Title: The role of human and social capital and entrepreneurial orientation for small business performance in a transitional economy

Authors: Ivan M. Manev, Bojidar S. Gyoshev, Tatiana S. Manolova

Addresses: University of Maine, Maine Business School, Orono, ME 04469–5723, USA. ' International Business School, Botevgrad, Bulgaria. ' Sawyer School of Management, Suffolk University, 8 Ashburton Place, Boston, MA 02108, USA

Abstract: We develop a model of small business performance in transitional economies in which owners| human and social capital are expected to be directly and positively related to the firm|s entrepreneurial orientation, and all three are hypothesised to have a positive impact on performance. In transitional economies, these factors are particularly salient because of the scarcity of resources and the lack of entrepreneurial tradition and adequate institutional infrastructure. The model is tested with structural equations analysis of data from 160 owners of small businesses in Bulgaria. We find that social capital is related to entrepreneurial orientation, and both are positively associated with business performance. This means that social capital is an important initial resource endowment in transforming economies, and small business owners need to establish and develop connections with partners, suppliers, customers, and institutions. Also, they should seek to identify opportunities and develop proactive and innovative strategies.

Keywords: small businesses; small firms; human capital; social capital; entrepreneurial orientation; transition economies; entrepreneurship; economic transition; bsuienss performance; Bulgaria; innovation; organisational performance.

DOI: 10.1504/IJEIM.2005.006531

International Journal of Entrepreneurship and Innovation Management, 2005 Vol.5 No.3/4, pp.298 - 318

Published online: 20 Mar 2005 *

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