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Entrepreneur’s Social Capital and Firm Growth: The Moderating Role of Access to Finance

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  • Rosemond Boohene

    (Centre for Entrepreneurship and Small Enterprise Development, School of Business, University of Cape Coast, Ghana)

Abstract

Social capital and access to finance have been identified as key resources that influence the growth of small firms however, these variables have rarely been studied. This paper, therefore, examines the relationship between social capital and firm growth with access to finance as a moderating role. 250 small firms in the Kumasi Metropolis in Ghana were used for the study. Structural Equation Modelling using Partial Least Square (PLS) was used to analyze the data collected using area sampling. The results indicated that social capital does not directly influence firm growth. In addition, access to finance does not moderate the relationship between social capital and firm growth. However, a positive relationship was found between social capital and access to finance. Access to finance and firm growth, though significant, had a negative relationship. It is recommended that since social capital influences the capability to access finance, entrepreneurs should be encouraged to build more relationships within their networks. Moreover, government agencies and financial institutions should devise strategies that will reduce the interest rates so that though these small firms in Ghana can access finance, the high interest rates will not erode the gains they may achieve in the long run.

Suggested Citation

  • Rosemond Boohene, 2018. "Entrepreneur’s Social Capital and Firm Growth: The Moderating Role of Access to Finance," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 26(03), pages 327-348, September.
    • Handle: RePEc:wsi:jecxxx:v:26:y:2018:i:03:n:s0218495818500127
    DOI: 10.1142/S0218495818500127
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    Cited by:

    1. Ashraf Elsafty & Dalia Abadir & Ashraf Shaarawy, 2020. "How Does the Entrepreneurs’ Financial, Human, Social and Psychological Capitals Impact Entrepreneur’S Success?," Business and Management Studies, Redfame publishing, vol. 6(3), pages 55-71, September.

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