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The Influence of Changes in Social Capital on Firm-Founding Activities

Authors

  • Patrick M. Kreiser,

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    • The first two authors contributed equally.
    • Patrick M. Kreiser is the Robert H. Freeman Professor of Entrepreneurship and Associate Professor of Management, 304 Copeland Hall, Ohio University, Athens, Ohio 45701.
  • Pankaj C. Patel,

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    • The first two authors contributed equally.
    • Pankaj C. Patel is Associate Professor of Management, Ball State University, Department of Marketing and Management, Miller College of Business, 2000 W. University Ave., Muncie, IN 47306.
  • James O. Fiet

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    • James O. Fiet is Brown-Forman Chair in Entrepreneurship, Department of Entrepreneurship, College of Business, 2301 S 3rd St., University of Louisville, Louisville, KY 40292.

Please send correspondence to: Pankaj C. Patel, tel.: 765-285-3174; e-mail: pcpatel@bsu.edu, to Patrick Kreiser at kreiser@ohio.edu, and to James O. Fiet at fiet@louisville.edu.

Abstract

This study examines how founders can manage changes in their network ties during firm founding. We find that an increase in tie strength is negatively associated with founding activities, whereas an increase in the number of ties is positively associated with founding activities. Furthermore, entrepreneurial intensity mitigates the negative relationship between an increase in tie strength and founding activities; and social competence reinforces the positive relationship between an increase in the number of ties and founding activities. Our study contributes to the social capital literature by theorizing and testing how changes in a founder's network structure can be beneficial to founding activities.

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