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Journal of Social Entrepreneurship
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Social Capital as a Driver of Social
Entrepreneurship
Gisele Hidalgo, Jefferson Marlon Monticelli & Ingridi Vargas Bortolaso
To cite this article: Gisele Hidalgo, Jefferson Marlon Monticelli & Ingridi Vargas Bortolaso (2021):
Social Capital as a Driver of Social Entrepreneurship, Journal of Social Entrepreneurship, DOI:
10.1080/19420676.2021.1951819
To link to this article: https://doi.org/10.1080/19420676.2021.1951819
Published online: 23 Jul 2021.
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Social Capital as a Driver of Social Entrepreneurship
Gisele Hidalgoa
, Jefferson Marlon Monticellib
and
Ingridi Vargas Bortolasoc,d
a
Management and Business School, Universidade do Vale do Rio dos Sinos, Porto Alegre, Brazil;
b
Health and Human Development Post-Graduation Program, La Salle University, Canoas, Brazil;
c
Department of Business Management and Communication, Universidade de Santa Cruz do Sul,
Santa Cruz do Sul, Brazil; d
Social Memory and Cultural Assets Post-Graduation Program, La Salle
University, Canoas, Brazil
ABSTRACT
Social entrepreneurship is a field widely explored from multiple
perspectives and within multiple academic disciplines. In parallel,
practitioners have applied social entrepreneurship principles to
multiple sectors and on multiple levels. This research investigates
how social capital applied to social entrepreneurship can contribute
as a driver of social enterprise. A systematic literature review
was conducted based on searches of major academic databases
(Web of Science, Ebsco and Periodicos Capes), winnowing an initial
list of 3,106 papers down to 472 articles that underwent content
analysis. The results of this analysis were summarised and
used to develop a theoretical proposal and research propositions
relating social entrepreneurship to social capital and highlighting
the social entrepreneur’s social connections with the collective
actors and institutions that together constitute social entrepreneurship.
The discussion presented suggests that the interface
between social entrepreneurship and social capital is a latent field
for research and the paper ends by presenting a model to consolidate
research efforts, identifying three key themes that recur
in the literature: Creation of social capital by the social entrepreneur,
social capital and its relationship with the institutions, and
Social capital as a former of groups. In these terms, a future
agenda is presented for debating these issues.
KEYWORDS
Social entrepreneurship;
social entrepreneur; social
capital; enterprises
Introduction
Social entrepreneurship has been attracting widespread interest over the last two decades.
Studies of social entrepreneurship have become a phenomenon and their appeal
has grown strongly among socially conscious groups. People have become more sceptical
about the ability of governments and businesses to solve pressing social problems
such as poverty, social exclusion and the environment (French et al. 2020; Wilson
2008). Much of the enthusiasm expressed in this topic stems from the challenging
CONTACT Jefferson Marlon Monticelli jeffmarlon@hotmail.com Health and Human Development PostGraduation
Program, La Salle University, Canoas, Brazil
ß 2021 Informa UK Limited, trading as Taylor & Francis Group
JOURNAL OF SOCIAL ENTREPRENEURSHIP
https://doi.org/10.1080/19420676.2021.1951819
empirical context offered by social entrepreneurship, combining both for-profit and
non-profit organisational activity (Dacin, Dacin, and Tracey 2011).
Social entrepreneurship is a mature field (Gupta et al. 2020) and this issue has
become a rich academic field for discovery of models inspired by value creation.
Around the world, the status quo and conventional thinking about what is feasible
have been challenged (Germak and Robinson 2014). In addressing social problems
and enriching communities and societies, social entrepreneurship has attracted considerable
interest in the literature (Zahra et al. 2009). In parallel, the concept of
social capital comprises aspects of social organisation such as networks, norms and
bonds of trust that facilitate coordination and cooperation for mutual benefit.
Expansion of the social and human capital of a community is linked to the presence
of social leaders who mobilise social actors and maximise social development
actions (Putnam 2002).
Regarding this perspective on social entrepreneurship and social capital, it can be
assumed that social entrepreneurs leverage relationships with active groups or institutions
for creation or mobilisation of social capital resources, to complement economic
and social objectives. According to Putnam (2002), social capital is a driver for establishing
relationships of trust and collaboration, leading to an environment that favours
collective and joint development. Broadly speaking, the concept of social capital
encompasses the roles played by individuals, their social networks, and the institutions
present in a particular socioeconomic field. Thus, social capital refers to circumstances
in which individuals can use membership of groups and networks to secure benefits.
One can accumulate social capital through purposeful actions and can transform social
capital into conventional economic gains. The ability to do so, however, depends on
the nature of social obligations and connections (Sobel 2002).
The concept of social entrepreneurship is founded on the observation that social
entrepreneurs try to solve social problems in an environment with multiple stakeholders.
Commercial and social entrepreneurs are therefore distinguished by their primary
objectives (profits and social wealth, respectively) (Estrin, Mickiewicz, and
Stephan 2013)
It has been suggested that social entrepreneurs can take greater advantage of
social networks than traditional (or commercial) entrepreneurs (Dufays and Huybrechts
2014). However, Estrin, Mickiewicz, and Stephan (2013) investigated 114,000 entrepreneurs
from 47 countries, using data from the Global Entrepreneurship Monitor 2009,
and found that higher national rates of social entrepreneurship are favourable to
development of commercial entrepreneurs, because they build collaborative relationships
and new ties across social groups, but that, conversely, higher national rates of
commercial entrepreneurship are unfavourable to development of social entrepreneurs.
These statements shed light on the reasons why social entrepreneurship
researchers have responded so favourably to the principles of social capital (e.g.
Arregle et al. 2015; Greve and Salaff 2003; Weber and Kratzer 2013). Following this
argument, it is important to state that, for the purposes of this article, social capital is
understood as the resources that are available to people through their social connections.
Thus, application of the principles of social entrepreneurship to the concept of
social capital provides grounds for the assumption that social entrepreneurs can reap
2 G. HIDALGO ET AL.
substantial transformational results by skilfully using their social ties, increasing their
chances of success (Rakhmani and Bhinekawati 2020).
The main motivation for conducting this study was to attempt to answer the question,
‘How is social entrepreneurship driven by social capital through a process of formation
of social enterprises?’ Given this perspective, this paper aims to investigate
how social capital applied to social entrepreneurship can contribute as a driver of
social enterprise. By so doing, it contributes to understanding of the process of formation
of social enterprises from a triad of perspectives, each focussing on a different
level: the individual (social entrepreneur), who articulates and connects people to a
common purpose; the active group (participants, donors, volunteers, collaborators,
etc.) that constitutes the collective social entrepreneurship1
around the cause; and
institutions (cooperatives, community businesses, credit unions, development trusts,
trading charities, housing associations and social firms), which are part of the operating
environment, provide the basis for the enterprise to achieve legitimacy and supporting
its sustainability. Recent studies have demonstrated the relevance of the
interdependent relationships between social enterprises that have revenue generating
or not-for-profit strategies (Lee et al. 2020). These studies have attempted to explain
how social entrepreneurship can create social capital (Estrin, Mickiewicz, and Stephan
2013) or how different forms of human capital influences social entrepreneurship
(Estrin, Mickiewicz, and Stephan 2016). However, it is not clear how the process of formation
of social enterprises occurs on the different levels or, in particular, how social
capital can be mobilised to legitimise different organisational forms that can both
enable and drive social entrepreneurship. Moreover, the heterogeneity of the phenomenon
involved makes it difficult to assemble a landscape that includes the several different
levels of analysis and incorporates a future agenda identifying and specifying
research avenues
In order to reveal insights to help fill some of the knowledge gaps and add detail
to a research landscape that is at present only lightly sketched, an approach to social
entrepreneurship and social capital was developed based on several different propositions
and a theoretical framework, resulting in an agenda for future research. As yet,
there are still few studies exploring this theme to reveal the true nature of the entrepreneurship
paradigm and its applicability to the social sphere, i.e. the connection
between entrepreneurship and social capital (Lang and Fink 2019). This study thus
focuses on an element of the phenomenon of social entrepreneurship that is still little
explored, related to the process of formation of a social enterprise (Molecke and
Pinkse 2017). Social enterprises are positioned at the crossroads between market, public
policies and civil society. They are actors characterised by a collective action taken
in pursuit of a social goal, by the constraint on profit distribution and by an open and
participatory governance model that distributes the ownership rights and decisionmaking
powers among stakeholders that are not limited to investors (Defourny and
Nyssens 2006; Galera and Borzaga 2009). The objectives of social enterprises are
deeply rooted in the values of their founders, balancing the motives for creating social
wealth with the need for profits and economic efficiency. Social entrepreneurs often
work in domains with little governance and supervision (Zahra et al. 2009). Formation
of such an enterprise requires elements that include an entrepreneur’s capacity to use
JOURNAL OF SOCIAL ENTREPRENEURSHIP 3
social interaction to establish local social networks that will support their communities
(Fligstein 1997; Robins 2006). Social entrepreneurs tend to use their social capital to
seek and access resources at each stage of their social enterprises (Greve and Salaff
2003). This study presents propositions and a future research agenda that complements
work by Dufays and Huybrechts (2014) in which they reported that social entrepreneurs
are more embedded in the social context than commercial entrepreneurs. At
this point, it has been shown how social entrepreneurs can leverage social capital to
construct collaborative relationships and form new ties among social groups (Estrin,
Mickiewicz, and Stephan 2013). However, it is necessary to improve the discussion
about how social entrepreneurship can help to develop social enterprises, because
social entrepreneurship is dependent on resource mobilisation to solve social problems
and to deal with market failures (Austin, Stevenson, and Wei-Skillern 2006).
Consequently, this study may contribute insights into how social capital can support
development of a social enterprise on several levels, especially those involving the
social entrepreneur, the group of people who engage in collective social entrepreneurship
and the institutions that support and regulate the business.
In order to fill these gaps, a systematic review was conducted of literature indexed
on scientific databases. A systematic literature review provides a means to recognise
the latent structure underlying a field of research and identify the main research
themes that academics are working with. A total of 3,106 papers were identified. After
selecting relevant studies, a total of 472 articles were analysed. A content analysis procedure
was used to map the main concepts and theoretical approaches and present
the main characteristics of work on social entrepreneurship employing the concept of
social capital.
This paper starts by addressing the theoretical assumptions underlying the concepts
of social entrepreneurship and social capital. The methodological aspects, including
the strategy employed to search and filter the existing literature are then described.
This description is followed by a discussion about the influence of social capital on
the development of a social enterprise, based on the literature analysed and making
connections between three perspectives: individual, group and institutions. Three
propositions are presented, together with a proposed framework for consolidation of
the topic. The paper ends with a discussion of the study’s limitations and suggestions
for a new research agenda.
Theoretical background
Although entrepreneurship may be regarded as a fairly young scientific field, it has a
long history as an object of intellectual interest and some pioneering contributions
were published as far back as the 18th century (Landstr€om 2020). In the last 2 decades,
social entrepreneurship has evolved as a research domain of great significance for
firms and researchers (Kannampuzha and Hockerts 2019). Although social entrepreneurship
has been gaining in popularity, scholars are engaged in a series of debates
involving conceptual clarity and the boundaries of the field and the struggle to create
a set of relevant and meaningful research questions.
4 G. HIDALGO ET AL.
Social entrepreneurship
According to Rakhmani and Bhinekawati (2020), the notion of ‘social entrepreneurship’
has become increasingly popular over the past 2 decades. In their study of social
entrepreneurship, Austin, Stevenson, and Wei-Skillern (2006) explain that study of the
concept of entrepreneurship can be divided into three phases. The first began with
Schumpeter’s seminal article (1934) that examined entrepreneurship as a key process
through which the economy advances as a whole. In a second phase, research began
to focus on the figure of the entrepreneur from psychological and sociological perspectives.
Finally, a third phase focussed on the business management process, including
research investigating how to promote innovation within established firms, startups,
venture capital, organisational life cycles and predictors of business success.
Despite its interdisciplinary nature, social entrepreneurship should be understood as a
complex social movement that is still in progress. For these reasons, the new field of
social entrepreneurship is replete with opportunities for study and research (Douglas
and Prentice 2019).
Social entrepreneurship can be defined as employing new types of resources in different
ways while combining the inventiveness of traditional entrepreneurship with a
mission to change society (Germak and Robinson 2014; Zivkovic 2018). In this sense,
entrepreneurship has become a watchword and politicians and policymakers see social
entrepreneurship as a solution to many social problems (Landstr€om 2020).
Consequently, social entrepreneurs take on the role of change makers (Stevens,
Moray, and Bruneel 2015) because they identify trends and seek innovative solutions
to social and environmental problems, either by seeing a problem that has not yet
been recognised by society and/or by seeing it from a different perspective (Shaw and
Carter 2007). In addition to new non-profit ventures, social entrepreneurship can also
be pursued by business ventures with social objectives, such as for-profit community
development banks and hybrid organisations that combine non-profit elements with
for-profit elements. This perspective helps to broaden the scope of socially oriented
entrepreneurial activities (Dees 1998).
Social entrepreneurship is rooted in the strong tradition of theory and research on
entrepreneurship and the social entrepreneur can be considered as a type of entrepreneur.
Dees (1998) draws a parallel between commercial and social entrepreneurs,
while pointing to the differentiation in their social mission. The core characteristics of
a social entrepreneur include: (i) recognition and ‘relentless’ pursuit of new opportunities
to promote the mission of creating value; (ii) continuous involvement in innovation
and modification; and (iii) daring actions taken without accepting resource
limitations. There is a general understanding in these definitions that social entrepreneurs
focus on the social mission or social value creation (Austin, Stevenson, and WeiSkillern
2006; Peredo and McLean 2006).
On the one hand, the social mission is central and explicit for social entrepreneurs
and their impact is judged relative to the mission and not to wealth. For social entrepreneurs,
wealth is only a means to a certain end and they meet needs that are not
addressed by for-profit ventures (McMullen 2011). In contrast, for commercial entrepreneurs,
generation of wealth is a way of measuring value creation. Commercial entrepreneurs
focus on the market exchange to maximise their profits (McMullen 2011).
JOURNAL OF SOCIAL ENTREPRENEURSHIP 5
This is because commercial entrepreneurs are subject to market discipline, which most
often determines if they are generating value. If they do not switch their resources to
be used in a more economically productive way, they will tend to be ejected from the
market (Dees 1998). On the other hand, it is relevant to consider that social entrepreneurs
are not the opposite of wealth creation, since although commercial and social
entrepreneurs can be distinguished by their primary objectives of profits and social
wealth, they also have in common innovation and the need to bear risk and to invest
(Estrin, Mickiewicz, and Stephan 2013). For example, Douglas and Prentice (2019)
researched the roles of prosocial attitude, profit and innovation as motivators of social
entrepreneurship, constructing a three-motive model which they argue is also applicable
to commercial entrepreneurs aiming to practise corporate social responsibility
while still pursuing profits. Thus, social entrepreneurship does not exclude profit-making
and neither do social entrepreneurs necessarily disregard wealth creation, rather,
they reconcile these different motivations and objectives (Stevens, Moray, and
Bruneel 2015).
For Van Ryzin et al. (2009), social entrepreneurs play the role of agents of change
in the social sector by adopting a mission to create and sustain social value (not just
private value, but not excluding private value either); recognising and relentlessly pursuing
new opportunities to serve that mission; engaging in a process of continuous
innovation, adaptation and learning; acting boldly without being limited by resources
currently in hand; and exhibiting heightened accountability to the constituencies
served and for the outcomes created. Their work enables the process of change to be
accelerated and inspires other actors to engage in a common cause. Social entrepreneurs
establish new organisations, develop and implement innovative programs and
organise or distribute new services (Sharir and Lerner 2006).
Social entrepreneurs can create new ways to influence existing economic organisations
and create change through new technologies. This may mean disrupting business
structures, tools and models from their normal way of operating by replacing an
existing method with a cheaper tool or innovation, thus creating a new technology to
solve an ongoing problem or re-orienting an old idea into a new context (Martin and
Osberg 2007).
Presenting similar ideas, Peredo and McLean (2006) argue that social entrepreneurs
can balance the interests of multiple interested parties and at the same time maintain
their sense of mission in the face of moral complexity. Moreover, they excel at recognising
and seising opportunities to deliver the social value they propose to provide.
Wallace (1999) sees social purpose firms as a means of harvesting the energies of all
three sectors to combat economic and social problems entrenched in urban communities.
However, social entrepreneurship can also be carried out by hybrid organisations
that simultaneously pursue social and economic goals (Bacq and Alt 2018; Mair and
Martı 2006). In this case, social motivations are combined with a profit motive, resulting
in hybrid organisations that conciliate commercial and social enterprises (Battilana
and Lee 2014; Haigh et al. 2015).
With regard to social enterprises, Mair and Martı (2006) defined them as organisations
engaged in business activities to achieve social goals (for example, Narayana
Hrudayalaya Ltd. is an Indian public limited company offering affordable and highly-
6 G. HIDALGO ET AL.
subsidised medical services to poor people). In these terms, social enterprises are
socially-oriented with the objective of changing the environment, while at the same
time generating economic return and profits (Stevens, Moray, and Bruneel 2015;
Strothotte and W€ustenhagen 2005). Consequently, social enterprises are most often a
collective form of organisation that depend on a coordinating partnership between
different actors (Dufays and Huybrechts 2014) who mobilise resources for bottom-up
social changes (Santos 2012). For Hespanha (2009), in highly unfavourable environments,
creativity and ability to improvise can be of greater utility to entrepreneurship
than risk-taking, since ensuring survival of the venture is often a massive challenge.
According to Cruz Filho (2012), these organisations work under a wide variety of legal
structures and represent new responses to changes brought about by economic crises,
to the difficulties of the State and to the social and economic needs and aspirations
of their communities. Sabourin (2008) states that economic activities are not motivated
solely by individual or corporate material interest, many of them also include
concern for satisfaction of others’ needs or maintenance of social ties. In this sense,
social capital can be defined as a set of characteristics such as trust, norms and systems,
which contribute to increasing the efficiency of society and facilitate coordinated
actions.
Social Capital
Social capital is usually associated with information, trust and norms of reciprocity
inherent in social networks that pervade individuals (Bourdieu 1986) and communities
(Bourdieu 1986; Putnam 2002; Woolcock 1998). On the one hand, for Putnam (2002),
social capital is related to values of society, solidarity and community. On the other
hand, for Bourdieu (1986), social capital is based on forms of power and domination.
These differing views support Coleman’s (1990) opinion of the definition of social capital,
in that social capital is not a single concept, but a variety of different structural
concepts that facilitate the actions of actors within a social structure. Along similar
lines, Bourdieu and Wacquant (1992) define social capital as the sum of real or virtual
resources that revert to an individual or group because of a durable network of more
or less institutional relationships of mutual knowledge and recognition.
Social capital can be understood as the goodwill generated by the fabric of social
relations that can be mobilised to facilitate action (Adler and Kwon 2002). Thus, social
capital is a social network resource that benefits a local actor by connecting them to
other actors. Social capital would be a resource located in the external links of a central
actor, giving cohesion to the collective social venture and facilitating the search
for common objectives (Adler and Kwon 2002). Also seen as the relationship with
friends and colleagues through which it is possible to use financial and human capital
(Bourdieu 1986), social capital enhances people’s ability to work together in groups
and organisations with a common purpose, thus fostering cooperation between group
members. It is also related to social networks and establishing norms and rules that
generate trust, thus facilitating coordination and collaboration (Putnam 2002).
Social capital refers to the social connections that people use to obtain resources
that they would otherwise acquire by spending their human or financial capital (Kim
JOURNAL OF SOCIAL ENTREPRENEURSHIP 7
and Aldrich 2005). In broad terms, study of the concept of social capital includes the
study of how social relations can positively influence the actions of particular individuals,
groups or organisations. This phenomenon has been seen from many perspectives,
generating research in fields ranging from economics to education (Estrin, Mickiewicz,
and Stephan 2013; Helliwell and Putnam 1999; Kawachi and Berkman 2000).
Marconatto, Ladeira, and Wegner (2019) state that the term social capital is used differently,
depending on the field of study. They explain that in the literature on political
science, sociology and anthropology, social capital generally refers to a set of
norms, networks and organisations through which people gain access to power and
resources that are instrumental in enabling decision-making and formulating policies.
Social capital is also used in different ways and at different levels in the management
literature, in relation to internal structures within the same firm, inter-organisational
relationships and career development, for example.
Within management, the concept of social capital is also used to describe how
economic actors draw resources from their social networks. Used in this sense,
social capital constitutes the value an individual can derive from social relations. In
the context of entrepreneurs, the concept of social capital refers to the various
relationships between entrepreneurs and their families, friends, associates and communities
(Davidsson and Honig 2003). For example, in their widely cited review of
the field of social entrepreneurship, Mair and Martı (2006) suggest that social capital
could be used for social entrepreneurship in restricted environments, such as
inner cities.
For Grootaert and Van Bastelaer (2002), social capital can be seen from a cognitive
perspective, since it facilitates information sharing, collective action and decision-making
through established rules, social networks and other social structures, supplemented
by formal rules and procedures. This phenomenon is a result of formation of
shared norms, values, trust, attitudes and beliefs, i.e. of formal institutions. However, a
complete institutional system includes interaction between formal and informal institutions
(behavioural, cultural, ethnic, ideological norms, conventions and codes of conduct)
(Cantwell, Dunning, and Lundan 2010).
On the one hand, in developing economies with flawed or absent institutions, i.e.
economies that suffer from institutional voids such as information asymmetry, misguided
regulations, and inefficient legal systems (Khanna and Palepu 1997), greater
investment is needed to develop trust in relationships because of the highly uncertain
environment (Nooteboom 2007). On the other hand, developed countries with strong
institutional quality are based on predictability and a strong rule of law that encourages
social capital to develop both social and commercial entrepreneurship (Estrin,
Mickiewicz, and Stephan 2013; Lee et al. 2020).
Trust, in particular, is considered one of the central elements of social capital.
According to Ostrom, Ahn, and Olivares (2003), the trust and attitude of reciprocity
adopted by an individual rarely derive from the quality of their interpersonal relationships
alone. Emphasising the role of social capital in different contexts, it relates to
actors’ ability to guarantee benefits due to membership of social networks. For
example, Maxwell, Jeffrey, and Levesque (2011) found that entrepreneurs who
received offers from investors (e.g. business angels) had trust-building behaviours, in
8 G. HIDALGO ET AL.
opposition to entrepreneurs who violated trust and whose investors terminated the
investment in response.
Between organisations, trust reduces the need for strict monitoring and control mechanisms
and strict rules (Dakhli and De Clercq 2004). For Fukuyama (1995), trust and honesty
are motivators to reduce transaction costs. Thus, it is understood that building trust makes
it possible for actors to cooperate and expect reciprocity, while strengthening relationships
between peers.
Trust involves a socialisation process, which in turn leads to internalisation of a particular
set of values and norms. The practical implications of social capital are broad,
because it enables trust based on shared norms and values to be developed and
enhanced (Nooteboom 2007), with consequences that can be beneficial or harmful.
Positive results include social control or compliance with rules, support and benefits
mediated by extra-family networks. For example, trust, collaboration, solidarity and
other values intrinsic to social capital can emerge, spread or be repressed in networks
of interpersonal relationships (Narayan and Cassidy 2001). Negative results can result
from opportunism, uncertainty, complexity of the environment, limited access to information
and failure to alleviate the burden of transaction and bureaucratic costs (Liu,
Luo, and Liu 2009; Newbert and Hill 2014). For example, Curtis et al. (2020) identified
that excessive trust in social enterprises can put social entrepreneurs in a position in
which they are attempting to deal unaided with problems that would need government
support to solve. Consequently, social capital and trust are mutually complementary
with institutions, because a lack of institutions can demand relationship building
based on trust (Nooteboom 2007).
Networks and institutions and also the agency of the individuals involved are all
important for generation of the relational trust and reciprocity that characterise social
capital. Social capital also has a positive relationship to institutions when it offers
social actors autonomy for their collective voluntary actions and creation of their own
rules of joint management (Ostrom 2000; Ostrom, Ahn, and Olivares 2003). In turn, formal
and informal institutions can facilitate effective distribution of reliable information
and offer supplementary sanctioning and monitoring capacity for the voluntary
arrangements built by the individuals in a society, tending to be more profitable to
the generation of social capital than centralised and totalitarian systems (North 1991;
Ostrom, Ahn, and Olivares 2003).
Finally, Roper and Cheney (2005) show that entrepreneurship is an important
avenue for responsible and sustainable businesses, although its importance has been
demonstrated more in practice than in academic research. Therefore, this study also
investigates the interface between social entrepreneurship and social capital, since the
field has attained a level of maturity that both enables and merits this review.
Method
As explained above, this paper aims to offer a shared understanding of the current
configuration of the literature on social entrepreneurship and social capital. More specifically,
our goal is to explore how social capital may support social entrepreneurship.
JOURNAL OF SOCIAL ENTREPRENEURSHIP 9
By detecting and mapping studies and pinpointing the crucial links in its intellectual
evolution, we are eventually able to offer a comprehensive scrutiny of the literature.
This paper is based on a qualitative and descriptive approach, employing a systematic
literature review, with the objective of achieving conceptual consolidation of a
fragmented field through systematic collection of data, descriptive and qualitative analysis
and synthesis. Systematic literature reviews analyse data from the literature about
a specific topic, using systematic search methods and summarise the information
extracted, ensuring the reliability of results through use of scientific, replicable and
transparent processes (Denyer, Tranfield, and van Aken 2008). By adopting this
approach, this type of research minimises possible investigator bias, employing rigorous
methodology to enhance the credibility and validity of the research findings.
For this paper, a systematic literature review was conducted, adopting criteria to
identify and discuss relevant contributions. Searches for studies related to social entrepreneurship
and social capital were run on the major academic databases Web of
Science and Scopus and additional databases available via Periodicos Capes.
First, the keywords of the search were defined; these were entered in English and
Portuguese, in combinations with two different operators: (‘social entrepreneurship’
and ‘social capital’), (‘capital social’ and ‘empreendedorismo social’), (‘social entrepreneurship’
or ‘social capital’), (‘capital social’ or ‘empreendedorismo social’). The search
terms were used to search for title, abstract and keywords, with no limits on year of
publication.
The search results listed 976 articles from Web of Science, 1215 from Scopus, and
915 from Periodicos Capes. These numbers are indicative of a substantial body of
research into the subject. However, in an attempt to further refine the database generated
by the initial search strategy, a number of filters were applied. First, subject area
was restricted to business; management; economics; and sociology, excluding all other
areas (since the focus of interest of the paper is mainly on the area of business and
management). Next, only documents classified as articles were selected. After carrying
out these procedures, the resulting list comprised 472 articles indexed on the databases
published up to 2020. Analysis of these articles revealed a proliferation of different
journals in which the subject of this study is covered. The fifteen journals that
have published most work on the subject are listed in Table 1.
Identification, categorisation and analysis of the articles revealed that academic
interest in this subject is mostly concentrated on the foundations of social entrepreneurship
as a phenomenon and as an entrepreneurial orientation. In conjunction with
these primary foci, the articles also covered topics such as social capital innovation,
governance, human resources, transaction cost theory, social network theory and
agency theory.
With regard to the research methods employed to address these topics, both qualitative
(41%) and quantitative (49%) approaches are widely used. There are also papers
taking a theoretical and conceptual perspective (7%), although these are less common.
Additionally, it is noteworthy that it was not possible to identify the method used in
some articles (3%), while articles classified as mixed methodology (1%) were also identified
in the search results. The most common qualitative techniques used were case
studies, single case study, unstructured interviews, semi-structured interviews,
10 G. HIDALGO ET AL.
observation, ethnography, narrative inquiry, discourse analysis and distributive analysis.
In turn, quantitative techniques employed included regression, factor analysis, descriptive
statistics, correlation analysis, controlled experiments, analysis of variance, chi
square test, and Q-factor analysis.
The first step in the content analysis was to read the articles, highlighting their
main objective, results and conclusions. The subsequent data analysis comprised three
steps: (i) data reduction; (ii) data presentation; (iii) conclusions and checking (Bardin
1979). In this paper, the articles selected from the databases and analysed were used
for the literature review.
Results and discussion
The content analysis process identified three main themes that recur in the articles on
social entrepreneurship supported by social capital that were identified by the database
searches: Creation of social capital by the social entrepreneur, Social capital and
its relationship with the institutions, and Social capital as a former of groups. In this
context, having presented social entrepreneurship and social capital in general, it is
necessary to discuss these issues in a coherent manner. Thus, the objective of this section
is to discuss each turn, after briefly covering the umbrella theme of social entrepreneurship
supported by social capital.
Social entrepreneurship supported by social Capital
Over the last two decades, social capital has come to be considered one of the pillars
of knowledge-based economies because it facilitates and promotes strategic connections
between different actors (Landry, Amara, and Lamari 2002; Maskell 2001), resulting
in social enterprises.
For Thornton and Flynn (2003), social capital relates to entrepreneurship at three
different levels of analysis: network bonds between individuals, groups and their connections,
and intra-business and inter-business relationships. The same authors also
state that social networks contribute significantly to entrepreneurship, considering
whether networks connect individuals, groups or firms to each other, or can unite
Table 1. Journals that published articles about social capital and/or social entrepreneurship.
Title of the journal Number of articles
International Journal of Entrepreneurial Behaviour and Research 16
Entrepreneurship and Regional Development 15
International Journal of Gender and Entrepreneurship 14
Sustainability (Switzerland) 8
Education and Training 7
Journal of Enterprising Communities 7
Small Business Economics 7
Journal of Developmental Entrepreneurship 6
International Entrepreneurship and Management Journal 5
European Business Review 5
Regional Studies 5
International Journal of Entrepreneurship and Small Business 5
Journal of Business Venturing 5
Source: the authors (2021).
JOURNAL OF SOCIAL ENTREPRENEURSHIP 11
actors in contexts that favour social, financial and human capital that can promote
entrepreneurship. For example, social capital promotes production and exchange of
knowledge in research, education and commercial R&D processes (Westlund 2006).
Creation of social Capital by the social entrepreneur
Social entrepreneurs have deep commitments to a social vision and value practices of
sustainability and innovation and the capacity to build social networks and generate
viable financial returns. According to Dees (1998), the social entrepreneur is endowed
with limited resources and driven by an unshakable passion to be an agent of social
change and a creator of collective social solutions. Therefore, a social entrepreneur
can be an individual, a member of a group, or an organisation that identifies and creatively
pursues a social goal (Peredo and McLean 2006).
The objectives of social enterprises are deeply rooted in the values of their founders,
as they balance the motives for creating social wealth with the need for profits
and economic efficiency (Zahra et al. 2009). In their studies on social entrepreneurs,
Nga and Shamuganathan (2010) point out that the profile of these social entrepreneurs
may be related to their age, since older individuals exhibited a greater propensity
to embark on collective ventures, in comparison to the individualism of young
social entrepreneurs. This factor is associated with learning acquired throughout life,
since social entrepreneurs tend to consider that adoption of social responsibilities
offers a good opportunity to improve their outlook on life and achieve personal goals.
According to Weerawardena and Mort (2006), learning, the ability to manage interpersonal
relationships and accomplish goals and effective use of social skills in relational
interactions can all contribute to explaining the varied outcomes of social
ventures. However, other factors such as resource access and mobilisation, capacity for
diffusion of ideas, heterogeneity, coalitions of social entrepreneurs, and the cohesion
deriving from their commitment to achieving a social goal may also be considered in
relation to the emergence of social enterprises (Dufays and Huybrechts 2014). These
elements show that social capital is central to the success of new developing enterprises
or developing economies because they very often suffer from lack of resources
or liability of smallness (Freeman, Carroll, and Hannan 1983).
Moreover, the personal values of a social entrepreneur can influence the way people
identify themselves as social entrepreneurs as well as identifying with other individuals
belonging to social and business communities (Dacin, Dacin, and Tracey 2011).
It is important to emphasise that social skills are elements of the actor’s social network
or interpersonal context. These elements include skills related to social interactions,
established formal networks, informal social ties and access to common communication
channels (Granovetter 1992; Robins 2006). Consequently, interaction between
organisational resources and human resources (elements of the social network) generates
competitive advantages for social enterprises (Weerawardena and Mort 2006)
because it potentiates information sharing and externality gains (Chung, Nam, and
Koo 2016). Bacq and Alt (2018) complement this perspective, since they consider that
the intentions underlying social entrepreneurship may be motivated by empathy and
its relationship with self-efficacy and social worth. In this case, they consider empathy
12 G. HIDALGO ET AL.
to be an antecedent of both social worth and self-efficacy, two different social selfviews.
Since the first of these is a self-oriented view rooted in agency and the second
is an other-oriented view rooted in communion, the intentions underlying social entrepreneurship
may have self-oriented pro-social motivations or other-oriented pro-social
motivations, which are not mutually exclusive. Given the great need for interpersonal
relationships in their operating network, it can be stated that by creating social capital,
social entrepreneurs start to establish social bonds between the group and the institutions
that will be part of their enterprise. Ansari, Munir, and Gregg (2012) add weight
to this statement, explaining that social capital is structured around the characteristics
of certain leaders who occupy central positions or form focal points throughout the
group, affecting the network configuration. Examples of relational social capital
include family ties, friendship, business relationships, or relationships with co-workers.
Each of these relationships implies a different level of proximity and trust.
In view of the above, the following proposition is ventured:
P1. Social entrepreneurs leverage social enterprises through skills that develop social
capital and support their communities.
Social Capital as a former of groups
The social capital approach is concerned with the collective or community capacity to
do things, where such capacities are also the properties of groups rather than just of
individuals. According to Gaiger and Corr^ea (2010), there is a culture of reciprocity
rooted in social capital that ensures collective insurance and creates social safety
among community members. Considering the local context in which most social
enterprises are established, while social capital is particularly important for the day-today
survival of a resource-poor community, it can also help to address the challenges
faced by the community over time (Evans 2002; Stewart 2005).
It can be stated that social capital is also related to the survival of a resource-poor
community insofar as it supports establishment of bonds of trust between members.
Strong community relationships can help resolve future disputes, since established
norms of trust and respect allow for better communication and coordination within a
group (Ansari, Munir, and Gregg 2012). For example, Lang and Fink (2019) conducted
a study about rural social entrepreneurship on the periphery of the European Union in
challenging economic conditions. Their results showed rural social entrepreneurs
mobilised and reconfigured different types of social capital using horizontal and vertical
networks such as government bodies, fund-raising agencies and public research
institutions.
The cohesion of a group belonging to a social enterprise derives from the trust
established between the participants, but it is relevant to consider antecedents in this
relationship such as empathy, moral judgement, self-efficacy, and presence of social
support (Hockerts 2017). Trust is a central element of social capital and is developed
through a process of open communication and negotiations between interested parties.
Thus, the credibility of efforts is reinforced after opportunities and social needs
are identified (Shaw and Carter 2007). In order to build trust and standards of cooperation,
relationship stability and durability are key features that affect the motivation to
JOURNAL OF SOCIAL ENTREPRENEURSHIP 13
generate returns, resulting in interdependence between stability and durability.
According to Ansari, Munir, and Gregg (2012), interdependence refers to how
embedded an individual is in the social network.
Trust enables greater confidence in shared information and facilitates the flow of
communication through social networks established by the enterprise. According to
Nga and Shamuganathan (2010), the highest level of communication occurs in the initial
phase during the formation of the new business. In the initial stages, the network
is mainly associated with parties closer to the entrepreneur. This sets the impetus for
long-term functioning relationships that allow time for mutual evaluation of personal
motivations and commitments in the development of social representatives. Within
that formation, reputation plays an important mediating role and is a non-replaceable
social resource involved in hiring, networking and the survival of the social enterprise.
Therefore, the following proposition is ventured:
P2. Social entrepreneurs leverage social enterprises through trust and reputation that
develop social capital and support their communities.
Social Capital and its relationship with the institutions
Despite their non-profit nature, social enterprises do not necessarily employ governance
models based on the non-profit sector (Low 2006). For social enterprises to be
successful, alliances within their environments are needed. In this context, institutions
can support and standardise the performance of the business and of the participants
involved. Considering the role institutions play as creators of the ‘rules of the game’, a
detailed examination of the institutional context is an important element in understanding
the role of entrepreneurship in economic life (Boettke and Coyne 2009;
North 1991).
According to Zahra et al. (2009), social capital can be used to mobilise external
resources and can provide a benchmark for assessing the performance of economic
and social ventures based on desired performance goals or performance compared to
other organisations. This pattern can also guide social entrepreneurs as they identify
the value of the opportunities they choose to pursue. Financial donors, for example,
can also apply this standard to monitor and hold social entrepreneurs accountable or
focus their ventures on achieving better results.
Social capital is a necessary ingredient for community development and can bridge
the gap between those holding fewer resources and the resources available through
groups or external institutions. Ansari, Munir, and Gregg (2012) argue that understanding
the interaction between business, government, and civil society is the path to
development of a more inclusive approach to growth. Also, if firms communicate
through members of the influential local community, who can then use their network
position to demonstrate and encourage collective learning across the group, this can
help dissipate potential resistance and increase retention of capacity. Ansari, Munir,
and Gregg (2012) therefore stress that entrepreneurs should strive to preserve and
develop social capital through relationships, leveraging the strength of existing links,
especially influential members’ ties with the rest of the group, rather than attempting
to restructure the existing relationships and governance norms of a community.
14 G. HIDALGO ET AL.
In their studies of institutional barriers, Weerawardena and Mort (2006) argue that
social entrepreneurs do not seem to mobilise resources in such a way as to create
barriers to competition, in contrast with what has been observed in research investigating
commercial entrepreneurship. However, cultural barriers can be difficult
because of a lack of understanding of these resources. For example, in areas where
literacy and education rates are low, social entrepreneurs have to deal with lessskilled
workers in the short term. In regions without a developed transportation system,
organisations face considerable challenges when acquiring and distributing
products and services. At the same time, in economies in recession, conventional
ventures may be challenged by currency shortages, inadequate or non-existent banking
systems, rampant inflation, and financial constraints, such as bribery and extortion
crimes.
Increasing the structural diversity in a network can influence social entrepreneurship
through collaboration with local partners such as non-governmental organisations
or government agencies. According to Sanchez and Ricart (2010), it is
necessary to combine, integrate and leverage the relationships ecosystem. In turn,
local partners can facilitate the growth and strength of network ties by stipulating
minimum local employment thresholds and providing incentives for resource transfer
initiatives. Such initiatives can occur through regular formalised meetings and
actions with community leaders, thus creating mutual trust and reciprocity
and building relational bridges of social capital. For example, Lumpkin, Bacq, and
Pidduck (2018) mapped different communities (geographical; of identity; of interest
or solidarity; and intentional) that are related to different types of capital (physical;
financial; human; and social) to promote social entrepreneurship. They concluded
that increased familiarity with the local community and knowledge acquired
through local institutions that build a consensus among the interested parties
enhanced the motivation to share knowledge and build capacities. Thus, the following
proposition is ventured:
P3. Social entrepreneurs leverage social enterprises through institutions that develop
social capital and support their communities.
Figure 1 illustrates how social capital can support the development of social entrepreneurship
along its three axes: individuals, groups and institutions.
If the social relationships between the individual, social entrepreneur, and group
are to be strengthened, actions must be implemented that favour interaction and
social relationships between these parties. Thus, social entrepreneurs can use their
social skills to develop interpersonal relationships between actors while generating
reputation and building a positive image with the members who make up the social
enterprise. Establishing a connection with other actors is critical to building the trust
and cooperation that will enable common goals to be achieved. On the level of
groups, development of trust is essential for cohesion and for fostering a sense of collective
social entrepreneurship among the participants in the new venture proposal.
Social capital resources such as open communication and information from trusted
sources are critical for negotiation and mutual respect between the parties, inhibiting
opportunistic behaviour (Stirzaker et al. 2021). Moreover, social networking will facilitate
coordination and collaboration between the participants. On the level of
JOURNAL OF SOCIAL ENTREPRENEURSHIP 15
institutions, social capital can also contribute to mobilisation of external resources
from government agencies and supporting entities through creation of alliances and
collaboration with local partners that identify with the mission of the venture.
Conclusions
This study aimed to investigate how social capital applied to social entrepreneurship
can contribute as a driver of social enterprise. The process of consolidation of the
most important themes in the current literature on the subject yielded an overview
showing that, seen from several different perspectives, social capital can be used as a
driver to develop a social enterprise insofar as it offers the elements that contribute to
creation of social (and economic) value. In these terms, this research makes contributions
that fill several gaps in the existing body of knowledge, improving the understanding
of social entrepreneurship and social capital.
First, the findings reinforce the relevance of social capital to promoting social entrepreneurship
(Rakhmani and Bhinekawati 2020) . Social interaction proved to be a
powerful element in mobilisation of social actors. Through the interaction between
social entrepreneurship and social capital, social ties are created that evolve into relationships
of trust and collaboration and this may be one of the great determinants of
whether people remain in social enterprises or seek the traditional market. The collective
social endeavour that forms in these enterprises generates the necessary cohesion
Figure 1. Social Capital as a Factor Supporting the Development of Social Entrepreneurship.
Source: the authors (2021).
16 G. HIDALGO ET AL.
so that the common objectives of the group are achieved, while mobilising resources
and information and maximising social gains.
Second, on an institutional level, the central actor’s external links can create networks
and bonds of trust that will facilitate norms of reciprocity inherent to social networks.
Also, the enterprise’s reputation can be used as an element of competitive
advantage over competitors in the market, allowing access to credit, creating partnerships
and developing the local community as a business supporter.
Third, this research contributes to more comprehensive studies on social capital
and social entrepreneurship. Social entrepreneurship is a context-dependent phenomenon
that has greater repercussions in fragile institutional environments in emerging
countries. To compensate for lack of resources, inefficient infrastructure systems, and
arbitrary government policies, social capital leverages social entrepreneurship because
it draws together different actors such as social entrepreneurs, groups formed by
social capital, and institutions motivated by a common social mission.
Finally, this discussion suggests that the interface between social entrepreneurship
and social capital is a latent field for research. Our review provides a comprehensive
overview of social entrepreneurship and social capital. Complementing and extending
work presented in other articles in the field, this study has collected and analysed the
literature and the theoretical lenses focussed on these topics, using the systematic
review methodology. In these terms, this paper makes a novel contribution to the
debate about social entrepreneurship and social capital in the form of an agenda for
future research (Table 1), considering the interface between theory and the phenomenon,
linking social entrepreneurship and social capital. This agenda is the fruit of
identification of the most promising theories that could explain the relationship
between social entrepreneurship and social capital, the most important public policies
for fostering this relationship and, consequently, the practical implications for society.
In short, the agenda proposed in this paper encourages researchers to pay closer
attention to social entrepreneurship and social capital at multiple levels. However, it
also directs scholars’ attention to a unique context for the study of institutions, government,
resources and governance. In these terms, we provide a summary of the
research questions that we believe should be addressed (Table 2).
Despite its methodological rigour, this study has limitations. First, a set of keywords
was used to search for articles, but potentially relevant articles may not have included
these terms in their titles, abstracts or keywords. Second, book chapters, articles with
errata, and conference proceedings were disregarded. Consequently, it is possible that
some article collections or ongoing research were not included in this study because
they may have just superficially touched on the themes about social entrepreneurship
and social capital. Third, a lack of depth inherent to analysis of the context as a whole
must be acknowledged. This study focussed on research conducted at different levels
such as networks and institutions, or even with individual social entrepreneurs. It is
therefore suggested that future work investigate a social enterprise as a whole in
greater depth, since the structures identified may be the origin or result of several
causes or influences of social capital, often recursively. Empirical studies are needed to
determine whether the established view of social capital as a developer of social
entrepreneurship can be confirmed in real world settings, in which other elements can
JOURNAL OF SOCIAL ENTREPRENEURSHIP 17
Table2.Agendaforresearchintosocialentrepreneurshipdrivenbysocialcapital.
Promisingresearchavenuesandkeytopicsandquestions
ResearchstreamsTheoryPublicpolicyPractice
Creationofsocial
capitalbythe
social
entrepreneur
Entrepreneurialorientation(intention,socialmission,
socialentrepreneurialbehaviour)
InstitutionalTheory(trustandreputation,ethical
leadershipbasedonthesocialentrepreneur’s
behaviour,socialnetworks,experience)
Howcansocialentrepreneursaccessfunds?
Howcansocialentrepreneursdeveloptraining
programsforotherpotentialsocialentrepreneurs?
Howtodiffuseeducationandlearningaboutsocial
entrepreneurship?
Howcaninterpersonalrelationshipsbemanagedto
potentialisesocialentrepreneurialresults
(leadership,awareness,communication,conflict
management)?
Howdosocialentrepreneursdevelopsocialties
(empathy,formsofengagement)?
Howcansocialcapitalbeleveragedtoboostsocial
entrepreneurialactivities?
Socialcapitalas
aformer
ofgroups
InstitutionalTheory(achievinglegitimacyand
buildingtrustbetweensocialentrepreneursand
communitiesthroughpunishmentsandrewards)
Transactioncosttheory(opportunisticbehaviour,
personally-informedaltruismversuscommercial
entrepreneurialopportunism)
Relationalview(relation-specificassets,knowledge-
sharingroutines,complementaryresources,
effectivegovernance)
Howarepoliciesandregulationsarounddonations
andtaxesdefined?
Howtohelpsocialentrepreneurstodevelopa
solutionscalefocussedonsocialproblems(social
entrepreneursdevelopsolutionsthatcanhelp
groups,communitiesorpopulations)?
Howtoidentifyrisksfromenvironmentalandsocial
responsibility(ESR)policyinsocial
entrepreneurialactivities?
Howtobalanceexpectationsofgroupformersand
socialentrepreneurs?
Howtochoosethemostappropriategovernance
modeforsocialenterprisestoexploitopportunities
(waystomanagerisksandwaystopromote
innovationandsharingofknowledgeand
technologies)?
Socialcapitaland
itsrelationship
with
institutions
Resource-basedview(identification,mobilisationand
orchestrationofresources)
Institutionaltheory(formalandinformalinstitutions,
regulatoryenvironment)
Institutionalpolycentrism(relationshipsamong
differentforcessuchassocialenterprises,social
networksandinstitutions)
Nonmarketstrategies
Howcangovernmenthelpsocialentrepreneursto
dealwithregulatorydifficulties?
Howcangovernmentmonitorandchecksocial
entrepreneurialactivities?
Howdoformalandinformalinstitutionsguideand
supportsocialcapitaltodevelop
entrepreneurship?
Fromagovernmentperspective,whatisthe
preferredlong-termbalancebetweensocialand
commercialentrepreneurshipactivities?
Howcansolutionsfromsocialentrepreneurshipin
developedcountriesbetransferredtoemerging
countriesandviceversa?
Howdosocialentrepreneursdealwiththeregulatory
environment(barriers,restrictionsand
opportunities)createdbygovernmentdecisions?
Howcansocialentrepreneursmobiliseexternal
resourcestoovercomeliabilityofsmallnessand
lackofresources?
Whatarethemostappropriatenonmarketstrategies
appliedtosocialmissions(waystomanagethe
institutionalcontext)?
Howtomeasuresocialenterprisesperformance?
Source:theauthors(2021).
18 G. HIDALGO ET AL.
be observed, thereby expanding possibilities for new research. In addition to conducting
research in greater depth into how social entrepreneurship is supported by social
capital, more studies are also needed investigating the roles played by formal and
informal institutions in the process of social entrepreneurship. Finding answers will
require a focus on the institutions that govern social entrepreneurship.
Acknowledgements
None.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Note
1. Montgomery, Dacin and Dacin (2012) define collective social entrepreneurship as
“collaboration amongst similar as well as diverse actors for the purpose of applying
business principles to solving social problems” and “the role multiple actors collaboratively
play to address social problems, create new institutions, and dismantle outdated
institutional arrangements.”
ORCID
Gisele Hidalgo http://orcid.org/0000-0003-2347-0980
Jefferson Marlon Monticelli http://orcid.org/0000-0002-1605-7090
Ingridi Vargas Bortolaso http://orcid.org/0000-0003-4881-1091
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