Conceptualising entrepreneurial capital for a study of performance in small professional service firms

Abstract

Purpose The purpose of this paper is to develop a robust theoretical framework for exploring the longitudinal impact of social capital on the performance of small business service firms. Design/methodology/approach This conceptual paper builds on theories of capital, particularly entrepreneurial capital, to develop a theoretically robust framework within which to consider the longitudinal impact of social capital on small business service firms. Findings Reviewing current literature on entrepreneurial capital demonstrates the difficulty in isolating capital in its various forms due to the convertibility and overlapping nature of different types of capital. Also problematic is the impact of time and the effect which changing amounts and types of capital can have on firm performance. The conceptual model addresses these concerns by exploring social capital in a sector where financial capital presents less of a barrier to entry and where owners' human capital, particularly their educational achievement, is broadly similar. To capture process‐based data, three key stages in the entrepreneurship process are explored: nascent, start‐up, and established. Practical implications Understanding the changing structure and relational aspects of social capital over time and its impact on performance will assist small business owners in utilising their relationships more effectively. Although the study focuses on small professional service firms it may also be applicable to other sectors, or be used in replicated studies with other professions. Originality/value The conceptual framework proposed recognises the overlapping and convertible nature of different forms of capital. Further, it recognises the fluctuating nature of entrepreneurial capital over time and the different outcomes which can emerge from social capital.