The interplay between human, social and cognitive resources of nascent entrepreneurs

This study integrates human, social and cognitive capital traits into a model of nascent entrepreneurial capital. We hypothesise that the cognitive traits of nascent entrepreneurs play a significant role in moderating the impact of human and social capital endowments on the outcome of the nascent entrepreneurship process. Thus, differences in cognitive traits explain why nascent entrepreneurs with similar stocks of human and social capital resources may experience different outcomes. Using data from the Panel Study of Entrepreneurial Dynamics (PSED), we find that models incorporating cognitive capital traits as moderating variables of human and social capital have a greater explanatory power of nascent entrepreneurship outcomes than models that consider these components of nascent entrepreneurial capital in isolation. The implications of our results are important for researchers, nascent entrepreneurs, venture capitalists and SME support agencies. Plain English Summary Nascent entrepreneurs' cognitive abilities shape the impacts of their human and social capital on success in the new venture creation process. Entrepreneurship starts long before the actual birth of the new venture. Nascent entrepreneurs are those individuals seeking to establish a new business by discovering opportunities, conceiving strategies and obtaining resources. Human capital (the knowledge entrepreneurs derive from their education and work experience) and social capital (the networks of contacts entrepreneurs use to learn about the market and gain access to resources) are recognised as important determinants of success in launching a business. This study finds that cognitive abilities (the psychological dispositions that influence entrepreneurs' behaviours) also affect the outcome of the nascent entrepreneurship process both directly and by boosting the impacts of human and social capital. This result has implications for researchers as it shows that human and social capital attributes do not act in isolation, but rather interact with cognitive abilities. There are also implications for venture capitalists and SME support agencies. Investment and support decisions need to consider more than the business opportunity and the resources available, as success may hinge on the cognitive abilities of the entrepreneur.