Diversity and social capital of nascent entrepreneurial teams in business plan competitions

Purpose - The purpose of this paper is to examine the influence of team member diversity and internal social capital on project performance within the context of business plan competitions (BPCs). Design/methodology/approach - The paper uses survey data on 95 nascent entrepreneurial teams enrolled in an open-to-the-public BPCs. It assumes that higher levels of functional diversity as well as higher levels of internal social capital enhance the performance of nascent entrepreneurial teams in the crafting of their business plans (BPs). Findings - Under this particular context, where the needs for information processing and decision-making requirements are so high, teams having higher levels of functional diversity attained better performance. Inversely, teams with higher levels of internal social capital did not show a significant advantage in the development of the BP. Research limitations/implications - Limitations are associated with the exclusion of external social capital measures and not considering demographic faultlines, which might have some impact on the results. Besides, this paper has the limitation of basing its analysis upon teams within a BP contest. Theoretical implications stress that under contexts maximizing the difference between potential upside gains and downside losses, team diversity is expected to play a larger role for BP effectiveness and success than team members’ internal social capital. Practical implications - Recognizing team prevalence and the impact of social dynamics amongst team members within entrepreneurial settings. Originality/value - The paper contributes with the impact of social dynamic processes on nascent entrepreneurial teams.