Influence of social capital offline and online on early-stage entrepreneurs.

Autorde Souza Silva, Tatiane Andreza
  1. Introduction

    As the access to the Internet is made more available, entrepreneurs and companies have been seeking social media websites as mechanisms to support and expand business. Accordingly, Smith, Smith and Shaw (2017, p. 18) affirm that "entrepreneurs are increasingly using social media to interact with others?. Confirming to such a statement, new investigations start gaining more space and becoming more important (Cho & Sagynov, 2015; Hanna, Rohm & Crittenden, 2011; Nasir, Nawi, Mamun, Fazal & Raston, 2017). Considering studies on entrepreneurship, themes traditionally considered important have been rescued and brought to this new digital world, where online relations prevail. This is the case of networks and social capital.

    The social capital, which is represented by characteristics of networks (Hernandez-Carrion, Camarero-Izquierdo & Gutierrez-CilMn, 2017) and by the set of resources that individuals "may access through their personal networks" (Stam, Arzlanian & Elfring, 2014, p. 153), enables entrepreneurs to identify new opportunities (Stam, Arzlanian & Elfring, 2014), gain credibility, access information, gain access to scarce financial and intellectual resources (Vixathep, 2017), expand commercial and business capabilities (Hernaandez-Carrioan, Camarero-Izquierdo & Gutiaerrez-Cillaan, 2017) among others. It is a key asset for entrepreneurs and entrepreneurship (Afandi, Kermani, & Mammadov, 2017; Bastie, Cussy & Le Nadant, 2016; Bucholtz, 2019; Pedrini, Bramanti & Cannatelli, 2016; Vixathep, 2017).

    With the proliferation of technological platforms and social media websites, e.g. Facebook, Twitter and WhatsApp, it is possible to notice some modifications in the type of personal and business relations; most of them switched from face-to-face interactions into digital environment relations (Smith, Smith & Shaw, 2017). Moreover, the pandemic provoked by the new coronavirus (COVID-19) and the consequent importance of isolation and social distancing are, for instance, encouraging and forcing companies to search for communication alternatives and maintenance of business in the digital environment (Nassif, Correa & Rosseto, 2020). Such changes exact from social capital researchers create new reflections and observations on the characteristics of such interactions, in addition to the influence of social capital for entrepreneurs and their ventures.

    Accordingly, Smith, Smith and Shaw (2017, p. 21) affirm that "differences in the on and offline contexts could impact the types of opportunities entrepreneurs" have access to "and the extent to which their social capital is developed, accessed, and used" (Smith, Smith & Shaw, 2017, p. 21). Confirming to the authors "people build, maintain, and use social networks" ina way that is "substantively different than with face-to-face interactions" (Smith, Smith & Shaw, 2017, p. 22). At the same some, some evidences-still poorly explored in the literature-suggest "potential differences in entrepreneurs' online and offline networking behavior" (Smith, Smith & Shaw, 2017, p. 18) when it comes to accumulating social capital.

    Our paper is inserted in the essence of such considerations. From a theoretical perspective, our purpose is to investigate the influence of entrepreneurs' social capital online and offline. In this investigation, social capital offline will be understood as the set of resources that entrepreneurs can access through what Williams (2006, p. 593) called "real life"; in other words, personal relations and face-to-face interactions (Smith, Smith & Shaw, 2017; Stam, Arzlanian & Elfring, 2014). Social capital online will be understood herein as the resources obtained from entrepreneurs through interactions on online social media (Bucholtz, 2019; Mahmood, Zakar & Zakar, 2018; Naseri, 2017; Wahid & Indarti, 2013).

    From an empirical perspective, our paper aims to insert the social capital theme into the reality of early-stage entrepreneurs, whose business is in existence up to 42 months (GEM, 2018). It is very important to provide better understand of such empirical context (Bernardino & Freitas Santos, 2019; GEM, 2018). Approximately 25 million entrepreneurs (about 46% of the total number of entrepreneurs in the country) are considered in "early-stage entrepreneurial activity" according to parameters adopted by the Global Entrepreneurship Monitor (GEM, 2018). In 2018, more than 2.5 million companies were created, which represents an increase of 15% when compared to the previous year (https://www.serasaexperian.com.br/).

    Also, literature has tried to figure out how and why such ventures tend to be more prone to failure and mortality. As observed by Fosiac, Kristiac and Trusiac (2017, p. 339), "the first stage of starting a business is the most challenging stage of an entrepreneurial career". Recent data provided by Sebrae [1] indicate that one in every four companies fails within the first two years of operation (www.sebrae.com.br). It is, therefore, important to understand the distinct factors inherent in companies, especially the relational ones (related to offline and online social capital), which may influence the trajectory of entrepreneurs in the early stage of their entrepreneurial careers.

    It seems that such debate has not reached Brazil yet. A search performed by us in some of the main databases (Spell and Capes Journals) and national events (EnANPAD, Egepe and Semead) did not identify the existence of articles that investigated if and how social capital offline and online can influence early-stage entrepreneurs. The search encompassed published papers over the past five years with combination of a few interest terms in the title or keywords (social media websites*, social capital or early*; social capital and creation of a company* and social media and entrepreneur*). Different questions guided the investigation conducted herein; the most relevant ones were as follows: (1) Does social capital offline and online influence early-stage entrepreneurs? If they do, how is such influence exerted?

    As pointed out previously, the literature on social capital was used, herein, in order to support the debate brought by us. We emphasize the existence of different approaches and levels of analysis on the theme (Han, 2018; Naseri, 2017; Ryu, 2017). Two of them, considered the "most important dimensions" of social capital (Ryu, 2017, p. 4), "have gained prominence in entrepreneurship literature" (Smith, Smith & Shaw, 2017, p. 20): bonding social capital and bridging social capital (Birendra, Morais, Seekamp, Smith & Peterson, 2018). The first approach attaches social capital to the immersed resources available in the dense/cohesive networks, which are constituted of intense and frequent interaction among individuals (Coleman, 1988; Granovetter, 1973). The second approach considers social capital as the gains achieved through linking distant networks, i.e. the resources achieved through less frequent contacts (Burt, 2009, 2015; Bucholtz, 2019).

    Our paper focuses on both approaches (bonding and bridging) by incorporating them as integral parts of each dimension considered herein: offline and online. In other words, we consider that social capital offline and online are constituted of elements related both to the bonding and to the bridging approach. By doing so, important research gaps tend to overcome. Although the bonding and bridging dimensions have already been explored in the offline context, when considering the online environment (i.e. digital social media) its manifestations are not sufficiently clear (Bucholtz, 2019; Smith, Smith & Shaw, 2017). Bucholtz (2019) emphasizes that only a few studies tried to investigate the juxtaposition between both social capitals (bonding and bridging) in the online communication. As reported by the author, "the evidence of ambiguity of the characteristics of bridging and bonding social capital in online environments are limited, but worthy of further inquiry" (Bucholtz, 2019, p. 4).

    There is also a gap in literature associated with the benefits that can be obtained by entrepreneurs through social media. In fact, "few studies have considered how entrepreneurs build and employ social capital in the context of online networks" (Smith, Smith & Shaw, 2017, p. 18). According to the authors, "little is known about how entrepreneurs establish social capital online" (Smith, Smith & Shaw, 2017, p. 19). A third gap in the literature relates to the possible associations between social capital offline and online. Conforming to Smith, Smith and Shaw (2017, p. 18), "it is not clear, however, to what extent or how entrepreneurs' social capital manifests differently online than offline". Besides, it is not clear if the social capital of the offline environment, usually developed over longer periods of time, is somehow "transferable to entrepreneurs' online relationships" (Smith, Smith & Shaw, 2017, p. 21).

    By trying to fill these literature gaps, our article makes significant contributions. The first contribution is the presentation of a set of offline and online variables, which can be used in further field research. The second highlights the influence of the combined offline and online social capitals on early-stage entrepreneurs, which broadens the developing literature on social capital and entrepreneurship. The third contribution indicates how each type of social capital (offline and online) influences early-stage entrepreneurs, which could be used to boost entrepreneurial initiatives. The fourth proposes the creation of an integrative model between social capital offline and online. The fifth and last indicates the need to develop further theoretical and empirical studies, which remain unapproached.

  2. Theoretical framework

    Social capital can be considered "two of the most influential concepts in social science over the past two decades" (Lewis & Chamlee-Wright, 2008, p. 107). Nevertheless, when the concept is associated...

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