Born to go public: Human capital, social capital, and fundability of high-potential technology new ventures

Date of Completion

January 2001


Business Administration, Management




Entrepreneurship research has tried to make sense of the new venture start-up process for more than two decades. Research has shifted from a focus on who the entrepreneur is (demographic and psychological characteristics) during the 1980s, to what entrepreneurs do, in the 1990s. Most reviews on the state of the art of the field conclude that the characteristics that make new ventures successful are as diverse as the entrepreneurs themselves, and that researchers need to develop theories that can acknowledge this diversity and the dynamic nature of new venture formation. Reynolds and White (1997, p.39) state that “how individuals create new firms is one of the least understood features of modern societies.” ^ The most recent research contributions on the start-up process focus on the key activities performed by entrepreneurs at each stage. Researchers have found that what entrepreneurs do during the start-up process affects the odds of venture survival. I contribute to this research stream by developing a model to explain how early decisions regarding the configuration of an initial resource base can have medium and long term performance implications for the firm and for the founder. In other words, it is not just which activities are performed but how they are performed that makes a difference. ^ The model is grounded in social capital theory and tested with a sample of new, high-potential, technology intensive ventures. High-growth firms face high time pressures and uncertainty from the start because of their financing needs, and the decisions made early on by their founders can be major determinants of success or failure. Results show that social and human capital initial endowments are instrumental in providing access to financial resources during the start-up process. These initial endowments continue to affect performance at later stages. Post-hoc analyses explore the effects of alternative growth strategies on firm and founder performance. The dissertation extends entrepreneurship and resource base theory, has recommendations for entrepreneurs on initial resource base configuration, and has implications for entrepreneurship education. ^