The Effects Of Entrepreneur’s Social Capital On The Firm’s Innovation Capabilities

With the growing requirement of resources in innovation activities, enterprises solely relying on their internal resources cannot meet the needs of innovation. The acquisition and exploitation of external resources become the key factors in influencing the result of enterprise’s innovation. Entrepreneurs as the bridge between enterprises and external organizations, their social capital are an effective conduit to acquire external resources which in turn can influence innovation capabilities leveraging, especially on the background of the transitional economy in China. Existing research has recognized the positive role of entrepreneur’s social capital in leveraging innovation capabilities. Yet we know very little about how entrepreneur’s social capital can effectively enhance innovation capabilities.This research focuses on the thesis of "the effects of entrepreneur’s social capital on leveraging innovation capabilities", integrates resources-based theory, resources dependence theory, social capital theory and innovation theory, and uses various research methods, including exploratory case study and statistic analysis to explore the "black box" between entrepreneur’s social capital and innovation capabilities.Specifically, three sub-studies are designed to answer this question.(1) Exploring the relationship between resources accumulation and resources acquirement in leveraging innovation capabilities via qualitative method. And a preliminary framework of the relationship between entrepreneur’s social capital, resources acquisition and innovation capabilities is formed.(2) An empirical examination is applied to check the mediating effect of knowledge-based resources acquisition and proprietary-based resources acquisition in the relationship between entrepreneur’s social capital and innovation capabilities.(3) Examining the moderating effects of entrepreneurship and dysfunctional competition in influencing the relationship between entrepreneur’s social capital and innovation capabilities.By combining theoretical and empirical research, qualitative and quantitative methodology, this research has made efforts to answer the key question mentioned above. Some research findings got as follows.(1) External resources acquisition and resources accumulation are complementary in leveraging innovation capabilities. Given to the complementarities of internal and external resources, this research found that entrepreneurs are critical in transforming the potential complementarities into realized enterprise’s innovation capabilities. Entrepreneur’s social capital can effectively turn external resources into firm’s accessible resources to complement the internal resources and leverage innovation capabilities. The role of entrepreneur’s social capital is particularly important in the initial stage and rapid growth stage of enterprise life-cycle.(2) Different dimensions of entrepreneur’s social capital have positive effect on the innovation capabilities leveraging. And this effect is mainly through the intermediary role of resources acquisition. To be specific, the relationship between entrepreneur’s political capital and innovation capabilities are fully mediated by resources acquisition. Yet, the relationship between entrepreneur’s business capital and innovation capabilities is partially mediated by resources acquisition. It means that entrepreneur’s business capital cannot only directly influence innovation capabilities leveraging, but also can indirectly influence innovation capabilities leveraging by acquiring external knowledge-based resources and proprietary-based resources. The influence of political capital on enterprise’s innovation capabilities leveraging should be taken through resources acquisition.(3) Getting insight into the internal environment factor and external environment factor in moderating the relationship between the entrepreneur’s social capital and innovation capabilities. Entrepreneurship as an important internal factor is conducive to enhance the positive relationship between entrepreneur’s business capital and innovation capabilities. While entrepreneurship negatively moderate the positive relationship between entrepreneur’s political capital and innovation capabilities. It means that enterprises with high levels of entrepreneurship are inclined to construct business capital instead of political capital to leverage innovation capabilities.Moreover, given that dysfunctional competition is an important externally environmental dimension in a transition economy, we examined how dysfunctional competition moderates the relationship between entrepreneur’s social capital and innovation capabilities. The positive relationship between entrepreneur’s business capital and innovation capabilities will be stronger when the level of dysfunctional competition is high than when it is low. But the moderating effect of dysfunctional competition on the positive relationship between entrepreneur’s political capital and innovation capabilities are not supported. This suggests that the legitimating effects of entrepreneur’s business capital are salient for deterring opportunistic behavior and reducing risks of innovation in the context of dysfunctional competition. And then entrepreneur’s business capital as an informal governance can promote enterprise’s Ⅷ innovation enthusiasm and innovation capabilities.The research findings deepen our understanding in terms of how entrepreneur’s social capital contributes to a firm’s innovation capabilities leveraging. Generally, the present research gets some theoretical contributions as follows.(1) Identifying the role of resource acquisition as a mediator in the relationship between social capital and innovation capabilities, which opens the black box of that how social capital affects innovation capabilities as well as enriching the theory of enterprise innovative capabilities via the social capital theory.Based on the previous works on the direct relationship between social capital and organizational capabilities, we explore the internal mechanism of entrepreneur’s social capital in leveraging innovation capabilities. According to the social capital theory, entrepreneur’s social capital acts as the role of conduit which can provide the possibility and opportunities of resources access and application. But how can enterprises turn these potential benefits into internal resources and further transform them into firm innovation?From the perspective of resource management, we introduce the variable of resource acquisition, analyze the role of resource acquisition in influencing the relationship between entrepreneur’s social capital and innovation capabilities, and find that entrepreneur social capital is needed to transform into internal resources to leveraging innovative capabilities.(2) Having an insight into the role of enterprise’s internal environment factors in the process of entrepreneur’s social capital promoting innovation capabilities, increasing the understanding of the effect of enterprise’s internal conditions to the relationship between entrepreneur’s social capital and innovation.Based on the insufficient of the existing researches which paid less attention to the role of organizations’internal environment factors in the relationship of entrepreneur’s social capital and innovation capabilities, this study introduces entrepreneurship as an important internal environment factor into the research model based on the view of strategic orientation, and explore the effect of entrepreneurship on the relationship of entrepreneur’s social capital and innovation capabilities. We find that the moderating effect of entrepreneurship on the relationship between entrepreneur’s business capital and innovation capabilities is opposite to its moderating effect on the relationship of entrepreneur’s political capital and innovation capabilities, which means that studies should concern about the state of the enterprise’s internal situational factors when they use the different dimensions of entrepreneur’s social capital. To some extent, this study deepens the understanding of context factors in using entrepreneur’s social capital.(3) Exploring the effect of external environment factors on the relationship of entrepreneurs’social capital and innovation capabilities, specifically, this study examines the effect of dysfunctional competition on this relationship, which makes some contributions to solve the problem of enterprise growth under the background of transition economy.This study finds that entrepreneur’s business capital, the core of which is enterprise’s external stakeholder relations, has played a more important role in promoting innovation capabilities at the condition of dysfunctional competition. While, dysfunctional competition has no significant effect on the positive relationship between political capital and innovation capabilities. These findings may indicate that political capital, the core of which is the relationship of entrepreneur and government, is difficult to make up invalid innovations caused by market imperfection. This study also explains that improving market’s competition mechanism is the key to enterprise’s effective innovation.These findings indicate that uncertainty of institutional environment existing in the transformation of economic system force enterprises to seek other ways to reduce the innovation risk and opportunistic behavior. While, to some extent, the construction of entrepreneur’s social capital provides informal governance means to enterprise’s effective innovation under the condition of imperfect institution. This finding offers theory guidance to how to encourage enterprise to realize innovation-driven development under the background of economic transformation.