Abstract

Entrepreneurship research on social capital has largely focused on the benefits of social capital. Studies have for instance examined the way social capital is utilized by entrepreneurs to acquire resources such as information (Burt, 1997), knowledge (Yli-Renko, Autio and Sapienza, 2001), personnel (Fernandez, Castilla and Moore, 2000), human capital (Coleman, 1988) and finance (Uzzi, 1999). What is less examined are the costs and risks associated with social capital. The most that exists in literature is the acknowledgement that social capital has costs (Nahapiet and Ghoshal, 1998; Adler and Kwon, 2002). This paper addresses this gap by examining the aggregate cost of social capital incurred by an entrepreneur when acquiring resources from his/her network. We address the following main question: in what ways does shared identity affect an entrepreneur’s effort to acquire resource from the network, particularly the quantity of resources raised, the diversity of resources raised and the aggregate cost of raising resources?

Share

COinS