The role of intellectual and social capital in funding businesses: A cross-country analysis

Purpose: The study aims to examine the impact of intellectual and social capital in funding businesses. Design/methodology/approach: The study made use of fixed-effects panel data models with a sample of 142 countries from the five continents during the period 1998–2018. Findings: It was found that human capital (HC), relational capital, structural capital and social capital play a role in investors’ decisions to fund a business. The study revealed that investors’ funding decisions in low human development index countries are based mainly on education, while those in high human development index countries are based mainly on the creativity component of HC and on relational, structural and social capital. Research limitations/implications: The study needs to be replicated using firm-level data within each country. Moreover, the search for new proxies for intellectual and social capital (although the list of variables is exhaustive) both at the country and firm level, constitutes an interesting avenue for future research. Practical implications: Countries should pay attention to intellectual and social capital to encourage business activity. In particular, low human development countries should strengthen HC, such as the school enrollment rate, with early entrepreneurial training and increase research and development investments, while high human development countries should continue to foster strategic alliances, protect intellectual property and maintain or increase the level of trust in the country. Originality/value: The study contributes to literature by being the first to explore such a variety of intellectual and social capital variables from a country-level perspective.