Status differences as an impediment to building entrepreneurial relational capital

We explore a potentially significant impediment facing entrepreneurial firms as they attempt to augment and utilize their relationships with other firms. Social capital has often been argued to be an alternative to contracts for governing inter-firm relationships. We extend existing research by arguing that significant differences in the quality of social capital can exist for entrepreneurial firms with similar sets of capabilities and initial structural connections to potential exchange partners. We specifically explore the influence of status differences between firms' representatives. We further discuss factors that moderate this influence. Entrepreneurial firms attempting to convert existing weak ties into strong ties with better established firms are most likely to encounter problems due to social status differences between the firms' representatives. Thus, their ability to rely on the positive aspects of social capital in governing inter-firm relationships is hampered.