Social Capital and Entrepreneurship: Impact of Trust and Social Interaction on Entrepreneurship Trial

Year 2024, Volume: 53 Issue: 1, 23 - 39, 30.04.2024

Özlem Özen

https://doi.org/10.26650/ibr.2024.53.1110286

Abstract

Social capital is an important factor in entrepreneurship in emerging economies as it allows for the recognition and use of opportunities. Although previous literature emphasizes social capital, the role of various dimensions concerning it in entrepreneurship remains underexplored. Moreover, the impact of these dimensions on the early stages of entrepreneurship requires further consideration. Thus, this study investigates the impact of social capital on the trial stage of entrepreneurship. Specifically, it examines the effect of trust and social interaction on entrepreneurial trial in an emerging economy— Türkiye. Based on a sample of Turkish firms, the results of the empirical analyses reveal that trust and social interaction have positive impacts on entrepreneurship trial. However, the interaction between trust and social interaction has a negative impact on entrepreneurship trial. This study advances research on entrepreneurship by considering the associations between the various aspects of social capital and entrepreneurial activities.

Keywords

Entrepreneurship trial, Social capital, Social interaction, Trust

References

• Abane, J.A., Adamtey, R., & Kpeglo, R. (2024). The impact of social capital on business development in Ghana: Experiences of local-level businesses in the Kumasi Metropolitan Area. Social Sciences & Hu-manities Open, 9, 100775. google scholar
• Adler, P.S., & Kwon, S.W. (2000). Social Capital: The Good, the Bad, and the Ugly. In E.L. Lesser (Ed.), Knowledge and Social Capital: Foundations and Applications (pp.89-115). Boston, MA: Butterworth-Heinemann. google scholar
• Adler, P.S., & Kwon, S.W. (2002). Social Capital: Prospects for a New Concept. Academy of Management Review, 27(1), 17-40. google scholar
• Afandi, E., Kermani, M., & Mammadov, F. (2017). Social capital and entrepreneurial process. International Entrepreneurship and Management Journal, 13, 685-716. google scholar
• Aidoo, S.O., Agyapong, A., & Mensah, H.K. (2020). Social capital and performance of SMEs: The role of entrepreneurial orientation and managerial capability. Africa Journal of Management, 6(4), 377-406. google scholar
• Aldrich, H. E., & Zimmer, C. (1986). Entrepreneurship through Social Networks. In D.L. Sexton, & R.W. Wilson (Eds.), The Art and Science of Entrepreneurship (pp. 154-67). Cambridge, MA: Ballinger. google scholar
• Anderson, A., Park, J., & Jack, S. (2007). Entrepreneurial Social Capital: Conceptualizing Social Capital in New High-tech Firms. International Small Business Journal, 25(3), 245-272. google scholar
• Ayob, A.H. (2018). Diversity, Trust and Social Entrepreneurship. Journal of Social Entrepreneurship, 9(1), 1-12. google scholar
• Bahmani, S., Galindo, M.A., & Mendez, M.T. (2012). Non-profit organizations, entrepreneurship, social capital and economic growth. Small Business Economics, 38, 271-281. google scholar
• Barringer, B.R., & Bluedorn, A.C. (1999). The Relationship Between Corporate Entrepreneurship and Stra-tegic Management. Strategic Management Journal, 20, 421-444. google scholar
• Batjargal, B. (2007). Internet entrepreneurship: Social capital, human capital, and performance of Internet ventures in China. Research Policy, 36, 605-618. google scholar
• Bauernschuster, S., Falck, O., & Heblich, S. (2010). Social capital access and entrepreneurship. Journal of Economic Behavior & Organization, 76, 821-833. google scholar
• Bjornskov, C., & Foss, N.J. (2016). Institutions, Entrepreneurship, and Economic Growth: What Do We Know and What Do We Still Need to Know? Academy ofManagement Perspectives, 30(3), 292-315. google scholar
• Bowey, J.L., & Easton, G. (2007). Entrepreneurial Social Capital Unplugged: An Activity-based Analysis. International Small Business Journal, 25(3), 273-306. google scholar
• Casson, M., & Della-Giusta, M. (2007). Entrepreneurship and Social Capital: Analysing the Impact of Social Networks on Entrepreneurial Activity from a Rational Action Perspective. International Small Business Journal, 25(3), 220-244. google scholar
• Chen, M.H., & Wang, M.C. (2008). Social networks and a new venture’s innovative capability: the role of trust within entrepreneurial teams. R&D Management, 38(3), 253-264. google scholar
• Coleman, J.S. (1988). Social Capital in the Creation of Human Capital. American Journal of Sociology, 94, S95-S120. google scholar
• Cope, J., Jack, S., & Rose, M.B. (2007). Social Capital and Entrepreneurship: An Introduction. International Small Business Journal, 25(3), 213-219. google scholar
• Correa, V.S., Queiroz, M.M., & Shigaki, H.B. (2021). Social capital and individual entrepreneurial orientati-on: innovativeness, proactivity, and risk-taking in an emerging economy. Benchmarking: An International Journal, 28(7), 2280-2298. google scholar
• Covin, J.G., & Slevin, D.P. (1991). A Conceptual Model of Entrepreneurship as Firm Behavior. Entreprene-urship Theory and Practice, 16(1), 7-25. google scholar
• Danis, W.M., De Clercq, D., & Petricevic, O. (2011). Are social networks more important for new business activity in emerging than developed economies? An empirical extension. International Business Review, 20, 394-408. google scholar
• De Clercq, D., Danis, W.M., & Dakhli, M. (2010). The moderating effect of institutional context on the re-lationship between associational activity and new business activity in emerging economies. International Business Review, 19, 85-101. google scholar
• De Clercq, D., Dimov, D., & Thongpapanl, N. (2013). Organizational Social Capital, Formalization, and Internal Knowledge Sharing in Entrepreneurial Orientation Formation. Entrepreneurship Theory and Practice, 37(3), 505-537. google scholar
• De Groot, M.B.T., Mihalache, O.R., & Elfring, T. (2022). Toward a Theory of Family Social Capital in Wealthy Transgenerational Enterprise Families. Entrepreneurship Theory and Practice, 46(1), 159-192. google scholar
• Deng, W., Liang, Q., Fan, P., & Cui, L. (2020). Social entrepreneurship and well-being: The configurational impact of institutions and social capital. Asia Pacific Journal of Management, 37, 1013-1037. google scholar
• Doh, S., & Zolnik, E.J. (2011). Social capital and entrepreneurship: An exploratory analysis. African Journal of Business Management, 5(12), 4961-4975. google scholar
• EBRD, Life in Transition Survey (LiTS). Erişim: https://www.ebrd.com/what-we-do/economic-research-and-data/data/lits.html google scholar
• Estrin, S., Mickiewicz, T., & Stephan, U. (2013). Entrepreneurship, Social Capital, and Institutions: Social and Commercial Entrepreneurship Across Nations. Entrepreneurship Theory and Practice, 37(3), 479504. google scholar
• Foo, M.D., Vissa, B., & Wu, B. (2020). Entrepreneurship in emerging economies. Strategic Entrepreneurs-hip Journal, 14, 289-301. google scholar
• Gedajlovic, E., Honig, B., Moore, C.B., Payne, G.T., & Wright, M. (2013). Social Capital and Entreprene-urship: A Schema and Research Agenda. Entrepreneurship Theory and Practice, 37(3), 455-478. google scholar
• Goel, S., & Karri, R. (2006). Entrepreneurs, Effectual Logic, and Over-Trust. Entrepreneurship Theory and Practice, 30(4), 477-493. google scholar
• Gohman, S.F. (2012). Institutions, Latent Entrepreneurship, and Self-Employment: An International Compa-rison. Entrepreneurship Theory and Practice, 36(2), 295-321. google scholar
• Granovetter, M. (1985). Economic Action and Social Structure: The Problem of Embeddedness. The Ameri-can Journal of Sociology, 91(3), 481-510. google scholar
• Hair, J.F., Black, W.C., Babin, B.J., & Anderson, R.E. (2010). Multivariate Data Analysis (7th ed.). New Jersey: Pearson. google scholar
• Hidalgo, G., Monticelli, J.M., & Bortolaso, I.V. (2021). Social Capital as a Driver of Social Entrepreneurs-hip. Journal of Social Entrepreneurship, https://doi.org/10.1080/19420676.2021.1951819 google scholar
• Hoetker, G. (2007). The Use of Logit and Probit Models in Strategic Management Research: Critical Issues. Strategic Management Journal, 28(4), 331-343. google scholar
• Hsieh, C., Parker, S.C., & Van Praag, C.M. (2017). Risk, balanced skills and entrepreneurship. Small Busi-ness Economics, 48, 287-302. google scholar
• Khan, M.S., Breitenecker, R.J., & Schwarz, E.J. (2014). Entrepreneurial team locus of control: diversity and trust. Management Decision, 52(6), 1057-1081. google scholar
• Khanna, T., & Palepu, K. (1997). Why Focused Strategies May Be Wrong for Emerging Markets. Harvard Business Review, 75(4), 41-51. google scholar
• Kwon, S.W., Heflin, C., & Ruef, M. (2013). Community Social Capital and Entrepreneurship. American Sociological Review, 78(6), 980-1008. google scholar
• Lee, R. (2009). Social capital and business and management: Setting a research agenda. International Jour-nal of Management Reviews, 11(3), 247-273. google scholar
• Light, I., & Dana, L.P. (2013). Boundaries of Social Capital in Entrepreneurship. Entrepreneurship Theory and Practice, 37(3), 603-624. google scholar
• Lin, N. (1999). Building a Network Theory of Social Capital. Connections, 22(1), 28-51. google scholar
• Manolova, T.S., Gyoshev, B.S., & Manev, I.M. (2007). The role of interpersonal trust for entrepreneurial exchange in a transition economy. International Journal of Emerging Markets, 2(2), 107-122. google scholar
• McKeever, E., Anderson, A., & Jack, S. (2014). Entrepreneurship and mutuality: social capital in processes and practices. Entrepreneurship & Regional Development, 26(5-6), 453-477. google scholar
• Molina-Morales, F.X., & Martinez-Fernandez, M.T. (2009). Too Much Love in the Neighborhood Can Hurt: How an Excess of Intensity and Trust in Relationships May Produce Negative Effects on Firms. Strategic Management Journal, 30, 1013-1023. google scholar
• Molina-Morales, F.X., & Martinez-Fernandez, M.T. (2010). Social Networks: Effects of Social Capital on Firm Innovation. Journal of Small Business Management, 48(2), 258-279. google scholar
• Nahapiet, J. (2008). The Role of Social Capital in Inter-organizational Relationships. In S. Cropper, M. Ebers, C. Huxham & P.S. Ring (Eds.), The Oxford Handbook of Inter-Organizational Relations (pp.580-606). New York, NY: Oxford University Press. google scholar
• Nahapiet, J., & Ghoshal, S. (1998). Social Capital, Intellectual Capital, and the Organizational Advantage. The Academy of Management Review, 23(2), 242-266. google scholar
• Neergaard, H., & Ulhoi, J.P. (2006). Government Agency and Trust in the Formation and Transformation of Interorganizational Entrepreneurial Networks. Entrepreneurship Theory and Practice, 30(4), 519-539. google scholar
• Patel, P.C., & Wolfe, M.T. (2023). Friends for richer or poorer: Economic connectedness, regional social capital, and county entrepreneurial activity. Journal of Small Business Management, https://doi.org/10.1080/00472778.2023.2220013 google scholar
• Pathak, S., & Muralidharan, E. (2016). Informal Institutions and Their Comparative Influences on Social and Commercial Entrepreneurship: The Role of In-Group Collectivism and Interpersonal Trust. Journal of Small Business Management, 54(S1), 168-188. google scholar
• Payne, G.T., Moore, C.B., Griffis, S.E., & Autry, C.W. (2011). Multilevel Challenges and Opportunities in Social Capital Research. Journal of Management, 37(2), 491-520. google scholar
• Peng, M.W., & Luo, Y. (2000). Managerial Ties and Firm Performance in a Transition Economy: The Nature of a Micro-Macro Link. The Academy of Management Journal, 43(3), 486-501. google scholar
• Percoco, M. (2012). Entrepreneurship, Social Capital and Institutions: Evidence from Italy. Spatial Econo-mic Analysis, 7(3), 339-355. google scholar
• Pillai, K.G., Hodgkinson, G.P., Kalyanaram, G., & Nair, S.R. (2017). The Negative Effects of Social Capital in Organizations: A Review and Extension. International Journal of Management Reviews, 19, 97-124. google scholar
• Podsakoff, P.M., MacKenzie, S.B., Lee, J.Y., & Podsakoff, N.P. (2003). Common Method Biases in Beha-vioral Research: A Critical Review of the Literature and Recommended Remedies. Journal of Applied Psychology, 88(5), 879-903. google scholar
• Pyo, T.H., Tamrakar, C., Lee, J.Y., & Choi, Y.S. (2023). Is social capital always “Capital”?: Measuring and leveraging social capital in online user communities for in-group diffusion. Journal of Business Research, 158, 113690. google scholar
• Rodrigo-Alarcon, J., Garcia-Villaverde, P.M., Ruiz-Ortega, M.J., & Parra-Requena, G. (2018). From social capital to entrepreneurial orientation: The mediating role of dynamic capabilities. European Management Journal, 36, 195-209. google scholar
• Sahasranamam, S., & Nandakumar, M.K. (2020). Individual capital and social entrepreneurship: Role of formal institutions. Journal of Business Research, 107, 104-117. google scholar
• Santoro, G., Bertoldi, B., Giachino, C., & Candelo, E. (2020). Exploring the relationship between entrep-reneurial resilience and success: The moderating role of stakeholders’ engagement. Journal of Business Research, 119, 142-150. google scholar
• Shane, S., & Venkataraman, S. (2000). The Promise of Entrepreneurship as a Field of Research. Academy of Management Review, 25(1), 217-226. google scholar
• Shao, Y., & Sun, L. (2021). Entrepreneurs’ social capital and venture capital financing. Journal of Business Research, 136, 499-512. google scholar
• StataCorp. 2015. Stata Statistical Software: Release 14. College Station, TX: StataCorp LP. google scholar
• Tsai, W., & Ghoshal, S. (1998). Social Capital and Value Creation: The Role of Intrafirm Networks. The Academy of Management Journal, 41(4), 464-476. google scholar
• Turkina, E., & Thai, M.T.T. (2013). Social capital, networks, trust and immigrant entrepreneurship: a cross-country analysis. Journal of Enterprising Communities: People and Places in the Global Economy, 7(2), 108-124. google scholar
• Uzzi, B. (1997). Social Structure and Competition in Inter-firm Networks: The Paradox of Embeddedness. Administrative Science Quarterly, 42(1), 35-67. google scholar
• Wang, N., Wang, L., Ma, Z., & Wang, S. (2022). From knowledge seeking to knowledge contribution: A social capital perspective on knowledge sharing behaviors in online Q&A communities. Technological Forecasting & Social Change, 182, https://doi.org/10.1016/j.techfore.2022.121864 google scholar
• Welter, F. (2012). All you need is trust? A critical review of the trust and entrepreneurship literature. Interna-tional Small Business Journal, 30(3), 193-212. google scholar
• Westlund, H., & Bolton, R. (2003). Local Social Capital and Entrepreneurship. Small Business Economics, 21, 77-113. google scholar
• Westlund, H., & Gawell, M. (2012). Building Social Capital for Social Entrepreneurship. Annals of Public and Cooperative Economics, 83, 101-116. google scholar
• Wu, W.P. (2008). Dimensions of Social Capital and Firm Competitiveness Improvement: The Mediating Role of Information Sharing. Journal of Management Studies, 45(1), 122-146. google scholar
• Wulandhari, N.B.I., Golgeci, I., Mishra, N., Sivarajah, U., & Gupta, S. (2022). Exploring the role of social capital mechanisms in cooperative resilience. Journal of Business Research, 143, 375-386. google scholar
• Yates, V.A., Vardaman, J.M., & Chrisman, J.J. (2023). Social network research in the family business litera-ture: a review and integration. Small Business Economics, 60, 1323-1345. google scholar
• Yli-Renko, H., Autio, E., & Sapienza, H.J. (2001). Social Capital, Knowledge Acquisition, and Knowledge Exploitation in Young Technology-based Firms. Strategic Management Journal, 22, 587-613. google scholar
• Zaheer, A., McEvily, B., & Perrone, V. (1998). Does Trust Matter? Exploring the Effects of Interorganizati-onal and Interpersonal Trust on Performance. Organization Science, 9(2), 141-159. google scholar
• Zeffane, R. (2015). Trust, personality, risk taking and entrepreneurship: Exploring gender differences among nascent and actual entrepreneurs in the United Arab Emirates. World Journal of Entrepreneurship, Mana-gement and Sustainable Development, 11(3), 191-209. google scholar