How is high-tech entrepreneurship able to grow in Sofia, Bulgaria?
A social capital perspective
Written by Neli Georgieva
Master Thesis: Sofia's high-tech start-ups: somewhere between two realities. Empirical analysis. Sofia's high-tech entrepreneurship was found to operate between two realities. On the one hand, it bears the inherent consequences of its background, post-socialism, and economic constraints. On the other hand, it is closer to the norms of Western counterparts through internationalization. The former means that entrepreneurial methods are characterized by certain unique models of transition economies. The latter means that compared with Bulgaria’s general entrepreneurial knowledge, Sofia’s high-tech entrepreneurship seems to show distinctive features. The following sections will discuss in detail, starting with a description of the study population of this study. 5.1. Research population characteristics. Sofia's high-tech startups seem to be founded by people of different ages-from college students to middle-aged people, the former accounting for one-third of the total population here. All the founders interviewed have obtained education degrees in Sofia, and some of them have studied abroad (D, E, G, H and I companies). In most cases, entrepreneurs have already acquired a wealth of work experience (Table 4), half of which is combined with the experience of starting a previous start-up. The founders of C, D and F have held management positions in their previous work experience. The start-up company was established in 2011-2015. All start-ups are founded by a group of entrepreneurs—between 2 and 6 people (Figure 3) and recruit more people. However, for some companies (G Company and I Company), these also include part-time positions. It seems that in some cases, the business of start-ups is highly related to business innovation (online markets), while in other cases this is combined with more substantial technological innovation (based on cloud and application services). Annex 2 provides a detailed description of the activities of start-ups. Companies B, I, and J still operate entirely in the Bulgarian market, while the remaining companies have expanded their markets abroad, mainly in the United States, the United Kingdom, and the Middle East. Empirical research shows that in the growth process of the sample startups, it is found that weak ties and sparse networks play a more important role in the sample startups. This phenomenon becomes obvious in the comparative perspective of a sample of startups, and it is highly related to the internationalization process of emerging companies. Early internationalization is a common mode of enterprises in transition economies (Manolova et al., 2014). Internationalization is also the reason why Sofia research entrepreneurs in the high-tech field are attracted. 6.1 High-tech Entrepreneurship in Sofia: Between the Bulgarian Background and the Western Market From the perspective of social capital, this research has been able to provide substantive observations on the role of social capital in the emergence and growth of entrepreneurship in Sofia’s high-tech sector. Initially, the lack of strong relationships that can promote business growth posed the threat that start-ups have limited opportunities to rely on social capital to improve performance. This also makes the consumption of resources by social capital very high, because it requires new accumulation in the new and small-scale stage of the enterprise. In addition to the findings related to the company's growth process, the social capital perspective adopted in this study also observed some significant differences between Bulgarian entrepreneurial knowledge, as described in the first chapter of this study, as well as those located in Sofia. High-tech start-ups. In the conclusion of this study, this section aims to emphasize the extent to which social capital has played a role in the emergence of these different characteristics. Opportunity identification is a complex process. It is a combination of entrepreneurial alertness, information asymmetry and prior knowledge, social networks, personality characteristics, and the type of opportunity itself (Bhagavatula et al., 2010). It was found that the level of opportunity recognition in Bulgaria is very low (GEDI, 2016). This study finds that the social capital of entrepreneurs promotes this process in two ways. For a company, it creates information asymmetry by providing privileged information. For the rest of the entrepreneur, social capital plays a role through social connections. These are the strong relationships in which they turn to discuss potential profit opportunities or the entrepreneurial club they join to find a limited number of partners who share their entrepreneurial direction. In this regard, establishing contacts with like-minded people facilitates the initial elaboration of recognized social/commercial issues. In only one case, the interviewee mentioned entrepreneurs in the family, and social capital research usually regards this as an important explanatory factor for entrepreneurial careers. This observation is context-specific and confirms the influence of local conditions (socialist past) on social capital. Bulgaria's fear of failure is also very low, being the lowest among the indicators used by GEDI (2016) mentioned in Chapter 1. This case study shows that initially, the entrepreneur’s risk acceptance was driven by the nature of his business rather than social capital. Read Less