Abstract

Since resource scarcity defines most new firms and resources serve critical roles in firm survival (Stinchcombe, 1965), growth (Davidsson & Honig, 2003), and ultimately success (Barney & Arikan, 2001), the resource acquisition process within startups is a central question in study of entrepreneurship. In this paper, we consider whether a startup’s social capital is one such generative resource that leads to the critical resource of legitimacy, which then subsequently contributes to firm performance and long-term competitive advantage.

We examine the influence of social capital by considering several aspects of a firm’s network that represent the structure of this network and the relationships between the focal firm and its partners. We also model the relationship between social capital and firm performance as being mediated by resources that can be directly tied to firm performance. Lastly, we study the relationship between social capital, legitimacy and performance.

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