The role of social capital in entrepreneurial effectuation : the South African experience

Abstract

The commercial environment and literature alike have emphasised the need for an increase in early-stage entrepreneurial endeavours. It is understood that effectuation adds value to understanding entrepreneurial action in uncertain environments and yields positive entrepreneurial outcomes at the start of a business venture. The study specifically explored the implications of uncertainty by probing how entrepreneurs may form social capital to co-create entrepreneurial opportunities during effectuation. The literature review established the need to understand how collaborative efforts are leveraged from network members. The exploratory research method applied for the study was qualitative and 16 semi-structured, in-depth interviews were conducted with founder entrepreneurs from various industries. The findings showed that the journey and experience, co-creation in social capital, and the intersection of social capital and effectual entrepreneurship help to contextualise how entrepreneurs form social capital during effectuation. Additional insights identified social mobility inhibitions for Black South Africans and rebutted the need for financial capital to start a venture. Findings identified a lack of support from networks and hindrance due to jealousy as the downside factors to having close ties from ‘whom you know’. The principal findings were formulated into a reconceptualised framework on the multilevel dynamics of effectuation.