Learning in Entrepreneurial Firms: The Moderating Impact of Social Capital and Absorptive Capacity

Abstract

Noting the paucity of research linking entrepreneurial behaviors to non-financial indicators of firm performance (Zahra, 1993), numerous scholars have recently argued that future research efforts should be focused on examining the relationship between firm-level entrepreneurship and organizational learning (Zahra, Nielsen, & Bogner, 1999). However, little is known about the specific factors that influence whether or not firm-level entrepreneurship will facilitate organizational learning in a given situation (Hitt, Ireland, Camp, & Sexton, 2001). Two concepts, absorptive capacity and social capital, may help shed light on the processes that encourage learning and knowledge creation within entrepreneurial firms. In this study, the knowledge-based (Grant, 1996; Spender, 1996) and relation-based (Dyer & Singh, 1998) theories of the firm were utilized to construct a theoretical model assessing the relationship between firm-level entrepreneurship, absorptive capacity, social capital, and organizational learning.

The propositions developed in this paper suggest that the incidence of firm-level entrepreneurship leads to increased levels of experimental learning within organizations, and that this learning in turn helps firms to develop a sustainable competitive advantage. It is also proposed that a firm’s level of realized absorptive capacity, as well as its network of external relationships, positively moderates the relationship between firm-level entrepreneurship and experimental learning. This implies that entrepreneurial firms have much to gain by enhancing their ability to learn (absorptive capacity) and also by developing and nurturing a network of relationships (social capital) that can help provide the organization with access to new knowledge.

Keywords: Entrepreneurship

JEL Classification: M13