The mediating role of entrepreneurial leadership: an investigation of the competitiveness of SMEs in the UK South-West food and drink manufacturing

Abstract

ABSTRACT It has long been argued that Social Capital, a concept represented by the value embedded in the social relationships of individuals or collectives constitute strategic resources for individuals and organisations. Social networks are thus perceived by businesses, particularly small and medium enterprises, as a means to access those resources, for example gaining privileged access to strategic information that could secure financial resources. In reality, and because of the inherent characteristics of Social Capital, entrepreneurs or business owner/managers who effectively use resources available within social networks are driven by a clear and compelling vision and sustained by a set of leadership attributes which are in line with the process of recognising, evaluating and exploiting opportunities. This study reinforces the concept of Entrepreneurship as a multi-social construct. Using survey data from 359 SMEs in UK South West food and drink manufacturing, this study uses a structural equation model to evaluate the relationships of interdependence between Social Capital, Leadership and Entrepreneurship Process. The mediating role of leadership in this interaction first, explains the relationship between Social Capital and Entrepreneurship Process and second, exposes the entrepreneurial behaviour common among SW food and drink manufacturers as the underlying explanatory factor of the competitiveness. Notwithstanding the prevalence of social networks, the level of brokerage appears to be very concentrated on closed networks with providers of professional services and local associations. This inadequate level of brokerage heightens the existence of structural holes which points to a situation of ‘over-socialisation’ suggesting that social norms prescribe economic action. The lack of appropriate market knowledge among ii owners/managers of small medium enterprises in the UK South West food and drink manufacturing frustrates the formulation of a comprehensive vision, in spite of the fact that values of ‘hard work’, ‘continued improvement’ and ‘ambition are largely shared among them. The main findings contribute toward a better understanding of Social Capital as distinct from social networks and the leadership role in business competitiveness. It makes a significant contribution to the debate on the integration of individual and environmental perspectives as a direction of future research on the understanding of Entrepreneurship. The study implications address policy-makers and business managers in filling the skills and knowledge gaps which are restraining the competitiveness of SMEs in this important and strategic sector