Investigating the influence of human capital and social capital on the performance of start-ups

Abstract

It is well known that the personality traits of leaders reveal a great deal about the cultural and motivational aspect in the firm, which ultimately affect the firms’ performance. Apart from the personality traits, the background of the leaders and societal connect may play an important role in affecting the firms’ performance. In the context of Indian start-ups, the factors related to personality traits, educational background, prior experience, as an employee and as a founder, play a significant role in the organizational performance. Apart from these, the metrics related to societal connect like number of followers in the social media and number of news articles published in a year play an important role in affecting the performance of the start-ups. This study aims at identifying the relationship of Social Capital and Human Capital in the performance of start-ups. The study has been conducted by undertaking 52 Indian tech start-ups. It is found that both Human Capital and Social Capital positively impacts the performance of the start-ups. The role of Social Capital is found to be stronger than the Human Capital. Hence, it can be deduced that the popularity of the product and service offered among different stakeholders play a dominant role in determining the performance of start-ups. Based on these findings, founders can gain a better knowledge about how to improve the performance of their business. Moreover, they can act in the favourable directions to get the desired results.