Abstract

How does one explain resource development within start-ups? Specifically, do successful entrepreneurs possess generative resources that do not directly contribute to the firm’s profitability, but generate other resources that make this contribution? Generative resources may constitute a dynamic capability, defined as “the firm’s ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments” (Teece, Pisano & Schuen, 1997). We suggest that one such generative resource is a firm’s social capital. Research finds that a founder’s relationships are important resources. This research typically investigates direct network ties and doesn’t consider tie relevance (Yli-Renko, Autio & Sapienza, 2001) or status. Shane and Cable (2002) find mixed results for the impact of direct and indirect network ties on obtaining funding. We propose a counterintuitive perspective: indirect ties may be more important to start-ups than direct ties and the relevance and status of ties may be more important than tie type. We also anticipate interactions between tie characteristics. For example, the status of intermediaries in indirect ties may be ascribed to a start-up; such transference may not occur for direct ties. Similarly, indirect, relevant ties may be more effective at providing useful, unique information than less relevant ties, whether direct or indirect.

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