As a result of the global economic downturn, Korea’s economy suffered drops in rate of economic growth. The ensuing freeze in the labor market caused increase in unemployment rate, especially that of the youth. As high unemployment emerges as a soci...
As a result of the global economic downturn, Korea’s economy suffered drops in rate of economic growth. The ensuing freeze in the labor market caused increase in unemployment rate, especially that of the youth. As high unemployment emerges as a social issue, the new government, with emphasis on creative economy, designates the procurement of the power for a new growth through job creation and vitalization of venture start-ups as its top priority.
The recent recognition of the importance of social capital in business founding led to various researches, and until now, most researches were aimed to determine the relationship between social capital and performance in network perspective. However, in this study, social capital was examined more holistically in terms of conceptual characteristics by discussing it in three different dimensions of social capital as suggested by Nahapiet & Ghoshal (1998), namely structural, relational, and cognitive.
The goal of this study is to analyze the effect of entrepreneur’s social capital, which accumulates through entrepreneur’s external network, trust and shared vision among members of the start-up team on entrepreneurial intention and opportunity recognition at the nascent entrepreneurship stage. In doing so, the study aims to suggest a substantial plan for vitalizing start-up business and it's performance.
For empirical analysis, successful entrepreneurs of smaller ventures were surveyed online, and the results are the following.
First, external bridging social capital and internal bonding social capital directly influence nascent entrepreneurship, and it is to say that social capital that has accumulated through the three dimensions—through external networks at the structural dimension, through the trust among the entrepreneur and the start-up team at the relational dimension, and through sharing of vision at the cognitive dimension—influence nascent entrepreneurship, which is a process of entrepreneurial intention and opportunity recognition.
Second, nascent entrepreneur's behaviors directly influences start-up performance, and it is to say that nascent entrepreneur's behaviors, which is a process of entrepreneurial intention and opportunity recognition, influences start-up performance, which comprises general outcome of the business and entrepreneur’s satisfaction on his start-up.
Third, external bridging and internal bonding social capital have a significant impact on start-up performance mediated by nascent entrepreneur's behaviors.
Fourth, analysis of indirect effect of social capital revealed that external bridging social capital not only influences entrepreneurial intention and opportunity recognition but also the start-up performance significantly, while internal bonding social capital only influences opportunity recognition and start-up performance and not entrepreneurial intention.
Through the result of this study, it was confirmed that entrepreneur’s social capital strengthens entrepreneurial intention, influences opportunity recognition and ideation which serve as the basis of business establishment, and consequently influences the start-up’s business outcome and entrepreneur’s contentment.
This study has provided theoretical grounds that support that preliminary or potential entrepreneurs can achieve successful entrepreneurship by recognizing the importance of social capital and overcoming the initial challenges of start-up such as lack of resources and anxiety about failure through strategic allocation of social capital.