Academic journal article International Journal of Business

The Influence of Organizational Capital on the Conception of the Enterprise Project

Academic journal article International Journal of Business

The Influence of Organizational Capital on the Conception of the Enterprise Project

Article excerpt

I. INTRODUCTION

According to Shane and Venkataraman (2000), an entrepreneurial project consists of two processes: discovery and exploitation of opportunities. For the project to succeed, the entrepreneur must assemble two types of resources: know-how, represented by human capital, and social capital.

The success of entrepreneurial projects is a central question that is of interest, of course, to the entrepreneurs themselves but, more broadly, to the set of stakeholders, including the financiers such as business angels, venture capitalists and bankers. In France, the five-year survival rate of newly created enterprises is approximately 50% (1). From this perspective, a certain number of works have sought to identify the criteria that could explain the success or failure of an entrepreneurial project. For example, Tyebjee and Bruno (1984) and MacMillan (1977) listed the criteria used by venture capitalists to select the entrepreneurial projects in which to invest. Other studies have themes of understanding the success of projects ex post (for example, Lasch et al., 2005). Meanwhile, a few works have examined the chances of success of projects ex ante, based on the characteristics of the projects, particularly as a function of their degree of ambition and degree of realism.

The object of the present research is to understand how the human capital and the social capital of founders affect the conception of the enterprise project, particularly the degree of ambition and realism of the project. Thus, this article provides two novel elements. First, the research question is asked in the very early stage, that is, from the conception of the business plan. Next, this research uses the theories of human capital and social capital to understand how they contribute to explaining the conception of the enterprise project.

This research study therefore seeks to show how the characteristics of the founder, together with other external factors, can explain the characteristics of the creation of the project, particularly its ambition and its realism.

We shall first present the theoretical framework, followed by the hypotheses of the research. Then, we shall present the methodology. Finally, the results will be analyzed and discussed.

II. THE THEORETICAL FRAMEWORK: THE INFLUENCE OF THE ORGANIZATIONAL CAPITAL OF THE ENTREPRENEUR

Entrepreneurship can be considered to consist of two processes: the discovery of business opportunities and their exploitation (Shane and Venkataraman, 2000). Recent conceptions of entrepreneurship are based on resources (Alvarez and Barney, 2004, Alvarez and Busenitz, 2001). To exploit an opportunity when it appears, the entrepreneur must assemble the necessary resources and find a way to organize these resources to extract the value of the opportunity. This process requires having access to these resources to generate the profits associated with a market opportunity and doing so in a way that enables the economic actor to collect at least part of the profits that have been generated (Alvarez and Barney, 2004). Among the resources available to the entrepreneur are his human capital and his social capital.

A. Human Capital

The theory of human capital postulates that individuals who have more or better-quality human capital achieve better performance in the execution of certain tasks (Becker, 1975). From an entrepreneurial perspective, human capital refers to the knowledge and skill sets that enable a person to engage successfully in the creation of activities or enterprises (Davidsson and Honig, 2003; Snell and Dean, 1992). Human capital is composed of both generic and specific human capital.

1. Generic Human Capital

Generic human capital consists of the knowledge, skill sets and ability to solve problems that are transferable to different situations. Generic human capital typically corresponds to education (Rauch and Frese, 2000). …

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