The Development of Entrepreneurial Leadership: The Role of Human, Social and Institutional Capital

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 development
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.


Entrepreneurial leadership is emerging as a critical
issue in our understanding of the dynamics of
economic development in the 21st century (Harrison
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 analyses
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 literature.
First, it is atheoretical, drawing variously on
the leadership and entrepreneurship literatures,
but not using these to articulate a theory of entrepreneurial
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 entrepreneurship
(Debrulle, Maes and Sels, 2010) and leadership
(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 development
of entrepreneurial leadership in its everyday
practices and discourses (Chia and Holt, 2008;
Garfinkel, 1967; Heidegger, 1962; Taylor, 1985).

Second, it does not formally define the concept
itself. Here, we understand ‘entrepreneurial leadership’
as the leadership role performed in entrepreneurial
ventures, rather than in the more
general sense of an ‘entrepreneurial’ style of leadership
(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 innovation
(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 development.
Indeed, much of this research takes as its
focus the larger organization, for example in
studies of successful, independent, UK organizations
(Nicholson, 1998), growing VC-backed companies
(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 entrepreneurial
firm is becoming more widely understood
(Thorpe et al., 2009), there is still much less attention
given to the analysis of leadership and leadership
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 entrepreneurial
firm are different from larger organizations.
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, partnerships,
family businesses, social enterprises),
our concern here is to focus explicitly on the challenge
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 development
(Leitch, McMullan and Harrison, 2009; Pittaway
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

context in entrepreneurial leadership development?
In this investigation, we build on an emerging
tradition of research taking a process–
relational perspective on entrepreneurship and
leadership development. Entrepreneurial leadership
is viewed as a social process enacted through
everyday active encounters as a practice of relational
learning (Anderson, 2005; Cope, 2005;
Fuller and Tian, 2006; Hjorth, 2003; Pittaway and
Thorpe, 2012; Steyaert and Katz, 2004).
Using a retrospective and interpretivist research
methodology (Leitch, Hill and Harrison, 2010),
which is focused on uncovering the everyday practices
of entrepreneurial leadership development
(Alvesson and Spicer, 2011a), we present the experiences
of one cohort of business leaders from an
executive development programme. From the
analysis, we conclude that, in the situational
context of the entrepreneurial firm, at least, the
social capital theory of leadership development,
while valuable in understanding the process, is
limiting. In such firms, the current distinction
between leader development as the acquisition of
skills and abilities and leadership development as a
socially situated process is difficult to maintain.
Thus, an expanded theory of leadership development
in this context, which incorporates recent
thinking on the role of institutional capital, that is,
formal structures and organizations, is proposed
(Anderson, 2010).

Towards a social capital theory of
leadership development

As the field of leadership studies has evolved
(Yukl, 2010), there have been two key shifts in
focus. First, with respect to role, there has been a
shift of interest, from the personal characteristics
of the leader to the role of leadership: that is, from
an individualistic and decontextualized conceptualization
of the leader as a reified heroic individual
to one which emphasizes leadership as a role
defined by the interaction of a leader with his/her
social and organizational context (Day, 2000;
Fiedler, 1996; Iles and Preece, 2006; Thorpe et al.,
2009). In short, it is recognized that ‘individuals
alone do not create successful firms’ (Thorpe
et al., 2009, p. 202).
Second, in terms of process, there has been a
shift from leadership as a set of traits, behavior’s
and actions to leadership ‘as a social process that

engages everyone in a community’, which requires
leadership capacity to be built throughout an
organization involving ‘both individual leader and
collective leadership development’ (Day, 2000, p.
583). This shift reflects the fact that most definitions
of leadership imply development, involving
‘a process whereby intentional influence is exerted
over people to guide, structure and facilitate activities
and relationships in a group or organisation’
(Yukl, 2010, p. 21). This represents a move from
the individual to the group, from the human to the
social (Day and O’Connor, 2003; Locke, 2003;
McCallum and O’Connell, 2009). Indeed, the most
effective leader is ‘attentive to both the task and
socio-emotional/relationship dimensions of leadership’
(Iles and Preece, 2006, p. 318). The contextual
element of leadership (Fiedler and Chemers,
1974) is important: concentrating on developing
just human capital seems ‘a lopsided investment
strategy’ which undervalues ‘the current and
future social capital needs of organizations’
(McCallum and O’Connell, 2009, p. 153). From a
human capital perspective, the focus is on improving
an individual’s knowledge, skills and capabilities;
in social capital theory emphasis is on the
relational dynamics of establishing relationships
among individuals to enhance cooperation and
resource exchange, leading to the creation of
organizational value (Bouty, 2000; Day, 2000; Tsai
and Ghoshal, 1998).
Human capital and social capital
The development of leadership, to build company
resources and capabilities, rests on the availability
of both human capital (the repository of valuable
knowledge and skills) and social capital (the relationships
between individuals and organizations
that facilitate action and create value) (Hitt and
Ireland, 2002). While Hitt and Ireland (2002) call
for more research into the integration of human
and social capital as a priority for 21st century
leadership research, this is in the context specifically
of the link between leadership and performance,
not in understanding the process of
leadership development. However, both Day
(2000) and Iles and Preece (2006) have argued that
their integration provides a foundation for bridging
the gap between the development of leaders
and of leadership development as a socially situated

If we recognize knowledge, skills and relationships
as social capital, we can see this as an extension
of the original economic concept of capital
(Table 2). For Marx, for example, capital represented
the surplus generated by the labouring
class which was appropriated by capitalists. This
economic capital was an essential resource for
building society, the basis for exploitation of the
workers by the capitalists, and a group phenomenon
‘that resulted from the group efforts of many
but belonged to no single individual in particular’
(Anderson, 2010, p. 3). As human capital theory
developed in economics, this Marxian emphasis
on capital as a group phenomenon was replaced
by the notion of human capital as an individual
one. This consists of knowledge, skills, talents
and intelligence, as well as acquired or inherited
attributes that an individual brings to bear in the
world (Fernandez and Castilla, 2001). These they
can enhance and use of their own volition and are
associated with identifiable returns (Becker, 1964;
Gupta, 2009; Mincer, 1974; Piazza-Georgi, 2002;
Schultz, 1959; Zhu, Chew and Spangler, 2005). At
an organizational level, Hitt and Ireland (2002)
have adopted this theory of human capital to
argue that it is a significant resource, owing to its
intangibility, uniqueness and being difficult to
imitate and replicate (Teece, 2001). Thus, it
affords an opportunity for conferring competitive
advantage to a firm reflected in greater capacity to

exploit opportunities (Davidsson and Honig,
2003) and higher levels of performance (Hitt
et al., 2001).
The development of a social capital theory,
initially in sociology and political science,
focused specifically on that subset of resources
that an individual could access, not through
their own inheritance or acquisition, but through
interaction with others (Lin, Cook and Burt,
2001). While this social capital perspective still
includes economic goods, the core of the theory
is embodied in two linked but distinctive perspectives:
the external, individual resources view
and the internal, collective characteristics view
(Alder and Kwon, 2000). In the former, the
focus is ‘primarily on social capital as a resource
facilitating action by a focal actor, a resource
that inheres in the social network tying that focal
actor to other actors’ (Alder and Kwon, 2000, p.
90). These networks are central to the development
of capital, and they and the resources they
bring to the individual, comprise ‘personal connections,
enhanced knowledge and wherewithal
and inside information’ (Anderson, 2010, p. 3).
In the latter, more common among political scientists
and development economists, the stress is
on social capital as a signal of group or community
cohesion (Putnam, 2000), and specifically ‘as
a feature of the internal linkages that characterise
the social structures of the actor (groups,

organisations, communities, regions, nations etc
as distinct from individual actors) and give them
cohesiveness and its associated benefits’ (Alder
and Kwon, 2000, p. 92; see also Alder and
Kwon, 2002; Schuller, n.d.).
In social capital theory, therefore, the network
of relations enables social capital affairs to be
conducted and provides network members (Nahapiet
and Ghoshal, 1998) with ‘the collectivityowned
capital, a “credential”, which entitles them
to credit in the various senses of the word’
(Bourdieu, 1986, p. 249). It is the social capital or
assets that are embedded in those relationships
that can contribute to developing value outcomes
(Dess and Shaw, 2001). In essence, social capital
supplements the effects of other types of capital,
including human and financial capital (Bourdieu,
1986; Coleman, 1988, 1990; Loury, 1987).
However, there are some elements in which
social capital does not share the same characteristics
of economic types of capital. First, even
though it might depreciate with non-use, it does
not depreciate with use, unlike physical capital.
In fact, as with human capital, it normally
grows and develops with use. Second, social
capital is a collective good in that it is not the
private property of those who benefit from it.
Third, it is located not in individual actors but
in their inter-relationships, so that no one actor
has exclusive rights to it. The inclusion of noneconomic
aspects in describing social capital fits
well with Bourdieu’s (1986) expanded view of the
concept of capital, which he believed included
both material (that is, physical capital) and nonmaterial
phenomena. Indeed, he identified two
additional forms of capital: cultural capital, as
knowledge and experience gained through education
and training (which is of course closer to
human than social capital); and symbolic capital,
which relates to ‘one’s reputation and value as
perceived by others’ (Fuller and Tian, 2006, p.
290), and refers to ‘any property (any form of
capital whether physical, economic, cultural or
social) when it is perceived by social agents’
(Bourdieu, 1998, p. 47; see also De Clercq and
Voronov, 2009a, 2009b; Karatas-Ozkan and
Chell, 2010; Özbiligin and Tatli, 2005).
As Svendsen and Svendsen (2004, p. 12)
observe, this expanded concept is most relevant
to interdisciplinary social science where ‘a
myriad of more or less exotic forms of capital
exist’. Nevertheless, what links the neoclassical,

sociological and political science perspectives is
that, although the focus is on the role of the social
– interconnectedness – in the development of
capital, it is still the individual who is central to
the theory and who accesses, controls and
increases social capital resources. As in concepts
of human capital, social capital theory is a theory
of individualism.
The definition of social capital implied in this is
something less tangible and less measurable than
the more common emphasis on the networks
approach to social capital used in entrepreneurship
research (Kim and Aldrich, 2005). Indeed,
the Putnam-esque identification of social capital
as something that accrues to society as a whole,
as well as to the individuals dyadically connected
in a network, draws attention to two further
features that are important for understanding
entrepreneurial leadership development. First, it
is through these relationships that individuals
develop mutuality in terms of trust, respect and
collaborative working; mutuality which underpins
the development of a democratic society. In
other words, ‘the strength of social capital lies
primarily in the group, namely, in group cooperation’
(Anderson, 2010, p. 5). Second, social
capital, as with other forms of capital, is developed
and built slowly and incrementally over time
in an ongoing process of learning from experience,
in this case the experience of interacting with
others in associational relationships.
Social capital and leadership development
This underpins the attempt to use social capital as
the basis for differentiating between the development
of leaders and of leadership in organizations
(Day, 2000; Iles and Preece, 2006). Leader development
refers to the enhancement of an individual’s
skills and capabilities as a form of human
capital. It is based on the development of social
capital by ‘expanding the collective capacity of
organizational members to engage effectively in
leadership roles and processes’ (Day, 2000, p.
582). This rests on also building and using interpersonal
capability which stresses the importance
of being able to understand people and incorporates
both social awareness and social skills
(Goleman, 1995). In other words, for organizational
development to occur, an effective interaction
must take place in an interpersonal or social
context, that is, between a leader and his/her

social and organizational environment. It is the
relationships that connect individuals, rather than
an individual’s attributes, which take centre stage
(Balkundi and Kilduff, 2005).
Given the relational aspect of social capital,
leadership development should focus on how
to build social networks and relationships to
access resources and coordinate activities. In this
sense, leadership is ‘an effect, rather than a cause,
an emergent property of social interaction in
context’ (Iles and Preece, 2006, p. 324). For
Balkundi and Kilduff (2005, p. 943) ‘leadership
can be understood as social capital that collects
around certain individuals – where formally designated
as leaders or not – based on the acuity of
their social perceptions and the structure of their
social ties’. As social capital exists in connections,
this suggests that inter- and intra-organizational
relationships are both essential (McCallum and
O’Connell, 2009). This shift in focus from the
individual to the collective, whether a top team,
teams or groups within and between an organization
or the organization as a whole, introduces
complexity into leader and leadership development
and presents challenges for both academics
and practitioners.
While this discussion recognizes that human
and social capital are not in direct opposition to
each other, they are in a ‘relationship of tension,
theoretically and pragmatically’ (Field, Schuller
and Baron, 2000, p. 250). In this context a social
capital theory of entrepreneurial leadership development
will have a focus on relationships rather
than individual leaders, will emphasize measures
such as participation, engagement and trust
rather than qualifications, will identify outcomes
in terms of social cohesion and further social
capital development rather than income and productivity,
will follow an interactive and cumulative
rather than linear model of development, and
will support policy and practice implications
based on capacity building and empowerment
rather than skill enhancement and rates of return
(Table 3).
Given the acknowledged problems of measuring
social capital and its impacts (Anderson 2010;
Fine, 2001, 2010), we have adopted a rather different
methodological approach from the ‘count

and classify’ one of network analysis. In applying
this within the context of entrepreneurial leadership,
we broadly follow the position articulated
by Alvesson and Spicer (2011a). First, leadership
‘is not a physical object like a rock or flower
that can be carefully measured using carefully
calibrated instruments. Leadership is something
that requires human understanding and interpretation
. . . [it] . . . is all about meaning, understanding,
performances, and communication’
(Alvesson and Spicer, 2011b, pp. 3–4). Second,
leadership is a practice, carried out in everyday
settings, involving the attribution of meaning and
significance to actions (Alvesson and Spicer
2011b, pp. 4–5; Ladkin, 2010). Third, leadership
is enacted in the real world, which involves recognizing
that the real world of everyday practice
is ambiguous, messy and provides significant
challenges for research that is more difficult and
time consuming to conduct (Gephart, 2004;
Leitch, Hill and Harrison, 2010).
The implications are as follows. First, most
prior research has involved quantitative studies
using behaviourally based leadership questionnaires
and assessment tools. Second, these
methods provide limited understanding of the
practice of leadership, as they are static and
backward-looking. Third, leadership development
is a complex social phenomenon made up of
exchanges and activities which vary over time and
by context. Fourth, a more interpretivist view of
leadership development focuses attention on the
contextual and situationally embedded nature
of the leadership development process (Leitch,
McMullan and Harrison, 2009).

Methodologically, traditional approaches (that
is, the so-called, standard, often quantitative,
research methodologies) are ‘badly adapted to
the study of the ephemeral, the indefinite and
the irregular’ (Law, 2004, p. 4). Accordingly, the
choice of methodology becomes a matter of
aptness: ‘different types of research question
are best answered by different types of study
employing appropriate methods’ (Leitch, Hill
and Harrison, 2010, p. 71). Given that our analysis
of entrepreneurial leadership development is
grounded in the understandings and personal
experiences of the research participants, an
interpretivist approach is the most appropriate
(Gordon, Hamilton and Jack, forthcoming):
‘interpretivism is based on a life–world ontology
which argues that all observation is theory- and
value-laden and that investigation of the social
world is not, and cannot, be the pursuit of
detached objective truth’ (Leitch, Hill and Harrison,
2010, p. 69). Rather, a research approach
which focuses on the development of rich descriptions
and is sensitive to the ‘subtleties and situated
nuances of leadership practice’ (Kempster
and Cope, 2010, p. 11) has been adopted.
However, small-scale, qualitative studies in the
interpretivist tradition do not allow for generalizability;
their strength lies in their capacity ‘to
provide insights, rich details and thick descriptions’
(Jack and Anderson, 2002, p. 473). From
an interpretivist standpoint, developing an understanding
of entrepreneurial leadership requires
recognition that any insights developed will necessarily
be uncertain and preliminary: ‘eternal
and robust truths are almost impossible to come
by in a complex, situation-specific and dynamic
area like leadership. All we can do is to expand
the range of ways we can interpret leadership and
hopefully provide some useful and engaging
insights that we did not have before’ (Alvesson
and Spicer, 2011b, p. 4).
Given the repeated calls for ontologically and
epistemologically coherent qualitative leadership
research (Alvesson, 1996; Bryman, Stevens and
Campo, 1996; Conger, 1998; Kempster and
Cope, 2010; Parry, 1998), our focus is to understand
the everyday practices of entrepreneurial
leadership development. In this, we follow
Heidegger’s (1950/1971) distinction between two
related ways in which ‘we may make sense of our
apprehension of phenomena in the world’, building
and dwelling modes of being, which provides

the relevant ontological and epistemological
context (Chia and Holt, 2008, p. 477).
In the building mode of being there is an
initial precognitive separation between an actor/
perceiver and the world, so that he/she has to
construct mental representations and models of it
in order to actually engage with it (Ingold, 2000).
Essentially, the actor is presumed to be a disinterested
observer who uses the constructed model or
representation as an ideal or goal, which guides
the creation of a conceptual plan or map, from
which action can follow. This separation distinguishes
between ‘theory’, the ideal and ‘practice’,
the approximation, and privileges the former.
This, produces knowledge ‘that is rigorous, scholarly
and uninvolved with the phenomenon it
surveys’ (Chia and Holt, 2008, p. 477).
While for Heidegger (1950/1971) the building
and dwelling modes of being should be ‘held in
mutual sympathy’ (Chia and Holt, 2008, p. 477),
the perspective of the dwelling mode is central to
his approach to a hermeneutics of ‘everydayness’
(Heidegger, 1962). This everydayness is the understanding
in everyday practices and discourses. In
other words, as a mode of being in the world, this
dwelling or inhabiting defines how we feel at
home in and relate to the world: ‘when we inhabit
something, it is no longer an object for us but
becomes part of us and pervades our relation to
other objects in the world’ (Dreyfus, 1991, p. 45).1
In this dwelling mode, it is assumed that actors are
‘inextricably immersed and intertwined with their
surroundings in all its complex interrelatedness’
(Chia and Holt, 2008, p. 477). As actors do not
have an overarching view of their situation, they
must instead ‘feel their way through a world that is
itself . . . continually coming into being’ (Ingold,
2000, p. 155). As such, actions and decisions arise
from being in situ, occur spontaneously and are
characterized by ongoing adjustment and adaptation
instead of resulting from some predesigned
plan. It is this prioritization of integration (rather
than separation) of a subject and their context,
and the attention it therefore places on practitioners
being immersed in, coping with and adapting
to emerging situations, that provides the wider
justification for our interpretivist approach to this

The research process
In this research, we have captured this integration
by obtaining leaders’ dwelling view of their world,
by accessing their ‘immersed doing’ of trying to
effect change in practice (Gordon, Hamilton and
Jack, forthcoming; Iles and Preece, 2006; Kempster
and Cope, 2010). Data for this project were
collected during the period May 2009–April 2010
from a cohort of eight business leaders who took
part in a leadership development programme held
between November 2007 and May 2008 (Table 4).
Their selection was based on a purposive sampling
strategy (Patton, 1990). First, we wished to include
entrepreneurial leaders who were consciously
attempting to develop their leadership capability.
Therefore, participants were selected from
an entrepreneurial leadership development programme.
2 Second, in order to ensure commonality
of experience and allow for differential developments
over time of the impacts from a common
learning intervention (Powells and Houghton,
2008), all participants came from a single cohort.
In so doing, we recognize that the role of the
leader changes as an organization grows in size and
complexity. If entrepreneurial leadership increasingly
becomes a distinct form of leadership during
the growth process (Kempster and Cope, 2010), it
does so because the informal management and
leadership practices that are most effective in emergent

businesses need to be replaced by more formal
ones as they grow (Perrin and Grant, 2001). From
a life-cycle perspective, this transition from owner
micro-management to larger-scale professional
management structures represents a significant
transformation in the nature of the business. Following
Phelps, Adams and Besant (2007), the need
for leadership development can be seen as a unique
path-dependent situational ‘tipping point’ challenge.
While we acknowledge that there is important
research to be done exploring the role of the
entrepreneurial leader in different entrepreneurial
organizational contexts (e.g. stage of development
or type of business), in this study we specifically
concentrate on the analysis of the leadership development
process at this transition.
The programme was structured around seven
two-day workshops supplemented by intersessional,
one-on-one coaching sessions and
action-learning sets (Leitch, McMullan and
Harrison, 2009). The sample of eight reflects
the size of the cohort to which we were given
access for research purposes.
Each participant was interviewed individually
at their place of work; these interviews lasted
between 90 minutes and two hours and were
undertaken 12 months after the end of the programme.
This allowed them time to reflect on
and implement what they had learnt (Downs,
Hydeman and Adrian, 2000; Millar and Tracey,
2006) and to provide a detailed account of their
experience through a process of guided extended
conversations (Ruben and Ruben, 2005). These
interviews were audio-recorded for subsequent

transcription and analysis. On the basis of this
analysis, further data were collected from two
focus groups held four months apart. These
involved all eight participants and explored in
more detail their experience of the dynamics of
leadership development during and after the programme.
As with the individual interviews, the
focus groups were audio-recorded. For both
the interviews and focus groups, participants
were advised of the broad theme of the research,
that is: ‘How does entrepreneurial leadership
develop as a social process and what is the role of
social capital in this?’ The specific research questions
were not provided, in order to reduce
respondent bias and allow participant’s stories to
emerge (Kempster and Cope, 2010).
The analysis of qualitative data is a difficult,
intuitive, creative and dynamic process, the outcome
of which is to understand the assumptions,
categories and relationships that constitute the
situated experiences, or everydayness, of the
participants (Basit, 2003). However, very few
interpretivist research studies elaborate on the
principles of data analysis (Bryman, 2004). Drawing
on guidelines for the practice of interpretivist
research in entrepreneurship (Leitch, Hill and
Harrison, 2010), in Table 5 we set out the
approach to analysis and interpretation adopted
in this study.

Human and social capital in
entrepreneurial leadership development

Our findings in this section are structured around
two of the three research questions articulated
in the Introduction. 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, and what is the place of social capital
in this? We concentrate here on identifying the
everyday practice of entrepreneurial leadership
development. In this we reiterate the importance
of understanding the entrepreneurial context,
the implications of independent smallness that
distinguish the entrepreneurial from the corporate
(see Table 1). Specifically, we frame the analysis
within Heidegger’s dwelling mode of being, which
emphasizes the inextricable immersion and intertwining
of the actor and his/her world, as a reflexive

process in which the entrepreneurial leader
both shapes and is shaped by this domain as
he/she enacts leadership.
Leadership development as human capital
For most of the participants, their justification
for enrolling on a leadership development programme
was to enhance their human capital in
terms of their knowledge, skills and capabilities in
the context of the need for significant change
(Phelps, Adams and Besant, 2007). For some, the
driver was the nature of the challenges facing
the business (Table 6, A1–A2). Clearly, these are a
manifestation of some of the constraints of the
entrepreneurial context, in terms of small and
over-stretched management teams with limited
resources. For others, the impetus was articulated
much more in terms of the challenges facing
them as individuals (Table 6, B1). In some cases,
this was expressed as seeking to gain an overall
view of their business, to rise above the day-today
concerns of managing to take a leadershipbased
view. In other cases, the motivations were
more specifically grounded in management challenges,
particularly around a desire to free up time
through improved delegation skills and enhanced
team-working within the management group
(Table 6, C1–C3), one of the key tipping points
identified by Phelps, Adams and Besant (2007).
Participants recognized that their actions and
decisions arise from being in situ, require ongoing
adjustment and adaptation, and the programme
provided an opportunity to share and learn from
the experiences of others in a similar situation
in a way which was not possible in their individual
businesses (Table 6, C2–C3, D1–D2). This
emphasis on networking and sharing highlights
that the development of human capital relies in
practice on the capacity and opportunity to
engage relationally with others in leadership
development, as in other areas (Brown and
Lauder, 2000). In other words, individual actions
are embedded in a social context: ‘if . . . human
capital is less tangible, being embodied in the
skills and knowledge acquired by an individual,
social capital is less tangible yet, for it exists in the
relations among persons’ (Coleman, 1997, p. 83).
As will become evident, the leadership development
process in entrepreneurial firms is fundamentally
predicated on the development of
relational social capital, which appears in practice

to be more important than the direct acquisition
of knowledge and skills per se. In essence, we
argue, following Nahapiet and Ghoshal (1998),
that social capital is appropriable, and that developed
in one context can be transferred to another.
Leadership development as social capital
Based on the evidence from this research, the leadership
development process relies on social capital
at two levels. The first of these is the participantto-
participant (peer-to-peer) relationships built up

within the programme. The second is developed
through the bridging social capital facilitated via
the programme director’s links to other cohorts
and courses (peer-to-other interaction). The
importance of interaction during the course was
identified by the majority of these leaders as key to
their experience of leadership development.
Most of the effective interaction occurred
during the residential sessions but outside the
formal workshops. This is clearly consistent with
a social capital theory of leadership development
(see Table 3). Participants valued the opportunity

of developing relationships, reflected in their sense
of participation in and membership of the group
(Table 6, E1–E4). As a result, they reported the
development of higher levels of social cohesion in
terms of their interaction, team spirit and camaraderie
(Table 6, E2–E4). In other words, participants
see the leadership development process as a
way of compensating for the constraints of small
non-specialist management teams. This, in turn,
supports the development of more social capital
and re-emphasizes the ongoing, interactive and
circular nature of social capital development. In
other words, social capital breeds social capital.
This peer-to-peer interaction is complemented
by peer-to-other interaction. In terms of leadership
development as social capital, the role of
the programme director seems to be critical.
Indeed, the development of social capital is stimulated
by his catalytic role, consciously or unconsciously,
orchestrating the composition of the
cohort to maximize the opportunities for interaction,
shared learning and the development of trust
and cohesion. This is reinforced throughout the
programme by his presence at the workshop
sessions and informal evening discussions, and
through his ongoing contact with participants
after the programme has finished (Table 6,
F1–F6). The fact that he is so involved with the
participants means that he knows them and their
businesses extremely well. This knowledge is used
to stimulate debate and relate theory to each of
the participants and help them transfer it into
practice more easily.
Social capital, therefore, does not develop just
from the interaction among participants in a
group as a process of mutual exchange, but can be
mediated by the overarching bridging social
capital of a group facilitator, in this case the programme
leader. This role is not dissimilar to the
development of social capital relations described
by Coleman (1988) as primordial: the role of the
programme director in leadership development is
the creation of a defined set of networks and relations
in which ‘close, bounded ties and strong
levels of trust appear to promote a propensity to
share information, ideas, and skills’ (Field,
Schuller and Baron, 2000, p. 261). By establishing
these boundaries and defining the domain within
which social capital develops, the programme
director is also delineating the extent of the learning
arena (Limerick and Moore, 1991) in which
leadership development occurs. In other words,

the leader–context nexus, as in Heidegger’s framework,
is more properly construed not simply as
the leader embedded in the context of their entrepreneurial
firm, but as them embedded in a less
formalized context of peer-to-peer and peer-toother
relationships. Thus, the development of this
reservoir of social capital that transcends the
boundaries of each individual firm provides the
platform for the development of institutional
capital. The implications of this complex interrelatedness
for the development of an institutional
view of capital are now considered.

Entrepreneurial leadership development
as institutional capital

This final section addresses our third research
question: What is the role of social and organizational
context in entrepreneurial leadership
development? It is clear for this cohort of entrepreneurial
leaders that the development of social
capital extends beyond their interaction on the
programme itself (Table 7).
Following completion of the programme, this
group decided to reconvene for formal, rather
than social, sessions on a quarterly basis to
provide ongoing peer group support for each
other. These sessions have taken the form of an
organized forum where the leaders share ideas
and learn from each other, with a set agenda and
an appointed coordinator/forum chair, a rotating
role. One of the consequences of this has been the
further development of social cohesion within the
group (Table 7, A2, A6), with particular emphasis
being placed on issues such as confidentiality,
re-motivation, sharing and trust (Table 7,
A3–A5). The importance attached to confidentiality
and trust during the course was central to
their decision to create this ongoing forum within
which they could share experiences.
From the programme, they realized that they
shared the same problems in the development of
their leadership capabilities and that they could
discuss these and learn from each other (Table 7,
A3, A6). The driver for establishing a regular
forum following the programme was to replicate
the conditions of confidentiality, sharing and
trust. Indeed, it is a means of providing a ‘release
valve’ for them (Table 7, A4). There was also a
sense that participating in this forum helped them
realize things that they may not have appreciated

otherwise and put things in perspective, within a
trust-based environment (Table 7, A5). Without
exception, the leaders were all highly positive
about their relationship as a group. Although
they had no formal contact with each other
outside these meetings, they gained a lot from
them, and preferred to and gained greater value
from meeting in a group situation rather than on
a one-to-one basis. As the programme director
describes it, these leaders are now benefiting from
the ‘board they cannot afford’. In other words, for
these participants the opportunity to develop
social capital is significantly enhanced to the
extent that they are able to institutionalize and
formalize the opportunity of developing a peer
support community. The development of this
forum as a social institution appears to be fundamental
to their ability to realize their aims and
expectations from the programme, and to address
the challenges of developing their leadership at a
critical juncture in the growth of their business
(Phelps, Adams and Besant, 2007). Reflecting the
constraints on leadership in entrepreneurial ventures
(Table 1), the establishment of this community
has provided a hitherto unavailable forum
for sharing experience (Table 7, A3), which redefines
how these leaders feel at home in and relate
to the world.
Accordingly, even by understanding the development
of social capital in this context, this does
not provide a full account of the process of entrepreneurial
leadership development through
executive education programmes. A key resource

for entrepreneurial leadership development appears
to be strong institutional development,
where we define institutions as organizations or
associations, in a more restrictive sense than the
new institutionalism definition as ‘sets of rules’ or
the rational choice definition of institutions as
sets of rules within organizations (Bunce, 1999;
Thelen, 2004). It is important for entrepreneurial
firms to be part of cohesive network structures
(Hite and Hesterly, 2001), not least because cohesion
is associated with performance (Aarstad,
Haugland and Greve, 2010), and networking and
political skill are important moderators in this
(Blickle, Wendel and Ferris 2010; Blickle et al.,
2009; Prieto, 2010). This is also vital to address
the attenuated leadership and management structures
within the entrepreneurial firm which, while
they provide the context for the enactment of
leadership, appear not to provide a full context
for its development.
On this basis, it is therefore possible that an
individual lacking social capital may gain spillover
effects through cohesion from a colleague
better endowed with social capital. This can be
extended, following Salanick (1995, p. 348), into a
network theory of organization which describes
‘how structures of interactions enable coordinated
interaction to achieve collective and individual
interests’. Social capital is a relational
phenomenon which, as we have argued above, is
primarily understood as something that belongs
or attaches to the individual. However, our
research also suggests that social capital can be

understood as a collective property which requires
us to move beyond previous studies of it as an
actor-level characteristic and at the dyadic level of
analysis (Aarstad, Haugland and Greve, 2010).
The very notion of social capital has, of course,
been subject to criticism on the basis of conceptual
incoherence among others (Fine, 2010).
Indeed, some have asked whether it is time to
divest ourselves of stock in the social capital
concept, but have rejected this on the proviso that
‘the context-dependent and social structural/
relational approaches of Bourdieu and Coleman’
are adopted (Foley, Edwards and Diani, 2001, p.
274). Based on the analysis in this paper, we
suggest that the context-dependent and relational
approach to social capital as a collective property
can be understood as being embedded in a
broader notion of institutional capital. This can
be defined as comprising institutions (in terms of
both organizations or associations and the rules
of the game in society: North, 1990), institutional
governance (organizational structures that create
and enforce the rules of the game) and more
general governance structures (structures that
effectively reduce uncertainty and stimulate adaptive
efficiency) (Platje, 2008).
The ongoing leadership development process in
which our participants are engaged appears to be
developing the characteristics of institutional
capital. The regular meetings now constitute an
institution, in terms of being governed by a set of
rules and norms that are accepted by all the
members. There are emerging strong organizational
structures, in terms of agendas and procedures,
which provide institutional governance
through which the rules of the game are created
and enforced. Finally, the institutional capital and
the more general governance structures that
encourage sharing, collaboration and learning
provide a means for participants to reduce their
uncertainty in their leadership role and improve
their capacity to adapt to changing circumstances
(Debrulle, Maes and Sels, 2010). In other words,
the emergence of a strong resilient institution that
can provide space and support for its members
becomes an alternative resource for problemsolving
which can complement or provide an alternative
to social capital (Anderson, 2010, p. 18).
In terms of this relationship between social
capital and a broader view of institutional capital
there are two perspectives. First, social capital
(and the development on that basis of social trust)

is essential for the development of institutional
capital (Putnam, 2000); that is, ‘strong social
capital will develop strong institutions by virtue
of the fact that individuals have already learned
to cooperate’ (Anderson, 2010, p. 271). Second,
institutionalization is necessary for the emergence
of social capital and the creation of a capacity to
cooperate (see, for example, Huntington, 1968).
Accordingly, the creation of institutional capital
can itself help create trust and build social capital.
However, it remains the case that the question of
‘exactly how the presence of strong social . . .
capital can help institutions to develop and vice
versa remains an unanswered question’ (Anderson,
2010, p. 271: Fukuyama, 2002).
This study has suggested that there is a place in
entrepreneurial leadership development for social
capital that goes beyond the enhancement of the
human capital stock of the individual leaders. The
emerging role of institutional capital in further
supporting this has also emerged. What is not yet
apparent though, and requires further detailed
longitudinal research, is the dynamic interplay
between social capital and institutional capital,
and the extent to which the development of entrepreneurial
leadership contributes to addressing
the significant challenges facing businesses at a
critical stage in their growth (Kempster and Cope,
2010; Phelps, Adams and Besant, 2007). As such,
this will require research focused on systematically
identifying the impact of entrepreneurial
leadership development initiatives on the individuals
and the companies they lead (Leitch,
McMullan and Harrison, 2009). In this case at
least, the emergence of institutional capital seems
to be based on the development of a strong platform
of social capital, and this, in turn, is associated
with a strengthening of that social capital.

In this paper, we have examined how entrepreneurial
leadership development can be seen as a
social process and the role of social capital in this.
We have done so in the specific context of the lived
experience of entrepreneurial leadership development
in a cohort of leaders in growing small businesses
facing a major challenge or tipping point in
their development. Thus, we have contributed to
the literature on leadership development in small
entrepreneurial firms (Anderson and Gold, 2009;

Leitch, McMullan and Harrison, 2009; Pittaway
et al., 2009; Rae, 2009; Ram and Trehan, 2009;
Smith, 2009; Stewart, 2009). In the context of
an action-learning-based approach to leadership
development, which provides an important vehicle
for the generation, articulation and dispersion of
domain specific knowledge (Enos, Kehrhahn and
Bell, 2003), we have recognized the role of human
capital and social capital in entrepreneurial leadership
development. Specifically, entrepreneurial
leadership is a social process, and entrepreneurs
are engaged in the practice of relational learning
derived from ‘active encounters’ (Burgoyne, 1995;
Taylor and Thorpe, 2004). For Terrion and Ashforth
(2002), ongoing peer-to-peer interaction
through group members’ communication with
each other on an executive development programme
has been identified with the development
of a sense of belonging (‘communitas’) and cohesiveness
within the group, in other words the development
of a reservoir of social capital.
This peer-to-peer interaction on such programmes
is associated with the development of
social capital (Terrion, 2006), the personal reserves
which individuals derive from membership of a
group that allows access to others with considerable
stocks of relevant resources (Bourdieu, 1986),
and the capital that is the property of interpersonal
relationships (Burt, 1992; Coleman
1988). However, reflecting the predominant
emphasis in leadership research on traits, characteristics,
behaviours and styles, that is, human
capital, ‘the social capital of leaders is perhaps the
most ignored, under-researched aspect of leadership’
(Brass and Krackhardt, 1999, p. 180; McCallum
and O’Connell, 2009). This is especially true
in the study of entrepreneurial leadership in the
smaller firm, where the human and social capital
aspects of development are ‘far less well understood,
yet . . . it is these that are often critical in
creating the opportunities for organisational
success’ (Thorpe et al., 2009, p. 201).
What we conclude from this analysis of entrepreneurial
leadership development is that the
primary focus of these leaders at the outset was on
the enhancement of their skills, knowledge and
abilities – their human capital. This was largely
based around their understanding of the development
of their leadership role through their
response to challenges facing the business, challenges
facing them as individuals, management
challenges and the challenge of learning how

to lead (Kempster and Cope, 2010). In practice
this human capital enhancement only occurred
through the development of their social capital. In
this, a central role was played by the development
of peer-to-peer interaction and trust-building
within the group as well as peer-to-other interaction
based around the role of the programme
director. While we acknowledge that there is a
potential tension between human and social
capital theoretically and pragmatically (Field,
Schuller and Baron, 2000), they cannot in practice
be discussed separately. In the specific context
analysed in this paper, leadership development
inevitably shows in the enhancement of the skills
and abilities of the leader; leadership development,
in turn, requires and relies on a social
capital-based leadership development process.
Beyond this, however, the context for leadership
development in the entrepreneurial domain
requires the development of institutional capital –
formal structures and organizations – which
enhances the role of social capital. As such, the
development of institutional capital provides the
basis for creating, enhancing and encouraging
horizontal ties among the members, where they
view each other as peers and partners, look toward
each other, build awareness of each other and
consider each other as resources: ‘horizontal ties
among them become part of the strength and
resources of the organisation itself. Members learn
that together they can do things that they would be
unable to do alone’ (Anderson, 2010, p. 10).
In this paper, we have concentrated on analysing
entrepreneurial leadership development in
one specific context, that of businesses and their
leaders facing significant growth and development
challenges. This is, of course, not the only context
within which leadership can be identified and
analysed. Future research on the process of
leadership development could, therefore, take
four directions. First, the concept of institutional
capital and its relationship to theories of human
and social capital could be further explored
as a basis for developing a deeper understanding
of capital as a collective property. Second, this
focus on social and institutional capital outside
the organization could be complemented with
a similar analysis of the dynamic relationships
underlying leadership within each specific
company, which could take full account of the
firm-specific constraints and facilitators. Third,
our analysis of leadership development in an

entrepreneurial, rather than corporate, context
could be complemented by a more disaggregated
consideration of the role of the entrepreneurial
leader and of leadership development in different
types and stages of entrepreneurial businesses.
This would address Vecchio’s (2003, p. 322) call
for the integration of ‘the dynamic process aspects
of entrepreneurial activity (from pre-launch
through exit) . . . with individual and contextual
factors when attempting to explain entrepreneurial
activity and success’. Finally, while this
research has been based on the study of entrepreneurial
leadership development, there is scope to
investigate the dynamic interrelationship between
social capital and institutional capital in other
organizational contexts. Only in developing these
insights will it be possible to obtain a full understanding
of the everydayness of entrepreneurial
leadership development across all relevant

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Claire Leitch is a Senior Lecturer at Queen’s University Management School, Belfast. The focus of
her research is individual and organizational development, enhancement and growth within an
entrepreneurial context. Specifically, she is interested in the dynamics of leader and leadership
development in the process of organizational transformation. As such, she is also concerned about
the future of executive education and the role which universities might play in this.
Christel McMullan is currently a researcher in the Institute of Nursing Research, University of
Ulster. She previously was a Research Fellow at Queen’s University Management School, Belfast,
where she investigated issues of leadership development and entrepreneurial leadership, using qualitative
research methods. Her professional experience includes social and health sciences research,
qualitative research methods and computer-aided qualitative data analysis software.
Richard Harrison is Director of the Leadership Institute at Queen’s University Management School,
Belfast, where he was previously Dean. His recent research interests cover the investigation of
learning and leadership processes in entrepreneurial contexts, the formation and exploitation of
capital (financial, human, social, intellectual and institutional) in entrepreneurial ventures, and
sustainable enterprise in emerging economies.