The internal mechanisms of entrepreneurs’ social capital: A multi-network analysis

Abstract

The present work addresses how and to what extent the personal and professional relationship networks of small-scale local entrepreneurs help improve their scarce resource endowments. Adopting a mechanistic and functioning oriented view of social capital, the paper suggests the existence of two different mechanisms which may explain the enrichment and entrepreneurial exploitation processes of social capital’s resources: (1) the resource mechanism, based on a network’s size and diversity, providing quantity and variety of social capital resources, and (2) the exchange mechanism, based on a network’s cohesion and relational quality, favouring the interchangeability of these resources among network members. The empirical study individually explores both the personal and professional networks of 958 Spanish entrepreneurs. Findings reveal how the two mechanisms are necessary and mutually complementary, although the resource mechanism proves more advantageous when exploiting personal networks, whereas the exchange mechanism prevails in the case of professional networks. JEL CLASSIFICATION L14; L26; M13; M14