Entrepreneurial Success: The Role of Human Capital and Learning

This dissertation reports three studies. Study 1 meta-analytically assesses magnitude, moderators, and mediators of human capital success relationships in entrepreneurship. Study 2 shifts the focus to the acquisition and effects of current entrepreneurial knowledge. Study 3 examines the role of entrepreneurial knowledge in the context of owner self-efficacy believes. The first study (Chapter 2) analyzed human capital from a learning perspective and meta-analytically integrated results from two decades of human capital research in entrepreneurship. While most reviews conclude that human capital is related to success there have been conflicting findings. Magnitude, best estimate of the relationship, and the processes from human capital investments to success are unknown. Based on 67 studies (N = 21.597) we found a significant but small relationship between human capital and success (rc = .10). Moderator analysis yielded higher relationships for human capital related to entrepreneurial tasks compared to human capital with low task relatedness, for human capital conceptualized as knowledge/skills compared to human capital conceptualized as experience/schooling (human capital proxies), for young compared to old businesses, in less developed countries compared to developed countries, and for success measured as size compared to growth and profit. Human capital as knowledge/skills and human capital in young business yielded the highest average relationship with success (rc = .17 and rc = .19, respectively). We further compared the validity of three approaches to entrepreneurial success: Schooling, cognitive ability, resourcebased view. Cognitive ability and variables attributable to the resource-based view produced higher success relationships than schooling. Finally, we tested a mediational model of human capital. Meta-analytic path analyses showed indirect effects from experience/schooling and cognitive ability to knowledge/skills to success. Findings are relevant, lenders, policy makers, educators, and the entrepreneurs themselves and may guide researchers in their variable selection and choice of measurements. The second study (Chapter 3) examines antecedents and outcomes of deliberate practice activities in entrepreneurship. Deliberate practice consists of individualized self-regulated and effortful activities aimed at improving one’s current performance level. Interview and questionnaire data from 90 South African business owners showed a direct impact of deliberate practice on entrepreneurial knowledge as well as an indirect effect on business growth via entrepreneurial knowledge. Cognitive ability and education were identified as antecedents of deliberate practice. The study emphasises the importance of continuous learning efforts in entrepreneurship. The third study (Chapter 4) examines the role of entrepreneurial knowledge and perceived self-efficacy for small business growth. Questionnaire and interview data from 280 Zimbabwean small businesses owners were analyzed. Structural equation models showed significant effects of entrepreneurial knowledge on financial and employment growth. While there was only a marginal effect of self-efficacy on financial and no effect of self-efficacy on employment growth the data showed interaction effects of entrepreneurial knowledge and self-efficacy for both growth indicators. The relationship of self-efficacy with financial and employment growth was stronger for business owners with higher entrepreneurial knowledge. Findings are interpreted as detrimental effects of overconfidence, the discrepancy between what owners know and what they believe they are capable of. The study adds to the understanding of potentially negative effects of self-efficacy on performance.