ABSTRACT
My study seeks to answer the main question: "how does entrepreneurs' social capital positively and negatively affect their resource mobilization efforts, and exploitation of entrepreneurial opportunity?" To answer this question, I develop a model for examining positive and negative effects of social capital on resource accumulation by entrepreneurs, and the subsequent effect of resource accumulation on the exploitation of entrepreneurial opportunity, and utilize data from Africa to ëmpirically test the relationships in this model. Developing nations are a suitable context because: a) They require entrepreneurship for economic development, b) They have received less attention in management and entrepreneurship research, c) Because of inadequately-developed institutions, entrepreneurs from developing nations face major resource mobilization challenges hence they often turn to their social ties for resources, and d) The communalistic and collectivistic nature of most developing nations -encouraging support and sharing of resources- may help us better understand how society's values and structures may contribute and also deduct firm resources.
My study reveals that social capital contributes resources to entrepreneurs in developing nations at a cost that takes away resources, and that more resources but lower costs facilitate entrepreneurial opportunity exploitation. For entrepreneurs in developing nations, large networks, greater shared identity, and more trust are beneficial. To increase chances of raising more resources, entrepreneurs from communalistic societies should include network members from outside their communities. Besides providing financial support, policy-makers should develop training programs and advisory services on configuration of entrepreneurs' networks so as to achieve more resources at a low cost. My study insights can help improve entrepreneurs' resource accumulation efforts and the subsequent growth of their firms, leading to the overall economic growth of developing nations.