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The Role of Strategic Orientation and Social Capital of Founders in the Performance of Korean Startups  

Sohn, Kwonsang (School of Management, Kyung Hee University)
Hur, Wonchang (College of Business Administration, Inha University)
Sohn, Dong-Won (College of Business Administration, Inha University)
Publication Information
Asia-Pacific Journal of Business Venturing and Entrepreneurship / v.15, no.1, 2020 , pp. 125-141 More about this Journal
Abstract
This study examines the effect of founders' strategic orientation and social capital on the performance of startups in Korean contexts. Founders' strategic orientation is proposed as the main factor to reduce the risk of failure and to increase the potential of future growth of the startup. Three main components of strategic orientation, entrepreneurial, market, technology, were simultaneously tested with a sample of Korean startups. Furthermore, founders' social capital, networks with supporting entities and the level of chemistry within founding members were also proposed to be important factors. We also tested possible mediating effects of social capital on the main impact of strategic orientation. With a sample of 79 startups founded less than 5 years in Seoul Metropolitan Areas, we found that technology orientation of founders only significantly increases the performance of startups, but both entrepreneurial and market orientation do not. Regarding social capital effect, the external networks of the founding members are effective as proposed, and also the high cohesiveness of founding members increases the startup performance. However, the mediating role of social capital is just partially confirmed. The implications of our findings, in both sense of firm's strategy and startup policy, are discussed. This study is expected to be a bridge connecting firms' strategy with startup policy-making in Korea.
Keywords
Entrepreneurship; Startup team; Strategic orientation; Social Capital; SME policy;
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