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Does social capital affect entrepreneurial intentions?

Article Excerpt
Abstract Nowadays, the scientific community assigns both social context and entrepreneurs' behavior as a central role in the growth and development of the world economy. However, the relationships between these two factors have not been sufficiently studied in business and economics. Therefore, in this paper, the specific influence of the new socioeconomic factor of social capital on the formation of entrepreneurial intentions will be analyzed. To test the theoretical hypotheses, an empirical study will be carried out using the Partial Least Squares (PLS) technique with data from a sample of young undergraduate students in the last year of their degree. This population has been selected because these individuals, according to different studies, show a higher propensity towards firm creation.

Keywords Entrepreneurship * Entrepreneurial intention * Social capital

JEL M00 * Z13

Introduction

Entrepreneurship theory has substantially advanced during the past 30 years. The main reason is the central role nowadays assigned to human capital and entrepreneurs by the scientific community in the growth of the different regions of the world economy (Wennekers and Thurik 1999; Audretsch and Thurik 2000; Galindo and Alvarez 2004). From an empirical point of view, that important role of the entrepreneur is related to the large changes that have taken place in recent decades, such as the fast pace of technological development and the growing globalization process derived from the liberalization of markets and from the transition of ex-communist countries to capitalism. In this context, the need for greater creativity and entrepreneurial capacities has increased.

The different fields of study within the entrepreneurship research program have recently focused both on the analysis of the characteristics of existing entrepreneurs and their quality (Davidsson 1991; Lumpkin and Dess 1996; Santos and Guzman 2001), and also on the analysis of the characteristics of potential entrepreneurs and the firm-creation process (Krueger and Carsrud 1993; Reynolds et al. 1999; Linan 2004). This paper identifies with this second field of research.

The analysis starts from Ajzen's theory of planned behavior, which has been used by Krueger and Carsrud (1993) to build their entrepreneurial intention model. Our main objective, then, is to introduce within this intention model the new socioeconomic concept of social capital (Lin 2003) to study its influence on the configuration of intentions and, subsequently, on the individual's firm-creation potential. The main reason to consider social capital in this study is the important role that nowadays, it is also assigned to social relationships and cooperation for economic success, both at a macro level (society) (Putnam 1993) and at a meso or micro level (firm and individual; Fukuyama 1995; Barros and Alves 2003).

To test the theoretical hypotheses, an empirical study will be carried out using Partial Least Squares as a statistical technique. Our data come from a sample of young last-year undergraduate students. This population has been selected on the basis of its high propensity to start a venture (Krueger et al. 2000).

After this introduction, the paper is organized in three sections. First, the theory regarding entrepreneurial intention models and the concept of social capital and its characteristics and typology are discussed. Social capital is then introduced into the entrepreneurial intention model, leading to the establishment of several hypotheses to be tested throughout the empirical analysis. Second, the empirical analysis will be performed, including data used, methodology and main results. The paper finishes with a discussion of those results and their implications.

Theoretical Background

Entrepreneurial Intention Models

A large number of studies on qualitative aspects of entrepreneurs have focused on the psychological characteristics and personality traits which differentiate both successful entrepreneur from non-successful entrepreneurs, and entrepreneurs from the rest of the population (Borland 1975). Later studies have emphasized the importance of different demographic factors, such as age, gender, religion, ethnic group, education, family, socioeconomic status, and professional experience (Reynolds et al. 1994).

Both research studies have made possible the identification of some significant relationships between several traits and demographic factors of individuals, on the one hand, and the fulfillment of entrepreneurial behaviors on the other hand. Nevertheless, from a theoretical point of view, both approaches have been criticized due to their methodological and conceptual problems, and also for their low explanatory capacity (Krueger et al. 2000). In fact, according to Chell (1986), accepting these approaches would mean that nobody...