Academic journal article Journal of Small Business Management

The Impact of Relational Capital on the Success of New Business Start-Ups

Academic journal article Journal of Small Business Management

The Impact of Relational Capital on the Success of New Business Start-Ups

Article excerpt

This study seeks to highlight the key role played by relational capital in new business start-ups. Following a review of previous research examining the success factors of new ventures and the role played by intellectual capital, our study sets out to achieve this objective by analyzing the impact of a set of intangible relational assets on the initial success of new business start-ups. Based on a study of 130 firms, we analyzed six hypotheses regarding the possible positive relationship between the relational capital of a start-up company and its success in its first few years of business.

Introduction

Studies in the field of entrepreneur-ship have recorded considerable growth in recent decades, with a particular focus on the entrepreneur and new ventures (above all in the start-up phase), and on the role the two play in the economic and social fabric of the business environment. This interest is attributable, in part, to the growing recognition being granted to start-up companies as key mechanisms in the creation of employment and as motors of a country's economic growth. Thus, in an economic climate marked by instability and change, entrepreneurship can be crucial for the dynamism and economic prosperity of a region, as well as providing it with the ability to adjust to the structural changes that it must face.

Among other reasons, new business start-ups can inject energy into an economy because of the fact that firms entering a market for the first time do so by contributing new products or services and by providing an offer hitherto unmet in a geographical area, thereby widening consumer choice. Furthermore, an increase in competition can stimulate the firms already operating in the market who, more often than not, have to improve the quality and/or lower the prices of their products or services in order to remain competitive.

Although there would seem to be a general consensus regarding the importance of new business ventures in regional economic growth, this consensus weakens when it comes to identifying the factors that allow us to distinguish between successful and not so successful firms. However, the figures indicate that this is no small matter, and that the more information we can gather, the more we will be able to help the development of businesses in the initial years of the business cycle. Indeed, this has been the approach taken in a number of studies that have sought to isolate the factors leading to the success or failure of a new business venture, providing us with results regarding the entrepreneur, the sector in which the entrepreneur takes his/her initiative and the strategies adopted in the start-up.

In an attempt at shedding further light on the matter, and adhering to the recommendations of those authors that stress the importance of conducting research from multiple theoretical perspectives within the field of entrepreneurship. as well as adding to these with Other theoretical approaches (Gartner 2001; Johannisson 1992), we turn our attention to studies in intellectual capital. Here, a particular emphasis has been placed on those intangible assets that add value to a firm and on which, therefore, their competitive advantage might be built. However, one of the main problems facing research in this field is the fact that firms tend not to manage these intangible assets correctly (Andriessen 2004). If from the time of a company's foundation, its directors and owners were aware of the importance these assets had for its short and medium-term performance and, in particular, for its long-term competitive advantage, then they would surely improve their management of these- assets considerably and even of the benefits they obtain from them. Thus, why wait until a firm reaches a certain age- or size before beginning to identify and measure its intellectual capital?

Similarly, we should remember that a new venture will not yet have had time to establish relations with its environment and that it cannot call on its history or past to provide it with the experiences needed to face the difficulties that arise. …

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