Social and Symbolic Capital and Responsible Entrepreneurship: An Empirical Investigation of SME Narratives

Abstract

This paper investigates links between social capital and symbolic capital and responsible entrepreneurship in the context of small and medium enterprises (SMEs). The source of the primary data was 144 ‘Business Profiles’, written by the owner-managers of small businesses in application for a Small Business Awards competition in 2005. Included in each of these narratives were claims relating to the firms’ contributions to wider society, relationships with customers, employees and stakeholders. These narratives were coded and classified in a framework drawn from Nahapiet and Ghoshal’s (1998, Academy of Management Review 23(2), 242–266) categorisation of social capital. The analysis revealed a range of strategic orientations towards the development of social and symbolic capital, along a conceptual continuum ranging from being responsible for oneself to being responsible for others. Overall, the evidence demonstrates the significance of the power inherent in the social relations of SMEs as a force for ethical behaviour, and suggests that normative theories of the development of social capital may provide ‘competitive advantage’ through responsible behaviour for small business in the global economy.

Appendices

Appendix 1 Abstracted texts from Business Profiles categorised in relation to their appearance in the development of particular types of social capital

This appendix lists verbatim phrases abstracted from the narrative texts of self-written Business Profiles from small businesses. The phrases are categorised according to key conceptual categories interpreted from the narratives and within Nahapiet and Ghoshal’s dimensions of social capital (structural, relational, cognitive).

 

  Social captial

Appendix 2 The development of symbolic capital, indicated implicitly or explicitly in narratives on social capital

We have interpreted from the data indications of activities relating to the development or presence of symbolic capital, either by (a) evidence of an explicit use of symbols or symbolic behaviour to signal prestige and reputation or (b) evidence of an implicit utilisation of reputational symbolism to create social capital. These are indicated either by highlighted text (for explicit symbolism) or non-highlighted (implicit capital accumulation). The conceptual linkage between social capital and symbolic capital is explained in the text, Table I and Figure 1.

1. Originated from ‘structural dimension’ of social capital

Assist organisations to get their message across, etc.

2. Originated from ‘relational dimension’ of social capital

Support sustainable future in communities; Sponsoring football team; Do project making contributing to sustainable development; Assist charitable organisations; Leader is active in local community; Support local church funds; Host visits for local village schools; Involving local CSR project; Encourage companies to be proactive in environmental responsibility; Benefit society by activating young people.

Never associated with brand damage with clients; Pay on the same day as receive fund from their clients; No to procure any business by bribes, coercion, illegal means of persuasion; Expect ethical standard from partners; Achieve success and growth by contributing partners business; Sustainable corporate growth driven by distributors.

3. Originated from ‘cognitive dimension’ of social capital

Uphold the principles of brands we support; Student’s opportunity to survive outside world; Sponsor and organise events around the country; Improve the value for money obtained for public bodies; Support NSPCC; Work for local enterprise agency no charge; Funding provision for DPU9FT; Supervise volunteers; Support NHS; Never loose sight of what it is like to be an employee on pay day; Recruiting new staff to go ethical; Treat staff fairly; A huge beneficial effect on workers having opt out of office and take a lifestyle choice instead; Want staff to be happy creating good work-life balance; No one gets sacked for taking risks; Positively encourage staff to fulfil lifelong learning; Offer people get suitable alternative employment; Create dynamic environment of sustainable corporate growth driven by employees; Beneficial on kids; Enjoy social interaction with peers; Contribute people’s enjoyment in York; Enable young Scot to make informed decision; Rely on mouth-word; Grow with reputation and service faltering; Differentiating; Deal with companies have good reputation; Thank people; Invest in learning and new ideas; Work placement for graduates; Active with universities; Student mentoring; Involving in local school and encourage youngsters to follow a career in Civil Engineering; Improve maths standard in the country; Educate people and Open source software.

Appendix 3 Case studies

The following is drawn from 6 cases selected from the 144 business profiles which are used to elaborate the narratives on social capital and the interpretation of the narratives with respect to the orientation of responsibility (to their own business (self) or to ‘others’).

Background of Cases

Business B is a beauty salon specialising in skin care and hair removal. Established in 2000, there are seven treatment rooms, two spray tan rooms and two manicure stations with three current staff.

Business H was founded in 2001 with initially employed two handymen. The basic business is plumbing work, electrical work, and other odd-jobs like putting up shelves, hanging pictures, fitting locks etc.

Business P was established in 1998 and provides advice and support on business technology, including consultancy, network services, hosting and Internet services, and security services. It became a limited company with 9 staff in 2000.

Business E is a UK-based software business, founded in 1996, specialising in design, development and implementation of web-based solutions for corporate risk and compliance management.

Business S was established in 1979 to provide security services for libraries. With current 26 staff, the company has become a main supplier in the UK market as well as providing solutions for overseas customers.

Founded in 1975, business G currently employs 19 staff across four regional offices. The company built its success around the provision of traditional civil engineering services from across the East Midlands.

Examples of narratives on being ‘responsible for self’

Structural dimension: “Customer can come in just to relax or they can talk about their problems...I have seen many clients who were embarrassed about their skin and over time we have dealt with the problem and improved their quality of life...I buy basic supplies from Beauty Express who also have a sister company in Belfast, Salon Services. I enjoy a good relationship with both companies and this means that if I ever run out of anything the Belfast Company will help me out.” (Quoted from ‘Relationships with the external environment’ of ‘Business B’)

In this bilateral business behaviour, Business B provides a consultation in order to promote their services and products. The relatively young business obviously relies on the ‘event’ to achieve customers for social capital accumulation. For the same reason, they construct a good relationship with suppliers. They need to be responsible for self i.e. build a good business structure with the partners rather than behave responsibly in an unconditional circumstance. This implies that they construct a social network for social and symbolic capital building.

Cognitive dimension: “We very rarely do recruitment advertising and choose who we hire, and reject at least 90% of applicants... A handyman devotes enough hours in the week to justify the investment in vehicle, equipment, induction and periods of unpaid leave” (Quoted from ‘Relationships with people working in the business’ of Business H) “The key figure we monitor regularly is average revenue per handyman per day. This is obviously driven by utilisation: how busy our handymen are.” (Quoted from ‘Monitoring the Business’ of Business H)

The working environment for employees is high-pressure and with less job security. The approach to the employee relationship by the employer puts business efficiency first, and indicates little sense of responsibility for local employment. Limitation of resources constrains the business to treat employees more ethically and to be responsible for self in this situation.

Relational dimension: “We offer 30 day credit to commercial customers, but it is rare for any one customer to have more than a few hundred pounds outstanding.”(Quoted from ‘Credit Risk’ of Business H)

“At every opportunity we encourage customers to recommend us to their friends and colleagues. Word of mouth represents by far our biggest marketing channel.”(Quoted from ‘Word of Mouth Marketing’ of Business H)

This approach to relational capital focuses on customer ‘word-of-mouth’ to establish a helpful network for potential business and development. The business’ behaviour shows more responsibility for self than for others.

Examples of narratives on being ‘responsible for partners’

Structural dimension: “Maintain a structured sales and marketing operation...helping to create a recognised brand image and an increased client-base. Profitability will be increased through a structured sales operation and economies of scale. A satellite operation outside London to take advantage of the business growth around the UK.” (Quoted from ‘Big Picture’ of Business E)

“We believe we can contribute to a more sustainable world by helping our customers improve their economic, environmental and social performance...Change requests and new product ideas are captured from customers through review meetings, interactive tools on the website...many elements of the system can be configured to meet the specific requirements of the customer.” (Quoted from ‘Relationships with Customers’ of Business E)

Running for 8–10 years, these businesses have accumulated resources to take consideration of their stakeholders. They are still working hard to construct networks, but more strategically. They care about partner’s benefit, which shows an orientation to ethics. Yet, they apply their extant social capital to be responsible for partners and accumulate resource for symbolic capital.

Relational dimension: “We keep track of client profitability by doing a regular analysis of their use of the helpdesk through reports we generate. We ensure that our customers are rewarded by providing discounts...We make sure that our best clients feel valued.” (Quoted from ‘Big Picture’ of Business P)

“We talk regularly with vendors, distributors and our competitors’ staff at industry events to keep abreast of what they are doing...I stay in regular contact with a number of other business owners who run technology companies around the country to share ideas and discuss new opportunities...” (Quoted from ‘Relationship with External Environment’ of Business P)

The text indicates that the business has developed relationships and that they use their resources in a way that is responsible towards their stakeholders, providing them with a relational benefit. Also, they know the importance to share ideas and opportunity with partners, which can be considered ethical. At the same time, they benefit from these bilateral activities for symbolic capital accumulation.

Cognitive dimension: '’...consequently we have built up strong and powerful partnerships over time...The premier event in the [E] calendar is the Annual User Conference. This is an excellent opportunity for users and the [E] Team, to discuss and share successes, exchange innovative ideas and discover new ways of getting the most out of the [E] System. The conference increases in numbers attending and breadth of discussion every year. A quote from last year is ‘Very informative and definitely a key source of information and excellent for networking’.” (Quoted from ‘Relationship with Customers’ of Business E)

In this case, the business shares knowledge and information with partners in the industry. They offer resource to set up conference and take the opportunity to create further development. They are sharing resources as part of a community responsibility. With this strategy, business aims to gain social capital through these mutually ethical behaviours.

Examples of narratives on being ‘responsible for others’

Structural dimension: “In 1991, after setting up and running the business for 13 years the owner decided to move to America, cutting himself off from ‘S’...During the mid nineties ‘S’ purchased Australian self issue machines through a UK distributor...In 2002 the Technical Director decided to leave to help set up a competitive company. ‘S’ launched [product] in 2004, again a product designed and developed by the company, manufactured in the UK and assembled and tested by ‘S’ staff” (Quoted from ‘Big Picture’ of Business S)

During the history of this 27 year-old business, it had moved to different locations, built different organic and sub-company, benefited from the extant networks and self-constructed networks. They have established resources to take responsibility and behave ethically towards others in commuity.

Relational dimension: “‘S’ agrees that the company would never react to a situation without having necessary information to hand as it was important not to get into a price war with smaller organisations. ‘S’ also has a policy of trying to effectively monitor the market’s requirements and expectations and adjusting their solutions accordingly.”’ (Quoted from ‘Big Picture’ of Business S)

The business has been aware of its community responsibility, such as to ‘monitor the market’s requirements and expectations’ and ‘price war’, which can be considered as ethical behaviour. The business regard itself as a veteran rather than novice in a community. Hence, the business would like to take more responbility to share resource and information to ‘small organisations’

Cognitive dimension: “A twice yearly bonus scheme has been introduced...every year we introduce one or two new trainees into the company.” (Quoted from ‘Relationships with people working in the business’ of Business G)

“In 2004 a bonus scheme was introduced to reward the employees for the continued success and this has now become an official, annual scheme. With regards to formal benefits, Plescon offers a pension scheme to all employees, paying 3% of the person’s salary into the scheme for them, as well as health insurance. The company has also found the training schemes help new staff settle in a lot quicker...” (Quoted from ‘Relationships with people working in the business’ of Business S)

“As the Electronics Engineer had a large input into the concept ...The company rewards him by a commission of 5% on every sale the company makes of the unit.” (Quoted from ‘Relationships with people working in the business’ of Business S)

Compared with what the Business H says, “... we don’t believe in paying employees for suggestions: all staff...should feel their contribution is valued without a paid-for suggestion scheme.” (Quoted from ‘Relationships with people working in the business’), Business G certainly rewards staff more than a start-up business. It is more ethical towards employees and shows responsible entrepreneurship.

Examples of narratives on ‘symbolic capital’

“You can’t make your own luck, but you can manage luck: PR opportunities, for example, you talk to journalists and answer their questions helpfully and patiently one day you’ll get your picture on the Time” (Quoted from ‘Relationships with the external environment’ of Business H)

As a younger business, it obviously has not accumulated enough social capital to produce symbolic capital. Therefore, it develops its business symbolism explicitly i.e. through public media. This is an example where symbolic capital is being developed with a greater orientation on ‘self’ than ‘others’

“We circulate our findings on both current and future trends to everyone within the business and provide training on emerging technologies before they become the norm...We actively encourage our staff to progress in their areas of interest. One staff recently identified that he enjoyed dealing with customers and would like to take his role in to a more customer service based role. We are currently working with him to identify a suitable course to help improve his skills and develop his career in this area”‘ (Quoted from ‘Relationships with People Working in the Business’ of Business P)

Comparatively, Business P is more mature than Business H. It demonstrates good cooperation between the employees and the business. The business offers the staff resource to improve skill, and also gains benefit from the staff’s contribution i.e. good reputation from staff. In this situation, the business has accumulated social capital to invest in people and treat employee ethically. This shows the business starts to utilise symbolic capital, being responsible for its stakeholders.

“We are gaining a reputation as one of the industry’s pioneers. We have recently embarked upon a high profile press and PR ... We have recently launched a marketing campaign with global search engine Google, which is proving a great success in generating leads from across the UK...We have invested heavily in new technology, including 3D CAD modelling software, plus a sophisticated ICT infrastructure...” (Quoted from ‘Relationships with the External Environment’ of Business G)

“...take Corporate Social Responsibility very seriously and try to support as many community activities as possible. We are members of Prohelp, a national network of professional firms who give their time and expertise for free to voluntary organisations. Business G is actively involved with local schools and is committed to encouraging youngsters to follow a career in Civil Engineering. We encourage staff to be involved in their local communities and support both staff and customers in their fundraising events too. Staff visits local schools during national Construction Week to promote civil engineering as a career.” (Quoted from ‘Relationships with the External Environment’ of Business G)

Compared with the above two younger businesses, this business is more mature. It has accumulated more social capital and resources. It is actively involved in ethical practices for stakeholders, e.g. local people and potential employees. The business utilises symbolic capital, which is exchanged from accumulated social capital, to contribute to business and social development.