Capital Is Not Enough: Innovation in Developing Economies

2012/01/10 by Steven W. Bradley, Jeffery S. McMullen, Kendall Artz +1 · 368 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Allocative efficiency #Business #Capital (architecture) #Creativity #Economic growth #Economic system #Economics #Entrepreneurship #Entrepreneurship Studies and Influences #Finance #Financial capital #Human capital #Industrial organization #Innovation and Socioeconomic Development #Microeconomics #Microfinance and Financial Inclusion #Novelty #Poverty #Productivity #Resource (disambiguation) #Social capital #Sociology

paper · doi:10.1111/j.1467-6486.2012.01043.x

published in Journal of Management Studies 49(4), 684-717 (Wiley)

openalex publication_date 2012/01/10 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/27

Abstract

abstract Economic development and social entrepreneurship often conceive of poverty as a resource allocation problem in which a lack of capital prevents the poor from increasing their income through entrepreneurship. This allocative view, however, represents only one possible approach to conceptualizing entrepreneurial opportunity. The alternative discovery‐ and creativity‐based views place a greater emphasis on innovation which implies that superior ideas are also needed if poverty is to be reduced through firm performance. Drawing from a survey of 201 small business owners involved in a microcredit programme in Nairobi, Kenya, we find that the financial, social, human capital–performance relationships are mediated in part by innovation. Further, we find that differentiation‐related innovations lead to better firm performance than novelty‐related innovations.

Citations

• IS SLACK GOOD OR BAD FOR INNOVATION?
• Creating Something from Nothing: Resource Construction through Entrepreneurial Bricolage
• Endogenous Technological Change
• Economic Action and Social Structure: The Problem of Embeddedness
• Markets as Politics: A Political-Cultural Approach to Market Institutions

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