The Development of Entrepreneurial Leadership: The Role of Human, Social and Institutional Capital
| Author | Richard T. Harrison,Christel McMullan,Claire M. Leitch |
| DOI | http://doi.org/10.1111/j.1467-8551.2011.00808.x |
| Published date | 01 September 2013 |
| Date | 01 September 2013 |
The Development of Entrepreneurial
Leadership: The Role of Human, Social
and Institutional Capital
Claire M. Leitch,1Christel McMullan2and Richard T. Harrison1
1Queen’s University Management School, Queen’s University Belfast, Riddel Hall, 185 Stranmillis Road,
Belfast BT9 5EE, Northern Ireland, UK, and2Institute of Nursing Research, University of Ulster,
Jordanstown, Shore Road, Newtownabbey BT37 0QB, Co. Antrim, Northern Ireland, UK
Corresponding author email: c.leitch@qub.ac.uk
This paper contributes to the literature on entrepreneurial leadership development.
Leadership studies are characterized by an increasing emphasis given to an individual
leader’s social and organizational domain. Within the context of human capital and
social capital theory, the paper reflects on the emergence of a social capital theory of
leadership development. Using a retrospective, interpretivist research method, the
authors present the experience of a cohort of business leaders on an executive develop-
ment programme to uncover the everydayness of leadership development in practice.
Specifically, they explore how entrepreneurial leadership develops as a social process and
what the role of social capital is in this. The findings suggest that the enhancement of
leaders’ human capital only occurred through their development of social capital. There
is not, as extant literature suggests, a clear separation between leader development and
leadership development. Further, the analysis implies that the social capital theory of
leadership is limited in the context of the entrepreneurial small firm, and the authors
propose that it should be expanded to incorporate institutional capital, that is, the formal
structures and organizations which enhance the role of social capital and go beyond
enriching the human capital stock of individual leaders.
Introduction
Entrepreneurial leadership is emerging as a criti-
cal issue in our understanding of the dynamics of
economic development in the 21st century (Har-
rison and Leitch, 1994; Kuratko, 2007). As an
ostensibly ‘new paradigm’ (Fernald, Solomon and
Tarabishy, 2005), it is explored largely in terms of
the leadership traits and behaviours of senior
executives in entrepreneurial companies (Gupta,
MacMillan and Surie, 2004; Nicholson, 1998;
Swiercz and Lydon, 2002), the advocacy of an
‘entrepreneurial’ approach to leadership more
generally (Kuratko, 2007) or more specific analy-
ses of issues such as leadership succession (White,
D’Souza and McIlwaine, 2007), creativity and
innovation in business development (Chen, 2007).
Three features characterize this emerging litera-
ture. First, it is atheoretical, drawing variously on
the leadership and entrepreneurship literatures,
but not using these to articulate a theory of entre-
preneurial leadership. In this paper, we contribute
to the debate that frameworks of human capital
(Becker, 1964; Schultz, 1961) and social capital
(Bourdieu, 1986; Coleman, 1988, 1990; Lin, 2001;
Putnam, 2000) can illuminate both the entrepre-
neurship (Debrulle, Maes and Sels, 2010) and lead-
ership (Day, 2000; Iles and Preece, 2006) domains.
Further, we argue that these accounts should
include analysis of the role of institutional capital
(Anderson, 2010) to fully understand the develop-
ment of entrepreneurial leadership in its everyday
practices and discourses (Chia and Holt, 2008;
Garfinkel, 1967; Heidegger, 1962; Taylor, 1985).
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British Journal of Management, Vol. 24, 347–366 (2013)
DOI: 10.1111/j.1467-8551.2011.00808.x
© 2012 The Author(s)
British Journal of Management © 2012 British Academy of Management. Published by John Wiley & Sons Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
Second, it does not formally define the concept
itself. Here, we understand ‘entrepreneurial lead-
ership’ as the leadership role performed in entre-
preneurial ventures, rather than in the more
general sense of an ‘entrepreneurial’ style of lead-
ership (Mintzberg, Ahlstrand and Lampel, 1998).
An entrepreneurial venture is a business based on
the systematic identification and exploitation of
opportunities (Shane and Venkataraman, 2000),
in which the presence of an entrepreneurial vision
(Hitt et al., 1999), processes that nurture inno-
vation (Quinn, 1985) and generate and secure
resources (Daily and Dalton, 1993), and the
capacity to undertake continuous exploration and
idea generation (Jelinek and Litterer, 1995) are
evident (Gupta, MacMillan and Surie, 2004).
Third, it does not specifically address the
implications of organizational scale, that is, the
institutional context, on its practice and develop-
ment. Indeed, much of this research takes as its
focus the larger organization, for example in
studies of successful, independent, UK organiza-
tions (Nicholson, 1998), growing VC-backed com-
panies (White, D’Souza and McIlwaine 2007),
high-tech ventures (Swiercz and Lydon, 2002) and
corporate entrepreneurship behaviours of middle
managers (Gupta, MacMillan and Surie, 2004).
Accordingly, we explicitly focus on the challenge
of understanding entrepreneurial leadership in the
context of the smaller entrepreneurial company, a
relative terra incognito in contemporary leadership
research (Jensen and Luthans, 2006).
While the link between the quality of leadership
and the management of the smaller entrepre-
neurial firm is becoming more widely understood
(Thorpe et al., 2009), there is still much less atten-
tion given to the analysis of leadership and lead-
ership development in this context (Coglister and
Brigham, 2004; Jensen and Luthans, 2006; Leitch,
McMullan and Harrison, 2009; Vecchio, 2003).
For some, there is nothing distinctive about the
smaller entrepreneurial firm and therefore it
is possible to simply extend existing leadership
research into this domain (Vecchio, 2003).
However, ‘exploring the founder/entrepreneur of
a small emerging firm as a leader has yet to be a
major area of study’ (Jensen and Luthans, 2006,
p. 650). This reflects the fact that the development
and challenge requirements in the small entrepre-
neurial firm are different from larger organiza-
tions. Indeed, ‘it is now almost a tautology to
point out that a small business is not just a scaled-
down version of a large unit’, and it is thus
necessary to ‘explore more fundamentally the
potential differentiated behaviour of something
that is small from something that is larger’ (Gibb,
2009, pp. 211, 212). Some of the implications of
independent smallness (Gibb, 2000) for leadership
development are set out in Table 1.
Even though a leader’s role can vary in different
stages (gestation, development and growth) and
in different types of business (for example, part-
nerships, family businesses, social enterprises),
our concern here is to focus explicitly on the chal-
lenge of understanding entrepreneurial leadership
in the smaller entrepreneurial company. We
review the emergence of a social capital theory of
leadership development (Day, 2000; Hitt and
Ireland, 2002; Iles and Preece, 2006; McCallum
and O’Connell, 2009) within the context of the
evolution of both human capital (Becker, 1964)
and social capital theory (Lin, Cook and Burt,
2001). We apply this in an investigation of the
process of entrepreneurial leadership develop-
ment (Leitch, McMullan and Harrison, 2009; Pit-
taway et al., 2009; Smith, 2009; Stewart, 2009;
Terrion and Ashforth, 2002) and add to the small
number of such studies (Gordon, Hamilton and
Jack, forthcoming; Kempster and Cope, 2010).
Specifically, our research is structured around
three questions. First, what is the role of human
capital in leadership development? Second, how
is leadership development as a social process
enacted in the entrepreneurial domain? Third,
what is the role of the social and organizational
Table 1. Constraints and facilitators on the role of the leader in
entrepreneurial ventures
Constraints Facilitators
Small management team
Stretched multifunctional
management and
overlapping roles
Fewer specialist managerial
personnel
Limited control over
external environment
Wider scope for domination
by leader (inflexibility)
Limited capacity for
scanning environment
Relatively limited resource
and power to raise
resource
Closeness of managerial
group
Wider potential for all staff
to know business and all
stakeholders
Wider scope of informal
ways of doing things
Wider scope for domination
by leader (vision and
implementation)
Greater ability to use
personnel observation
rather than systems for
control
Adapted from Gibb (2009, p. 213).
348 C. M. Leitch, C. McMullan and R. T. Harrison
© 2012 The Author(s)
British Journal of Management © 2012 British Academy of Management.
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