Culture and Social Capital: Effect on the Growth of Small Medium Enterprise - The Case of Software Firms

We examine the role of intra-firm and inter firm's social capital of small and medium enterprises, and in particular we focus on micro and small software (MSS) firms. More specifically, we develop a conceptual model of the impact of intrafirm and inter-firm social capital on the performance and evolution of MSS firms. This model aims to explain the great performance differences between MSS firms in different regions of the world. We thus explore the social fabric in which software companies are embedded, affecting their growth and development in the market. Unlike existing theoretical models of social capital, the current theoretical framework proposed in this paper a) decomposes social capital based on the nature of interfirm and intra-firm social ties, b) includes the firm leaders' uncertainty avoidance as a precursor of the nature of firm social ties, and c) includes the national culture dimension of individualism/collectivism as an important moderator of the effect of intra-firm social ties on firm performance.