The Strategy Seminar: Business Leaders-Virgil Cammack-Academic Article-Human Capital and Social Capital in Entrepreneurs and Managers of Small and Medium Enterprises

In Felicio Augusto, Eduardo Couto, and Jorge Caiado’s article Human Capital and Social Capital in Entrepreneurs and Managers of Small and Medium Enterprises, the authors examine the characteristics of both human and social capital. As the article’s title states the study was conducted with small and medium size firms. This was done across numerous industries within a small open economy country. The study’s hypotheses were as follows:

H1:    Human capital elements (knowledge, experience, professional field, cognitive ability and proactivity) are associated with elements of social capital (status, entanglement, complicity, personal relationships, family support and social relationships).

H1a.  An entrepreneur’s elements of human capital are related to his elements of social capital –namely, family protection and complicity.

H1b.  A manager’s elements of human capital are related to his elements of social capital -namely, power and influence.

H2.    Business sectors and industries influence different relationships within human and social capital.

H2a.  Across different industries an entrepreneur’s elements of human capital are linked with his elements of social capital -namely, family protection and complicity.

H2b.  Across different industries a manager’s elements of human capital are linked with his elements of social capital -namely, power and influence.

The hypotheses above where supported by the study. Though there is further need for study in the interdependence and causality of social and human capital elements –as the study noted –the study nevertheless provided insight into the “best fit” for manager and entrepreneur types in general and for manager and entrepreneur types per industry. It should not seem surprising that entrepreneurs would need elements of support (since they are responsible for raising the capital and overcoming other start-up obstacles) and managers need elements of power and influence (since they must accomplish tasks without the control inherent in ownership).

Entrepreneur types and manager types might naturally be drawn to their roles as entrepreneurs and managers; however, if this is not the case, an analysis such as this one is beneficial to both types in helping them find their natural place. Understanding one’s role and recognizing what one needs from human and social capital can only make the journey easier.


Citation.
Augusto, Felicio, Eduardo Couto, and Jorge Caiado. Human Capital and Social Capital in Entrepreneurs and Managers of Small and Medium Enterprises. Journal of Business Economics & Management; Jun 2012. vol. 13 issue 3. pp. 395-420.