Leitão, João and Franco, Mário (2008): Individual Entrepreneurship Capacity and Performance of SMEs.
Download (106kB) | Preview
This paper analyses the importance of human capital and organizational capital on the determination of SME’s performance, by proposing and testing a conceptual model about Individual Entrepreneurship Capacity, and its impact both on non-economic and economic performance. This constitutes an innovative approach in the sense that uses information collected at the individual level, that is, the entrepreneur. Moreover, it constitutes a first attempt for facing the caveat in the literature on the relationship among types of capital and entrepreneurial performance.
A model where the individual entrepreneurship capital is defined as a function of two types of capital: Human and Organizational; is proposed and empirically tested. For the Human Capital we consider three dimensions: (a) Individual Characteristics; (b) Managerial Push; and (c) Managerial Pull. As concerns the Organizational Capital, four dimensions are considered: (i) Individual Entrepreneurial Behavior; (ii) Collective Entrepreneurial Behavior; (iii) Managerial Practices; and (iv) Organizational Culture (in terms of the Superstructure and the Socio-Structure).
The use of the stepwise method provides the selection of significant variables that impact on SME’s performance. When only non-economic indicators are considered for measuring the performance, in what respects the human capital we find out that the only significant variable is: enthusiasm at work. In what concerns the organizational capital the significant variables are: efficient organizational structure; participative management; incentives for interdisciplinary discussion and dialogue; and frequent meetings of working groups. For its turn, when economic indicators are considered for measuring the performance, we find out that the significant human capital determinants are: entrepreneur’s intuition; and propensity for innovating activities. In terms of organizational capital determinants we reveal that the significant variables are: efficient organizational structure; and use of external indicators for improving entrepreneurial performance.
The main policy implication of the paper is the possibility of creating, at an individual level, new incentives and motivational tools based on the identification of the most important variables of human capital and organizational capital, for fostering SME’s performance.
|Item Type:||MPRA Paper|
|Original Title:||Individual Entrepreneurship Capacity and Performance of SMEs|
|Keywords:||Human Capital, Organizational Capital, Performance, SME|
|Subjects:||L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and Scope
D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L26 - Entrepreneurship
|Depositing User:||João Leitão|
|Date Deposited:||09. Apr 2008 08:47|
|Last Modified:||17. Dec 2013 11:20|
Audretsch, D. (2003) “Entrepreneurship: A Survey of the Literature”. Enterprise Papers, European Commission, Enterprise Directorate-General, 14, Brussels.
Audretsch, D. and Monsen, E. (2008) “Entrepreneurship Capital: A Regional, Organizational, Team and Individual Phenomenon”. In R. Barrett, & S. Mayson (Eds.), International Handbook of HRM and Entrepreneurship, forthcoming. Cheltenham, U.K.: Edward Elgar Publishing Ltd.
Bartlett, C. and Ghoshal, S. (2002) “Building Competitive Advantage through People”. Sloan Management Review, 4(2), pp 34-41.
Bates, T. (1990) “Entrepreneur Human Capital Inputs and Small Business Longevity”. Review of Economics and Statistics, 72, pp 551-559.
Batjargal, B. (2007) “Internet Entrepreneurship: Social Capital, Human Capital, and Performance of Internet Ventures in China”. Research Policy, 36, pp 605-618.
Baumol, W. (2002) The Free-Market Innovation Machine: Analyzing the Growth Miracle of Capitalism. Cambridge, UK: Oxford University Press.
Becker, G. (1964) Human Capital. University of Chicago Press, Chicago.
Blanchflower, D. (2007) “Entrepreneurship in the UK”. Foundations and Trends in Entrepreneurship, 3(4), pp 257-364.
Blanchflower, D. and Meyer, B. (1994) “A Longitudinal Analysis of Young Entrepreneurs in Australia and the United States”. Small Business Economics, 6(1), February, pp 1-20.
Blanchflower, D. and Oswald, A. (1998) “What Makes an Entrepreneur?” Journal of Labor Economics, 16(1), pp 26-60. Bontis, N. (1998) “Intellectual Capital: An Exploratory Study that Develops Measures and Models”. Management Decision, 36(2), pp 63-76.
Bosma, N., Van Praag, M., Thurik, T. and Wit, G. (2004) “The Value of Human and Social Capital Investments for the Business Performance of Startups”. Small Business Economics, 23, pp 227-236.
Bruderl, J. and Preisendorfer, P. (1998) “Network Support and Success of Newly Founded Businesses”. Small Business Economics, 10, pp 213-225.
Bruderl, J., Preisendorfer, P. and Ziegler, R. (1992) “Survival Chances of Newly Founded Business Organizations”. American Sociological Review, 57, pp 227-242.
Bruyat, C. and Julien, P. (2000) “Defining the field of research in entrepreneurship”. Journal of Business Venturing, Vol. 16(2), pp 165-180.
Brynjolfsson, E., Hitt, L. and Yang, S. (2002) “Intangible Assets: computers and Organizational Capital". Brookings Papers on Economic Activity, pp 137-181.
Carmeli, A. (2004) “Strategic Human Capital and the Performance of Public Sector Organizations”. Scandinavian Journal of Management, 20, pp 375-392.
Casson, M. (2003) The entrepreneur: an economic theory, 2nd Edition, Cheltenham, Edward Elgar.
Chung, L. and Gibbons, P. (1997) “Corporate entrepreneurship: The roles of ideology and social capital”. Group & Organization Management, 22(1), pp 10-30.
Colombo, M. and Grilli, L. (2005) “Founders’ Human Capital and the Growth of New Technology-based Firms: A Competence-based View”. Research Policy, 34, pp 795-816.
Cooper, A., Gimeno-Gascon and Woo, C. (1994) “Initial Human and Financial Capital as Predictors of New Venture Performance”. Journal of Business Venturing, 9, pp 371-395.
Davidsson, P. and Honig, B. (2003) “The role of Social and Human Capital among Nascent entrepreneurs”. Journal of Business Venturing, 18, pp 301-331.
Hébert, R. and Link, A. (1988) The entrepreneur: mainstream views and radical critiques, 2nd Edition New York, Praeger.
Holmes, T. and Schmitz, J. (1990) “A Theory of Entrepreneurship and its Application to the Study of Business Transfers”. Journal of Political Economy, 98(4), pp 265-294.
Hsu, D. (2007) “Experienced Entrepreneurial Founders, Organizational Capital, and Venture Capital Funding”. Research Policy, 36, pp 722-741.
IAPMEI (2004) Estrutura Empresarial em Portugal – 2003, Edição do IAPMEI.
Jovanovic, B. (1994) “Entrepreneurial Choice When People Differ in their Management and Labor Skills”. Small Business Economics, 6(3), pp 185-192.
Jungwirth, C. (2007) “How Market Appraisal Affects Investments in Human Capital: Evidence from Austrian and Swiss Venture Capitalists”, In Dowling, M. and Schmude, J. (eds) Empirical Entrepreneurship in Europe – New Perspectives, Edward Elgar.
Kihlstrom, R. and Laffont, J-J. (1979) “A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion”. Journal of Political Economy, 87(4), pp 719-748.
Knight, F. (1921) Risk, Uncertainty and Profit, New York: Houghton Mifflin.
Krause, D., Handfield, R. and Tyler, B. (2007) “The Relationships Between Supplier Development, Commitment, Social Capital Accumulation and Performance Improvement”. Journal of Operations Management, 25, pp 528-545.
Lev, B. and Radhakrishnam, S. (2004) “The Valuation of Organizational Capital”. Paper presented at the Conference on Research in Income and Wealth. June, University of Illinois, Urbana – Champaign.
Lucas, R. (1978) “On the Size Distribution of Business Firms”. Bell Journal of Economics, 9, pp 508-523. Milgrom, P. and Roberts, J. (1990) “The Economics of Modern Manufacturing: technology, Strategy and Growth”. American Economic Review, 80, pp 511-528.
Parker, S. (2005) “The Economics of Entrepreneurship: What we know and what we don’t”. Foundations and Trends in Entrepreneurship, 1(1), pp 1-54.
Parker, S. (2006) “The Economics of Entrepreneurship: What we know and what we don’t”. Summer Institute of the Entrepreneurship, Growth and Public Policy Group, Max Planck Institute of Economics, July of 2006, Jena, Germany.
Parker, S. (2007) “Which firms do the entrepreneurs come from?”. Economics Bulletin, 10(10), pp 1-9.
Pennings, L., Lee, A. and Witteloostuijn, V. (1998) “Human Capital, Social Capital, and Firm Dissolution”. Academy of Management Journal, pp 425-440.
Rudez, H. and Mihalic, T. (2007) “Intellectual Capital in the Hotel Industry: A Case Study from Slovenia”. Hospitality Management, 26, pp 188-199.
Samaniego, R. (2006) “Organizational Capital, Technology Adoption and the Productivity Slowdown”. Journal of Monetary Economics, 53, pp 1555-1569.
Shane, S. (2004) A general theory of entrepreneurship: the individual-opportunity nexus, Cheltenham, Edward Elgar.
Shane, S. and Stuart, T. (2002) “Organizational Endowments and Performance of University Start-ups”. Management Science, 48, pp 154-170.
Stuart, R. and Abetti, P. (1990) “Impact of Entrepreneurial and Management Experience on early Performance”. Journal of Business Venturing, 5, pp 151-162.
Van Praag, C. (2003) “Business Survival and Success of Young Small Business Owners: An Empirical Analysis”. Small Business Economics, Vol. 21(1), August, pp 1-17.
Van Praag, C. and Cramer, J. (2001) “The roots of Entrepreneurship and Labor Demand: Individual Ability and Low Risk Aversion”. Economica, 269, pp 45-62.
Youndt, M., Subramaniam, M. and Snell, S. (2004) “Intellectual Capital Profiles: An examination of investments and returns”. Journal of Management Studies, 41(2), pp 335-361.