How social entrepreneurial organizations create value through social capital

Social capital theorists have established that the possession of social capital is of tremendous importance to entrepreneurs. Less is known, however, about the actual processes that they use to convert their social capital into competitive advantage. This paper reports on an extensive qualitative and observational research project exploring inter-firm relationships in an extended network of social entrepreneurial organizations (SEOs). The research identifies three processes that these organizations used to exploit social capital. Different combinations of social capital, exploitation processes and organizational heterogeneity enable the identification of a typology of relationships exhibiting varying levels of value creation.