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

ABSTRACT

The present study seeks to evaluate the influence of organizational capital on the conception of enterprise projects in the first stages of the entrepreneurial adventure. This work rests on the application of the theory of human capital and the theory of social capital. Two variables are the object of examination: the level of ambition of these projects and their degree of realism. The influence of human capital and of social capital is measured from the beginning of the enterprise project using financial projections made by the creators at the stage of the business plan. Based on tests of hypotheses made on an original sample of 125 business plans of enterprises in the creation stage, the results show the influence of human capital and of social capital on the conception of enterprise projects. In particular, the importance of the functions served before the creation of the actual enterprise, the presence of a former director (or of a serial entrepreneur) on the team of creators and the force of the social resources of the entrepreneurs have a positive influence on the level of ambition of the project, whereas the proportion of women on the team play an opposite role. Moreover, the size of the team of entrepreneurs and the force of their social resources is positively correlated to the realism of the project, whereas the average level of functions previously served by the creators, the average duration of their studies and the proportion of women on the team play an opposite role.

JEL Classifications: L26, G24, G32

Keywords: Entrepreneur; Human capital; Social capital; Start-up; Business plan; Ambition; Realism; Venture capital; Financing

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. …

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