New Venture Success: The Role of Principal's Social Capital and Social Effectiveness

Abstract

Previous empirical research indicates that founder social capital and founder social effectiveness may both be beneficial during the venture creation process. However, few, if any, studies have examined the combined influence of both social capital and social effectiveness on new venture success. Using data gathered from 156 new venture founders throughout the United States, this study examined the influence that both social capital and social effectiveness had on new venture success. Specifically, the current research had three main objectives. First, it sought to examine the notion that new ventures operated by founders with high levels of social capital would experience more new venture success than ventures operated by founders with less social capital. Next, it attempted to examine the notion that new ventures operated by socially effective individuals would experience higher new venture success than ventures operated by less socially effective founders. Finally, it sought to examine the notion that the interaction between a new venture founder’s social capital and social effectiveness would positively influence new venture success. Results indicated that founder social effectiveness positively influenced new venture success.