The influence of social capital and competitive strategy on entrepreneurial business performance in South Africa

Thela, Luyanda
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An entrepreneur often needs to tap into various relationships to enable their business’s success. Relationships that are formed with friends, family and the immediate community form the initial social capital that an individual can tap into should they require assistance. The entrepreneur can also use relationships developed with other industry role-players as they continue with their business. Social capital is viewed as a set of resources that one has access to because of one’s position in a network. It requires a continuous investment to yield benefits. One must understand which networks yield the most benefit in improving business performance. The study aimed to investigate the extent to which social capital and networking aid an entrepreneur in accumulating resources that benefit the performance of their entrepreneurial ventures, particularly in its application to South Africa as a developing country. Additionally, the study sought to determine whether the influence of social capital on business performance was contingent upon implementing a competitive strategy. A cross-sectional and quantitative research design was used. The data was collected from November 2020 to January 2021. The initial survey response contained 134 cases which were narrowed to 101 cases once the data had been prepared for analysis. The study found a positive and insignificant relationship between social capital and business performance. It was found that the influence of social capital on business performance was not contingent upon implementing a competitive strategy. The study has contributed towards social capital research within sub-Saharan Africa through exploring its influence on business performance on businesses in South Africa. Given the multitude of challenges that have swept through the globe in the advent of the COVID-19 pandemic, it has become much more important for businesses to pursue additional measures to improve business performance. The ongoing investment in social capital is imperative to enable the entrepreneur to stay afloat or to tap into new markets
A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfilment of the requirements for the degree of Master of Management (in Entrepreneurship and New Venture Creation), 2021
Differentiation strategy, Managerial social capital, Bonding social capital, Entrepreneurship