You are only as strong as your weakest link: Founder and community social capital and start-up survival

Abstract

Social capital is important for organizational performance, but it can be a challenge for new firms to establish exchange relationships. While studies have focused on founder-level social ties and network effects on firm survival or performance, less attention has been given to the role of social capital within the community. We theorize that founder social ties are related to community social capital, which fosters varying levels of business opportunities. These relationships and business opportunities influence start-up survival. We test our hypotheses for a longitudinal cohort of new start-ups using Kauffman Firm Survey data merged with community social capital data. Our baseline model finds that a founder’s weak tie relationships—not strong ties—are associated with higher odds of start-up survival. Furthermore, we find that community-level social capital increases survival odds, particularly for founders who receive funding from weak-tie networks. Our study furthers our understanding of how community-level social engagement shapes founders’ social networks and firm survival odds through increased possibilities for exchange relationships.