partner and governing agency) resident in a firm’s global network. It is theorized that customer, business partner and governing agency social capital provide a basis for enhancing customer value delivery and thus firm performance. Specific marketing management strategies necessary for the development of each type of firm level social capital, as well as the benefits derived from each type of social capital are presented. This analysis raises a number of previously unexplored research issues concerning the nature and scope of social capital in a firm’s global network and how social capital can be employed in a global marketplace.     

Do strategic marketing and social capital really matter in regional clusters? Lessons from an emerging economy of Latin America

This research explores the relationship between geographic proximity and the building of social capital and inter-firm cooperation in strategic marketing. By emphasizing social interactions and the building of social capital, we extend the research on industry clusters beyond traditional economic perspectives and factors motivating cooperation between firms. The empirical study is based on a survey of 90 senior managers from three natural resources-based industries (two non-clustered and one clustered) in Chile. The results show that managers in clustered versus non-clustered industries differ in terms of the perceived value of location, the perceived value of building social capital, their involvement in activities that build social capital, their attitudes toward cooperative marketing, their history of involvement in cooperative marketing activities, and their intentions for engaging in cooperative marketing activities in the future. Trade associations in clustered versus non-clustered industries play different roles in regard to creating social capital. The article concludes by discussing the implications of these findings for researchers, managers and policy makers.     

When are venture capital projects initiated?

This paper examines how public market information relates to the initiation of venture capital projects. Analysis of venture capital investments in the U.S. between 1980 and 2007 indicates that venture capitalists tend to defer new investment projects in target industries with substantial market volatility. This delay effect of market volatility is reduced if the target industry experiences high sales growth or if competition among venture capitalists is intense in the target industry. The paper provides further evidence to corroborate the view that venture capitalists rationally respond to market shifts in their investment decisions.     

Why do contracts differ between venture capital types?

The main objective of the present paper is to investigate differences in the design of contracts between venture capitalists and their portfolio firms across venture capital (VC) types. By controlling for selection effects, we focus on contract design differences which reflect differences in corporate governance approaches across VC types. To address this issue, we use a unique, hand-collected German data set consisting of all contractual details of VC investments into 290 entrepreneurial firms in the period 1990–2004. By employing various matching procedures, we show that VC types differ in their corporate governance approach vis-à-vis their portfolio firms. It turns out that independent VCs, when compared to captive VCs, use significantly more contract mechanisms which induce active intervention.     

Human capital signals and entrepreneurs’ success in equity crowdfunding

Grounding on research about the role of signals in the attraction of equity finance, this paper studies the effects of diverse human capital signals on entrepreneurs’ success in equity crowdfunding. We argue that the human capital of an entrepreneur, who launches (alone or with other teammates) an equity crowdfunding campaign to finance her start-up, constitutes a set of signals of the start-up quality. The impact of each human capital signal on entrepreneur’s success in equity crowdfunding depends on both signal fit with start-up quality and signal ambiguity. Empirical estimates on 284 entrepreneurs who launched equity crowdfunding campaigns indicate that only entrepreneurs’ business education and entrepreneurial experience, two human capital signals that have both a good fit with start-up quality and a low degree of ambiguity, significantly contribute to entrepreneurs’ success in equity crowdfunding.     

Demand uncertainty and the capital–labour ratio in Poland

This paper investigates the effect of demand uncertainty on the capital–labour ratio of non-financial firms in Poland. An eclectic model is used to characterise a utility maximising firm in a transition economy with demand uncertainty and imperfect competition. It is assumed that labour is completely variable and capital is quasi-fixed. The demand for capital, and hence the capital–labour ratio, derives from the optimisation of expected costs and the firm's pricing and output decisions, and crucially depends on the sign of the covariance term, i.e. the firm's risk behaviour. The main testable proposition of the model is that if firms are risk-lovers, an increase in demand uncertainty increases the capital–labour ratio, whereas the capital–labour ratio decreases when firms are risk-averse. The model is estimated using data from a cross-section of 148 non-financial firms in Poland. The results unambiguously show that there exists a significant positive relationship between demand uncertainty and the capital–labour ratio. This finding suggests that Polish firms are risk-lovers, i.e. they respond to demand uncertainty by increasing their capital–labour ratio because they are more concerned to have stable labour costs than they are to have stable profits. The evidence has important implications for the needed set of regulations and corporate governance in Poland as part of the necessary economic reform.     

Socially optimal North–South capital transfer and technology diffusion

We study North–South capital transfer and the diffusion of embodied technologies within a framework of intertemporal global welfare maximization. We show saddle path stability and characterize the steady state. We then examine the transition path by running numerical experiments based on realistic data. As a result, technology diffusion will succeed if the absorptive capacity is sufficient which requires sufficient investment. While a large share of capital is allocated to the South in early periods, this share declines in later periods when the South has caught up in terms of technologies.     

Planning and social responsibility — A reexamination

A new public centered long-range corporate planning orientation is proposed. Underlying this orientation is the rationale that the main purpose of business activity is the satisfaction of socially desirable needs, i.e. needs that are compatible with long run public welfare. Such need satisfaction will tend to bring about improvements in the quality of private and public life. Corporate planning should thus facilitate the performance of business activities designed to achieve the satisfaction of socially desirable needs.The determination of what are socially desirable needs will be based on public consensus, which corporations can periodically assess, and incorporate into their long range plans. A long-range planning procedure, incorporating social welfare considerations is developed. It is suggested that a planning procedure such as this is essential for the existence of firms in the long run. Jacob Naor, Associate Professor of Marketing, University of Maine at Orono, Maine. Member of the Board of Directors, World Affairs Council of Maine. About three dozen articles published.This article is based on a paper originally presented by the author at the Annual Meeting of the European Academy for Advanced Research in Marketing, Stockholm, Sweden, May 1978.     

How useful is venture capital prestige? Evidence from IPO survivability

This study examines the effect of venture capitalist (VC) prestige on the post-issue survivability of IPOs and how VC characteristics influence the effect. We find that IPOs backed by prestigious VCs are less likely to delist for performance failure and have longer listing duration relative to those without VC backing; however, IPOs backed by ordinary VCs are as likely to delist as IPOs without VC backing. The finding is robust for Internet and high-tech firms. We further examine heterogeneous VC characteristics and find that the ability of prestigious VCs to improve IPO survival is a function of their investment experience and managerial ability. VC prestige characterized by industry specialization and syndication networks is not related to IPO survival. Overall, the results suggest that the VC characteristics that produce prestige, rather than the prestige itself, drive the long-term survival of IPOs.     

Why do venture capital firms exist? theory and canadian evidence

This paper investigates the role of venture capitalists. We view their “raison d’être” as their ability to reduce the cost of informational asymmetries. Our theoretical framework focuses on two major forms of asymmetric information: “hidden information” (leading to adverse selection) and “hidden action” (leading to moral hazard). Our theoretical analysis suggests four empirical predictions.1. Venture capitalists operate in environments where their relative efficiency in selecting and monitoring investments gives them a comparative advantage over other investors. This suggests strong industry effects in venture capital investments. Venture capitalists should be prominent in industries where informational concerns are important, such as biotechnology, computer software, etc., rather than in “routine” start-ups such as restaurants, retail outlets, etc. The latter are risky, in that returns show high variance, but they are relatively easy to monitor by conventional financial intermediaries.2. Within the class of projects where venture capitalists have an advantage, they will still prefer projects where monitoring and selection costs are relatively low or where the costs of informational asymmetry are less severe. Thus, within a given industry where venture capitalists would be expected to focus, we would also expect venture capitalists to favor firms with some track records over pure start-ups. To clarify the distinction between point 1 and point 2, note that point 1 states that if we look across investors, we will see that venture capitalists will be more concentrated in areas characterized by significant informational asymmetry. Point 2 says that if we look across investment opportunities, venture capitalists will still favor those situations which provide better information (as will all other investors). Thus venture capitalists perceive informational asymmetries as costly, but they perceive them as less costly than do other investors.3. If informational asymmetries are important, then the ability of the venture capitalist to “exit” may be significantly affected. Ideally, venture capitalists will sell off their share in the venture after it “goes public” on a stock exchange. If, however, venture investments are made in situations where informational asymmetries are important, it may be difficult to sell shares in a public market where most investors are relatively uninformed. This concern invokes two natural reactions. One is that many “exits” would take place through sales to informed investors, such as to other firms in the same industry or to the venture’s own management or owners. A second reaction is that venture capitalists might try to acquire reputations for presenting good quality ventures in public offerings. Therefore, we might expect that the exits that occur in initial public offerings would be drawn from the better-performing ventures.4. Finally, informational asymmetries suggest that owner-managers will perform best when they have a large stake in the venture. Therefore, we can expect entrepreneurial firms in which venture capitalists own a large share to perform less well than other ventures. This is moral hazard problem, as higher values of a venture capitalist’s share reduce the incentives of the entrepreneur to provide effort. Nevertheless, it might still be best in a given situation for the venture capitalist to take on a high ownership share, since this might be the only way of getting sufficient financial capital into the firm. However, we would still expect a negative correlation between the venture capital ownership share and firm performance.Our empirical examination of Canadian venture capital shows that these predictions are consistent with the data. In particular, there are significant industry effects in the data, with venture capitalists having disproportionate representation in industries that are thought to have high levels of informational asymmetry. Secondly, venture capitalists favor later stage investment to start-up investment. Third, most exit is through “insider” sales, particularly management buyouts, acquisitions by third parties, rather than IPOs. However, IPOs have higher returns than other forms of exit. In addition, the data exhibit the negative relationship between the extent of venture capital ownership and firm performance predicted by our analysis.     

Does acquiring venture capital pay off for the funded firms? A meta-analysis on the relationship between venture capital investment and funded firm financial performance

Researchers and practitioners frequently propose that venture capital (VC) is an important resource to increase the performance of funded firms, especially in environments of uncertainty. In this paper we scrutinize these theoretical propositions, following an evidence-based research approach. We synthesize 76 empirical samples on 36,567 firms. We find a small positive performance effect of VC investment on funded firm performance; however, the effect vanishes if researchers control for industry selection effects. Furthermore, we find that the performance effect mainly relates to firm growth while profitability is unaffected. We also uncover that performance effects are reduced when the funded firms are very young or very mature. In addition, studies focusing on IPO events, which constitute the majority of studies, determine a substantially smaller performance effect. We discuss theoretical implications and offer suggestions for future research on VC.     

Understanding consumers’ social networking site usage

Abstract

The purpose of this research is to examine consumer motivations to use social networking sites (SNSs) for three distinct activities: (1) general SNS usage, (2) the joining of a business’s SNS page and (3) clicking on an advertisement on a SNS. To assist with this exploration we draw upon the decomposed theory of planned behaviour as a theoretical lens and conduct a mixed-method study that utilises both an empirical investigation as well as qualitative focus group interviews in order to delve deeper into specific reasons why individuals engage in SNS activities. Results show that a number of antecedents such as attitude, compatibility, relative advantage, complexity, normative influences and self-efficacy come into play when determining SNS usage activities. However, specific antecedents may vary according to the explicit activity under investigation. This study’s main contribution involves advancing our understanding of consumer behaviour as it relates to SNS activities by examining not only antecedents to intention but also attitude, subjective norms and behavioural control. Other contributions include additional development of the SNS literature, integrating SNSs into a classical theoretical framework and providing valuable insights and implications for both practitioners and researchers alike.