Social Capital and Entrepreneurial-Specific Knowledge as Key Drivers of Innovation

Abstract

Innovation in startups is frequently attributed to technological novelty or access to financial capital. However, contemporary entrepreneurship research increasingly recognizes innovation as a knowledge-based and socially embedded process. This article examines how entrepreneurial-specific knowledge and social capital jointly shape innovation outcomes in startups and explores the implications of these mechanisms for Brazilian public policy and university-based entrepreneurial ecosystems. Building on the knowledge-based view of the firm, social capital theory, and the knowledge recombination perspective, innovation is conceptualized as the outcome of interactions between tacit and explicit knowledge mediated by trust-based networks. Methodologically, the study adopts a qualitative, theory-driven multiple-case approach based on secondary data from twelve Brazilian startups. A structured coding protocol was used to classify entrepreneurial knowledge (tacit, explicit, or mixed) and forms of social capital (relational, institutional, and market-based), thereby enhancing analytical transparency and rigor. The findings show that startup innovation rarely emerges from isolated technological invention. Instead, it results from the recombination of entrepreneurial-specific knowledge accumulated through professional experience, academic training, and sectoral immersion, combined with social capital embedded in networks of customers, partners, universities, investors, and regulators. The study extends prior research by showing that innovation outcomes depend on the alignment between knowledge type and network structure. The article contributes to theory by refining the concept of entrepreneurial-specific knowledge as a dynamic capability and to practice by advocating a shift in innovation policy from finance-first to capability-and-network-first approaches.