Innovativeness and start-up performance: a configurational analysis of relational factors

Start-ups frequently face challenging, uncertain and resource-limited environments impeding access to tangible and intangible resources necessary for innovation and that can help lead to success (Aldrich and Martinez, 2001). Commonly mentioned constraints include inadequate and underdeveloped networks as well as an entrepreneur’s difficulty in persuading others to contribute their resources due to liability of newness (Stinchcombe, 1965). These contextual, capability and relationship-based challenges mean that resource disparities can cause variation in innovation capacity subsequently impacting start-up performance.

Lack of clarity and depth in empirical investigations into the relationship between a start-up’s innovativeness and financial outcomes (Aspara et al., 2010), along with various competence-based relational contingencies potentially influencing this connection, motivates us to explore possible combinations of conditional pathways leading to financial performance. Consequently, the main objective of this study is to investigate the interplay between social capital, social competence, resource mobilization and entrepreneurial ecosystem support determining how they can lead to high financial performance in higher and lower innovating start-ups. We reformulate Rosenbusch et al.’s (2011) initial inquiry as to whether innovation is always the best strategy for start-ups into two key research questions:

1. Is being highly innovative the sole pathway to financial performance for start-ups?

2. Do higher and lower innovating start-ups follow similar paths to financial performance depending on relational contingencies?

We focus on critical relational contingencies, as entrepreneurship involves collaborative action, often depicted as a multi-stakeholder endeavor reliant on resource access for success (Healy et al., 2024). Prior research presents inconsistent and incomplete findings regarding the impact of relational factors such as levels of social capital and social competence on financial performance (Czernek-Marszałek et al., 2023). Other studies suggest that mere access to support is insufficient; instead, start-ups and entrepreneurs require the ability to obtain and effectively utilize resources (Lyu et al., 2022). Thus, emphasis is placed not only on relational connections, but also on possessing the social competence to access, acquire and deploy necessary resources.

We aim to address this gap through employing fuzzy-set qualitative comparative analysis (fsQCA) on a dataset comprising 128 accelerator-based start-ups in Spain, using the resource-based view as our underlying theoretical basis. We identify unique sets of causal configurations that emerge across cases. Unlike regression-based approaches, which assume symmetric relationships, fsQCA accommodates asymmetric relationships, allowing for complex combinations of independent variables that can lead to similar outcomes. This method enables the refinement of existing theories by examining inter-relational aspects resulting in combinations of variables representing distinct causal conditions (Kumar et al., 2022).

From a theoretical standpoint, we contribute to knowledge on innovation levels, social relations and financial performance in startups (e.g. Baron and Markman, 2003; Kellermanns et al., 2016; Lanivich et al., 2023; Rosenbusch et al., 2011). We embrace a contingent value perspective (Stam and Elfring, 2008) by integrating the concept of equifinality (Katz and Kahn, 1978), suggesting that various initial conditions can lead to the same end-state of high financial performance. We argue that the presence of social capital, social competence, resource mobilization capacity and entrepreneurial ecosystem support may not universally drive high financial performance across all start-ups. Instead, start-ups exhibit unique configurations with differences in the intensity and combination of these factors. Our research indicates that higher innovating start-ups generally benefit from social competence and some form of networked support, but the importance of this relational support varies. Conversely, the ability to mobilize resources—defined as adjusting objectives based on available resources, finding necessary resources and organizing existing resources to achieve start-up goals—is of lesser significance. This latter set of resource mobilization skills holds more value for highly profitable yet lower innovating start-ups.

Findings offer valuable insights for entrepreneurs establishing and leading start-ups, as well as for entrepreneurial intermediaries aiming to support start-up growth and sustainability. For instance, entrepreneurs leading higher innovating start-ups are advised to build relational competence, such as persuasion skills. In contrast, entrepreneurs leading lower innovating start-ups may benefit from prioritizing the development of resource mobilization capabilities. For entrepreneurial intermediaries such as accelerators and incubators, our findings suggest the importance of tailoring support based on a start-up’s innovation level.

Blank (2013) defines a start-up as “a temporary organization designed to search for a repeatable and scalable business model” (p. 67). Traditional start-up research typically assumes that all start-ups behave in similar ways, yet extant thinking recognizes motivational, operational, performance and resource-based differentials (Caliendo et al., 2023a, b; Salmony and Kanbach, 2022). For example, some start-ups focus on purely economic gains whilst others on a social purpose (Douglas et al., 2021). Some will benefit from developed networks and easier access to resources (Hite and Hesterly, 2001), yet others can be constrained by their liability of newness (Stinchcombe, 1965).

In line with start-ups being accepted as a heterogenous group, investigations into the factors leading a start-up to success have been diverse exploring various individuals (Caliendo et al., 2023a, b; Roche et al., 2020), team (Hashai and Zahra, 2022), organizational (Lee, 2022), location (Minola et al., 2021) and relational (Cacciolatti et al., 2020) factors, with innovation receiving significant attention (Rosenbusch et al., 2011). Therefore, it is believed that for start-ups to survive and thrive they must first and foremost innovate (Cefis and Marsili, 2006).

Start-up innovativeness, i.e. their “tendency to engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services, or technological processes” (Lumpkin and Dess, 1996, p. 142) is widely regarded as a primary driver of performance, supported by empirical evidence (Aspara et al., 2010; Bach et al., 2019). For instance, innovation can impact firm survival, cost efficiencies, market position, competitive advantage, absorption capacity and venture capital attraction (Cefis and Marsili, 2019). However, withstanding a now generalized acceptance of the benefits of innovation, being innovative can introduce complexity, paradoxically harming performance outcomes. Accordingly, studies have shown mixed results regarding the direct relationship between innovation and financial performance (Foss and Saebi, 2017; Pittaway et al., 2004; Walker, 2004).

Although start-ups are often characterized as inherently innovative (Ilyas et al., 2023; Kraus et al., 2018), the question arises: Are all start-ups truly innovative? Shane (2009) argued that the typical start-up is not, while Bhide (2000) stated that successful start-ups often have “ordinariness of their concepts” and that “most successful businesses … do not start with innovative concepts” (p. 31f.). This introduces degrees of innovativeness into the equation causing us to question what drives financial performance across these degrees.

Social resource theory (Lin, 1999) posits that the nature of resources within an entrepreneur’s network will impact performance. We believe that access to external entrepreneurial support intermediaries and the capacity to effectively interact and convince intermediaries to part with their resources to be a key determinant of performing well financially (Czernek-Marszałek et al., 2023). Entrepreneurship, as a resource-constrained social endeavor, involves interaction to achieve goals (Baron and Markman, 2003; Fang et al., 2015) and must recognize individual abilities in resource pursuit (Kellermanns et al., 2016). Literature on social networks and entrepreneurship acknowledges the positive influence of networks on entrepreneurship due to the access they provide to essential resources (Jenssen and Koenig, 2002). As we elaborate below, prior research has identified several potential relational conditions that can drive financial performance, however, this value may be contingent on a startup’s innovative position which has been previously unaccounted for (Stam and Elfring, 2008).

Developing effective interactions between entrepreneurs and resource providers is crucial for entrepreneurial success (Baron and Markman, 2000). The ability to cultivate one’s social network directly impacts the new venture creation process (e.g. De Carolis et al., 2009; Lee and Tsang, 2001). Through network interactions, resources flow, enabling entrepreneurs to address any functional or relational deficits that could impede start-up performance (Lazear, 2004). Existing personal networks expose entrepreneurs to diverse ideas and trends crucial for innovation (Arenius and Clercq, 2005), help in the discovery and commercialization of products (Marion et al., 2015) and foster credibility and trust with stakeholders (Obstfeld, 2005).

Conversely, without established relationships, start-ups may struggle to gain the necessary trust to garner support for their ventures, thus limiting future profit potential. Limited personal networks can hinder access to funding, talent recruitment and partnerships essential for developing and implementing innovative ideas (Dubini and Aldrich, 1991; Elfring and Hulsink, 2003). Entrepreneurs may miss out on critical market insights, emerging technologies or novel business models that inspire innovative products or services and that can drive financial gains.

The collective resources accessible to an entrepreneur through their relationships are often termed their social capital (Adler and Kwon, 2002; Nahapiet and Ghoshal, 1998), encompassing structural, relational and resource-based dimensions (Hoang and Antoncic, 2003). The structural dimension emphasizes benefits derived from the entrepreneur’s position in the network, including structural holes and network size (Greve and Salaff, 2003). Larger networks provide more social ties, enhancing resource access (Dubini and Aldrich, 1991), while structural holes create opportunities for brokerage and resource combinations for innovative solutions (Ozdemir et al., 2016). Centrality within networks increases the potential for acquiring and exchanging novel resources for innovation (Tsai and Ghoshal, 1998). The relational dimension considers the quality of network ties, bonding, reciprocity and trust (Davidsson and Honig, 2003). Strong, trusting relationships facilitate the acquisition of tacit knowledge (Vissa, 2012), whereas weaker ties enable diverse resource acquisition (Newbert and Tornikoski, 2013). Finally, the resource element pertains to tangible (e.g. technology) and intangible (e.g. reputation) resources possessed by network actors, with the latter being crucial in entrepreneurship (Lichtenstein and Brush, 2001).

Social capital has encouraged a proliferation of studies attempting to determine its link with start-up performance and empirical investigation shows social capital to have a positive effect on new venture creation and survival (Birley, 1985; Dubini and Aldrich, 1991) as well as an overall significantly positive relationship with firm performance both when the three dimensions of social capital are considered in aggregated and disaggregated forms (Stam et al., 2014)

Stam et al. (2014), after meta-analyzing social capital’s impact on small firm performance, suggest combining relational and structural approaches with understanding resource access mechanisms. Social competence helps in strategically accessing start-up development resources (Santos et al., 2013). It refers to “entrepreneurs’ overall effectiveness in interacting with others” (Baron and Markman, 2003, p. 43), complementing entrepreneurs’ resource pools from relationships (Nahapiet and Ghoshal, 1998).

In diverse start-up teams and competitive industries, efficient collaboration is crucial for launching, growing and sustaining ventures (Dinnar and Susskind, 2018). Interpersonal abilities enable entrepreneurs to navigate stakeholders and mitigate conflicts arising from divergent interests and power dynamics (Prashantham and Madhok, 2023). Given the likelihood of conflicts and an entrepreneur’s attachment to their projects (McMullen and Kier, 2016), social competence becomes especially relevant in highly innovative firms requiring tactful maneuvering.

Limited research investigates how social competence affects a start-up’s financial performance, although it is argued to have a positive impact as effective communication is associated with successful entrepreneurs (Baron and Markman, 2003; Duchesneau and Gartner, 1990) and persuasion is critical in the new venture creation process (Gartner et al., 1992) helping with information search and resource acquisition (Baron and Tang, 2008). Research has found that entrepreneurs with social competence perceive themselves as more persuasive (Hoehn-Weiss et al., 2004), highlighting its complementary role with social capital in fostering entrepreneurial success while serving a distinct function.

Drawing on past research in related areas, differences in negotiation behaviors between entrepreneurs and non-entrepreneurs have been observed with persuasion considered a negotiating process (Conger, 1998) impacting performance outcomes (Artinger et al., 2015). Another related area of research focuses on entrepreneurs pitching their ideas and visions to prospective supporters, essentially engaging in persuasion (Chen et al., 2009). For resource-constrained early-stage start-ups, pitching serves to communicate ideas and solicit financial support (Clarke et al., 2019).

Skepticism from potential resource providers is particularly pronounced when novel, unproven innovations disrupt established cognitive and behavioral frames within their target audience (Rogers, 2003). Associated risks, including those that are technology, implementation, market and performance-related, create a challenging environment characterized by uncertainty and information asymmetries (Das and Teng, 1998; Fiet, 1995). Entrepreneurs must build trust and persuade others to buy into their novel ideas (Dinnar and Susskind, 2018; Maxwell and Lévesque, 2014). Additionally, external resource holders may exert more influence over the start-up due to its liability of newness and smallness which present unfavorable negotiating conditions for the entrepreneur (Rosenbusch et al., 2011). Under these conditions, socially competent entrepreneurs can negotiate more favorable terms from stakeholders with experienced entrepreneurs demonstrating better negotiation skills and the ability to raise equity funding at higher valuations (Hsu, 2007).

Entrepreneurs utilize bricolage to secure vital resources and expand their ventures (Baker and Nelson, 2005). Resource mobilization reflects an entrepreneur’s motivation and capacity to extract value from existing resources, independent of environmental constraints (Sirmon et al., 2007). By integrating entrepreneurship-specific human capital and cognitive ability, resource identification and exploitation are supported (Alvarez and Barney, 2017). This capability can significantly increase a firm’s financial performance through repurposing available resources (Batjargal, 2003).

Start-ups with existing strategic resources, like a unique culture or a strong brand, have advantages in achieving sustained competitive performance (Peteraf, 1993). Scarce strategic resources, however, necessitate creative methods, exemplified by Sarasvathy’s (2001) concept of effectuation, which emphasizes working within one’s means and flexibility. Entrepreneurs who can successfully pivot goals based on current resources can positively influence innovation and growth and thereby financial performance (Alvarez and Busenitz, 2001).

Effective resource management is therefore crucial for a start-up’s financial success, giving preference to utilization over mere possession. It involves strategically deploying assets, personnel and finances for maximum impact. That-being-said, an over-reliance on bricolage can impede resource acquisition, hinder growth and reduce financial performance (Stinchfield et al., 2013). Entrepreneurs with greater resource mobilization capacity may focus on profiting internally from available resources, with bricolage associated with low-end and new market disruption (Kickul et al., 2018).

In the absence of strong social capital, a supportive entrepreneurial ecosystem becomes crucial for start-up performance (Iyortsuun, 2017). It offers alternative resource sources, such as funding through grants or early-stage investors, talent through university partnerships and strategic advice through mentorship programs (Sohail et al., 2023). Entrepreneurial ecosystems facilitate connections, organize events, workshops and meetups, helping entrepreneurs build networks (Donaldson et al., 2023). While it may not immediately replace personal social capital, it serves as a vital starting point for entrepreneurs lacking networks with needed resources. Additionally, entrepreneurial ecosystems can enhance legitimacy through affiliation with renowned incubators or accelerators signaling credibility to stakeholders and helping overcome trust deficits (Baker, 1990; Sohail et al., 2023). Entrepreneurial ecosystems foster shared entrepreneurial visions and can increase resource exchange opportunities (Tsai and Ghoshal, 1998).

Lower innovation performers with underdeveloped networks may turn to the entrepreneurial ecosystem due to limited resource sophistication and the comprehensive support it offers. They may prioritize economies of scope and access to well-understood resources through ecosystem collaboration (Grossman et al., 2012). Conversely, higher innovators may rely more on their own networks due to the specificity and depth of their resource requirements. For example, accessing technologically complex and tacitly held resources that necessitate trusting relationships for appropriation and exchange (Batjargal, 2003).

Stam et al. (2014) stress the ambiguity surrounding entrepreneurial social capital and start-up performance, advocating for a contextualized view of distinct forms of social capital and their relationship with start-up outcomes. Here, we address this need by interpreting social capital as linked to personal relations, while entrepreneurial ecosystem support is seen as a unique form of social provision (Gulati et al., 2011). Social capital, derived from personal networks, is entrepreneur-specific and direct, focusing on the quality of relationships and access to critical resources essential for start-up performance (Maurer and Ebers, 2006).In contrast, entrepreneurial ecosystem support is broader and less exclusive, offering benefits irrespective of an entrepreneur’s existing connections, thus reducing search costs (McEvily and Zaheer, 1999). Entrepreneurs can enhance their social capital within the ecosystem over time by becoming more connected.

Second, entrepreneurs have greater agency over their social capital, actively shaping and expanding it, whereas entrepreneurial ecosystems to a lesser extent are influenced by isolated individual actions (Chwe, 2001). Ecosystem support arises from the accumulation of individual agency resulting in collective action, benefiting entrepreneurs with lower social capital through access to established supports. Moreover, while many forms of ecosystem support are formalized networks, such as training sessions and acceleration programs, social capital embedded within sub-groups is more informal, fostering trust and facilitating the exchange of tacit knowledge (Obstfeld, 2005; Birley, 1985).

While social capital and entrepreneurial ecosystem support are closely intertwined, analyzing them as distinct concepts can help unravel definitional complexities and operational overlaps in social relations literature (Czernek-Marszałek et al., 2023). This approach enables a better understanding of how these constructs interact and where they may complement or substitute each other, informing more nuanced strategies.

Our review of the relevant literature highlights a potential discrepancy between innovation and financial performance in start-ups. This relationship is unlikely to be straightforward with the ability to resolve resource disparities through social capital, social competence, resource mobilization capacity and entrepreneurial ecosystem support expected to play a key role. While prior research has explored these factors individually, for instance highlighting the positive role of social skills on social network use (Fang et al., 2015) or confirming that entrepreneurs engage in creative resource orchestration to overcome resource constraints (Lanivich et al., 2023), there is a lack of understanding regarding how these relational factors, which are even more pertinent in entrepreneurial contexts (Kellermanns et al., 2016), interact in influencing financial performance. Thus, a need for a configurational approach to uncover unique sets of causal conditions is stressed.

Causal asymmetries and equifinality are crucial concepts in innovation research (Ganter and Hecker, 2014), yet configurational analyses remain underutilized in studying start-up innovation and performance. This study aims to identify sets of causal conditions leading to high financial performance in both higher and lower innovating start-ups using fsQCA. We aim to specify necessary (conditions needed for the outcome) and sufficient (conditions capable of producing the outcome alone) conditions for financial performance (Ragin, 1987). While we initially proposed that social capital, social competence, resource mobilization and entrepreneurial ecosystem support are relevant for achieving financial performance, it remains unclear which conditions are necessary and sufficient.

This study examines a sample of 128 start-ups participating in a top Spanish accelerator. The accelerator is privately governed and forms part of a larger entrepreneurial ecosystem that includes a non-profit entrepreneurial university and an entrepreneurial financing company. The accelerator constitutes a wide-spanning portfolio of start-up types irrespective of industry, mode (online/offline), stage, size or technology. Since its formation in 2013, 1,300 start-ups have been accelerated with over €21.9 million invested in supporting new ventures. We selected this accelerator as it was recently ranked 19th out of 125 in the Financial Times list of Europe’s Leading Start-up hubs, highlighting its strong reputation and ability to support high-performing start-ups. Furthermore, the accelerator’s diverse range of start-ups from various industries aligns with our research objective of examining determinants of financial performance in higher and lower innovating firms. Selecting an accelerator that is highly regarded, sector-agnostic and embedded within a supportive entrepreneurial ecosystem, makes it an ideal setting to investigate the interaction of relational variables and financial performance.

Data were collected cumulatively at three time-points over a three-year period (one collection point per year). The sampling frame consisted of all founders currently participating in the accelerator who had not completed the questionnaire in previous years. Therefore, to be eligible for inclusion in the study, participants had to be the founder or co-founder of a start-up, be actively participating in the accelerator program at the time of data collection and have not previously participated in the study.

Eligible participants were invited via email to complete an online survey, emphasizing the importance of the research and assuring confidentiality. Participation was voluntary resulting in 128 completed questionnaires over the three years (16% response rate of the 800 accelerator participants contacted during this time). Among these, 60 respondents were from higher innovating start-ups and 68 from lower innovating start-ups. The sample comprised 103 male and 25 female entrepreneurs with an average age of 36 ± 8 years and an average start-up size of 6 ± 8 individuals.

Following previous studies with similar approaches (e.g. Kallmuenzer et al., 2019; Kraus et al., 2016), we initially identified higher and lower innovating start-ups based on the average of their innovation outcomes. Participants rated their start-up’s innovation outcomes relative to competitors on a five-point Likert scale where innovation encompasses “the tendency to engage in and support new ideas, novelty, experimentation, and creative processes that may result in new products, services, or technological processes” (Lumpkin and Dess, 1996, p. 142). Start-ups scoring above the average are classified as higher innovating, while those below are deemed lower innovating.

We utilized a subjective self-reported measure of financial performance akin to archival measures in its effect sizes (Stam et al., 2014). Participants were asked to assess their start-up’s financial performance relative to competitors on a five-point Likert scale ranging from “a lot worse” to “a lot better” (Tan and Peng, 2003). Subjective measures of financial performance are common in entrepreneurship research as it is often difficult to access accurate and comprehensive objective financial data (Dess and Robinson, 1984). Many start-ups are privately held and are not required to publicly disclose their financial information. Additionally, start-ups often have limited resources and may not have sophisticated financial reporting systems in place making it challenging to obtain reliable and consistent financial data across the sample. For this reason, subjective measures are useful for our research purposes.

Our social capital measure, adapted from Stam et al. (2014), includes structural and relational components. Participants rated their agreement with statements about their social network, covering relationships like family, friends and customers. Structural aspects were assessed with four items, while network relations were evaluated with seven items. Social competence was gauged using three-items based on Baron and Markman (2003) and Santos et al. (2013) focusing on persuasion, convincing and influencing abilities. Resource mobilization was measured with three items from Santos et al. (2013) assessing adaptability to project objectives based on available resources. Entrepreneurial ecosystem support was evaluated by seven-items inspired by Franke and Lüthje (2004) and Reynolds et al. (2005) capturing perceived assistance from the entrepreneurial ecosystem in overcoming obstacles. All measures used five-point Likert scales.

The concept of set relationships has gained significant attention in the social sciences, extending into innovation research (Ganter and Hecker, 2014; Iannacci and Kraus, 2023). fsQCA serves as a robust tool for analyzing social science theories, facilitating asymmetric thinking in data analysis (Kraus et al., 2018). The selection of fsQCA in this study is informed by several key advantages that align closely with our research objectives. First, Kumar et al. (2022) suggest symmetrical approaches may be inadequate in accurately predicting real-world phenomena. In contrast, fsQCA offers a more robust and objective method for deriving predictive conclusions through a statistically informed configurational approach. Unlike traditional statistical methods that often focus on variable-by-variable analysis, fsQCA is designed to identify configurations of conditions that collectively lead to an outcome. Second, fsQCA is particularly effective in identifying sufficient conditions that lead to a specific outcome. This capability is especially valuable in our study as it enables the identification of various combinations of conditions that contribute to high performance, thereby reflecting the multifaceted nature of entrepreneurial success. Third, fsQCA offers a more holistic understanding of the relationships between variables by considering the interactions among various conditions rather than treating each condition independently or focusing solely on net effects. Fourth, fsQCA’s set-theoretic approach provides a nuanced perspective that traditional regression models or factor analyses might fail to capture, especially in contexts where conditions are interdependent and their interactions are crucial to understanding the outcomes (Di Paola et al., 2024).

Following Ragin’s (1987) guidelines, this study employs fsQCA 4.1 to examine whether antecedent variables—namely, social capital, social competence, resource mobilization and entrepreneurial ecosystem support—can lead to high financial performance in both higher innovating and lower innovating start-ups. In the initial stage, data calibration involved converting Likert scale ratings into fuzzy scores. This process assigned full membership (95%), cross-over anchors (50%) and full non-membership (5%). Specifically, Likert scale values of 5.0, 3.0 and 1.0 correspond to these membership levels, respectively. Following calibration, a truth table was constructed. Using a consistent cut-off value of 0.8 and a case threshold of 1, the truth table was generated in accordance with fsQCA guidelines. Intermediate solutions derived from standard analysis were employed to confirm the sufficient conditions that lead to high financial performance.

The results of the fsQCA analysis indicate that values of Kaiser–Meyer–Olkin are higher than 0.7 (i.e. greater than 0.6), for convergent validity higher than 67.6% (i.e. greater than 60%) and for reliability analysis over 0.75 (i.e. greater than 0.6) (see Table 1). According to Hair et al. (2019), these results indicate that reliability and effectiveness for the measurement constructs of social capital, social competence, resource mobilization and entrepreneurial ecosystem support are acceptable.

The analysis of factor configurations leading to high performance identified three sufficient conditions for higher innovating startups (i.e. A1, A2 and A3) and three for lower innovating start-ups (i.e. B1, B2 and B3) (see Table 2). Solution coverage for both groups exceeds 0.4 and the solution consistency is above 0.8. According to Ragin (1987), these sufficient conditions have good explanatory power and consistency.

Figure 1 illustrates the potential for achieving high financial performance based on specific conditions for higher innovating start-ups. Path A1 shows social capital and social competence as present but entrepreneurial ecosystem support is absent. Path A2 is characterized by the presence of high values of social competence and entrepreneurial ecosystem support however, social capital is at a lower level or absent. Path A3 demonstrates the presence of high values of social capital, social competence and resource mobilization.

Figure 2 illustrates the potential for achieving high financial performance based on specific conditions for lower innovating start-ups. Path B1 consists of high levels of resource mobilization and the absence of social capital, social competence and entrepreneurial ecosystem support. Path B2 shows high levels of social capital, resource mobilization and entrepreneurial ecosystem support but absence of social competence. Path B3 includes the presence of social competence, resource mobilization and entrepreneurial ecosystem support but the absence of social capital.

Path A1, labeled “Relational Builders”, shows that high social capital and social competence can compensate for low entrepreneurial ecosystem support. These individuals can leverage extensive social and professional networks, utilizing their strong relational capital to access various resources (Liao and Welsch, 2005). Their close ties help provide avenues for downstream complementarities such as distribution channels that can enhance their ability to profit from their innovations (Criscuolo et al., 2012). Despite the rich resources embedded in their networks, high levels of persuasiveness allow them to effectively appropriate these resources (Fang et al., 2015). By closely collaborating with networks and customers they can convince stakeholders of the value of their offering (Baron and Markman, 2003). However, they may risk becoming insulated from new information due to inflexibility arising from excessive embeddedness (Stam and Elfring, 2008).

Path A2, labeled “Relational Borrowers”, suggests that higher innovative start-ups can achieve financial performance with social competence and entrepreneurial ecosystem support even if social capital is comparatively lower (Berman et al., 2022). Unlike Relational Builders, Relational Borrowers rely less on close networks and instead seek support from distant ties in the wider entrepreneurial ecosystem that can facilitate financial performance through market transactions (Elfring and Hulsink, 2007). Engaging with the broader ecosystem enables them to access a wider range of resource providers including legal professionals that are crucial for establishing legal protection around innovations (Criscuolo et al., 2012). Relational Borrowers may themselves be experienced, benefiting from tacit knowledge and industry expertise and therefore less reliant on closer connections.

Path A3, labeled “Social Mobilizers” suggests that elevated social capital, social competence and resource mobilization suffice for financial success. Unlike Relational Borrowers, Social Mobilizers appear to rely on personal relationship-specific resources, pooling and combining them with those held by the start-up in novel ways (Stam et al., 2014). This approach enables a targeted and nuanced application of knowledge and resources drawing from their social relations. For instance, a start-up might leverage close relationships with technology providers to gain early access to emerging technologies (Wellalage et al., 2021), integrating them into product development ahead of market trends. Trusted advisors within the network may offer critical market insights, allowing the start-up to respond to shifts in consumer preferences in more agile ways. Unlike broader ecosystem support – characterized by generic resources and guidance – deep, personal connections enable start-ups to secure highly specific, often tacit, knowledge and resources (Hughes et al., 2019). This focused approach to innovation allows resources to be strategically aligned and synthesized to create novel solutions that can help drive profits.

Path B1, labeled “Sole Mobilizers”, shows that lower innovative start-ups can perform well financially when resource mobilization is high despite having lower levels or absence of social capital, social competence and entrepreneurial ecosystem support. Sole Mobilizers appear to maximize minimal resources related to the concept of “asset parsimony” (Ansoff, 1979) which focuses on efficient usage of existing assets like personnel, technology or intellectual property (Jenssen and Koenig, 2002). Asset parsimony enables lean operations, minimizes waste and ensures sustainability for start-ups operating with limited innovation capacity (Ansoff, 1979). For example, a food delivery start-up might optimize delivery routes using existing GPS tracking technologies that can improve performance by enhancing customer satisfaction and reducing operational costs. Although profitable in the short-term, Sole Mobilizers may face strategic inertia due to insularity and limited information flows conducive to high innovation (Huggins, 2000).

Path B2, labeled “Pragmatic Chasers”, emphasizes the importance of social capital, resource mobilization and entrepreneurial ecosystem support for financial performance in lower innovating start-ups. Pragmatic Chasers appear to rely on a blend of personal networks and the broader entrepreneurial ecosystem to access necessary resources (Nai et al., 2022). Initially, they can tap into close networks; if resources are unavailable, they can then extend their search to weaker ties. Pragmatic Chasers’ ability to mobilize resources can compensate for lower social competence, through leveraging social capital and ecosystem support that can help drive profits (Reichert et al., 2016). Social capital helps bridge valuable networks and therefore facilitates introductions to suppliers, customers and investors, while ecosystem support fills critical resource deficits (Nai et al., 2022). This expanded network offers collaboration opportunities, market access and operational efficiency, enabling quick adaptation to market demands (Reichert et al., 2016). For instance, a delivery start-up might creatively use widely available technologies, such as last-mile software, to offer more innovative services within their startups that may under normal circumstances not be considered innovative.

Path B3, labeled “Ecosystem Mobilizers”, posits that lower innovating start-ups can achieve financial performance through social competence, resource mobilization and entrepreneurial ecosystem support, even when social capital is absent. These firms appear to derive capabilities and potential from their wider entrepreneurial network that can help stabilize the business rather than stimulating disruptive innovation (Fernandes and Ferreira, 2022). Their connections are directed toward specific support activities and expertise within the ecosystem allowing them to cater for start-up deficiencies (Hite and Hesterly, 2001). This strategic orientation is likely to prioritize stability and sustainable development over radical innovation. For example, a start-up lacking advanced technological capabilities might partner with a local university or research institute for access to knowledge that can help improve product offerings without significant internal innovation (West and Bogers, 2014). In this way, Ecosystem Mobilizers can navigate wider ecosystems to identify and utilize resources and support services addressing their unique challenges and operational gaps.

Using a resource-based view and employing fsQCA, this study investigated the influence of four relational factors (social capital, social competence, resource mobilization and entrepreneurial ecosystem support) on the financial performance of 128 accelerator-based start-ups depending on their degrees of innovation.

We found that for higher innovating start-ups financial success is often driven by a combination of social competence and some form of networked support. In some cases, start-ups rely on close relational networks to acquire resources whilst under other circumstances achieve success by leveraging broader entrepreneurial ecosystem connections. For lower innovating start-ups, resource mobilization plays a more prominent role in achieving financial success. These startups appear to compensate for weaker relational networks by focusing on efficiently utilizing existing resources. Some benefit from a mix of personal and broader ecosystem networks while others rely on the support of entrepreneurial ecosystems to address operational challenges without heavily investing in innovation.

Overall, our findings highlight that no single relational factor is universally critical; instead, the most effective configuration varies depending on the start-up’s degree of innovation, offering theoretical and practical insights for scholars, entrepreneurs and support intermediaries.

Our findings help clarify financial performance modes from a relational resource-based lens, shedding light on the strategies entrepreneurs do, and can, use to achieve success (Kellermanns et al., 2016; Nason and Wiklund, 2018). We introduce the boundary condition of innovativeness as an explanation of how entrepreneurs can use their networks and skills to achieve financial performance.

According to social resource theory (Lin, 1999), the nature of resources within an entrepreneur’s network will impact success, with an entrepreneur’s decision to pursue innovation or replicate existing ideas in turn influenced by their social embeddedness (Ruef, 2002). Therefore, it is crucial to recognize that higher and lower innovating start-ups can leverage relational ties differently, with different types of connections contributing unequally to start-up financial performance (Peng and Luo, 2000).

Through a contingent value perspective (Ahuja, 2000; Stam and Elfring, 2008), we highlight that depending on innovativeness and the availability of some form of resource pool, either an entrepreneur’s (1) social competence or (2) resource mobilization skills, emerge as critical conditions for financial performance. While social networks, as a form of social capital, can compensate for resource deficits (Brüderl and Preisendörfer, 1998) and reduce the cost of raising capital, enhancing small business productivity and facilitating customer acquisition, skill elements are necessary to build these networks, access resources and effectively utilize them (Gulati et al., 2011).

Kellermanns et al. (2016) argue that “relational resources might matter even more in an entrepreneurship context” (p. 41), emphasizing resource heterogeneity across entrepreneurial firms (Foss et al., 2008). The relationships entrepreneurs have with resource-holders can facilitate or impede subsequent start-up performance (Johannisson, 2000). For instance, networks play a vital role in providing access to critical resources, including service providers (e.g. venture capitalists and legal professionals), employees and customers (De Carolis et al., 2009) that allow start-ups to participate in economic exchange for financial gain.

Specifically, close personal relationships can greatly benefit higher innovating start-ups by facilitating the quick transmission of high-quality information, establishing trust, promoting reciprocal interaction and providing direct access to opportunities (Adler and Kwon, 2002). These strong ties facilitate the transfer of more sophisticated and readily applicable information due to familiarity and alignment of interests (Hansen, 1999). Strong ties therefore assume a crucial role in resource acquisition (Hormiga et al., 2011) and profitable entrepreneurs have been found to prioritize building dense networks to facilitate the flow of highly relevant information (Ostgaard and Birley, 1996). This enables higher innovators to establish closer relationships with customers and suppliers who are crucial sources of market uncertainty and financial performance (Beckman et al., 2004).

However, the way an entrepreneur engages with their networks and their ability to persuade others to contribute, share or utilize resources is a crucial intangible capability in this performance relationship (Ge et al., 2009). Prior research indicates that socially skilled entrepreneurs derive greater benefits from their close networks, not only for intentional resource access but also for serendipitous opportunities (Klyver and Arenius, 2022).

By influencing the thoughts and perceptions of others, entrepreneurs can challenge existing frames and encourage acceptance of deviations from the status quo (Falchetti et al., 2022) while also mitigating concerns related to opportunism (Bergh et al., 2019). The ability to persuade stakeholders including investors, markets and customers, is essential for resource acquisition and venture advancement (Clough et al., 2019; Kleinhempel et al., 2022), making it particularly relevant for higher innovators due to the uncertainty associated with their novel business ideas and models (Zellweger and Zenger, 2023). Innovation demands substantial resources (Li and Atuahene-Gima, 2001), and entrepreneurs who possess the ability to persuade and convince others are better positioned to secure ongoing resource commitments. For instance, scaling start-ups often engage in multiple rounds of investment to sustain operations and accommodate increased demand.

Research therefore highlights the positive impact of social skills on the formation and utilization of social networks (Fang et al., 2015). Expanding on this emerging line of investigation, we incorporate social competence, which encompasses an entrepreneur’s capacity to influence, convince and persuade others, as a crucial social skillset that when coupled with some form of social network can drive financial performance for higher innovating firms.

For lower innovating start-ups, resource mobilization emerged as a commonality across all three corresponding pathways indicating that financial performance can emerge from effective resource repurposing and utilization (Morrow et al., 2007). Recent studies confirm that entrepreneurs facing resource constraints tend to think creatively and employ bricolage as a strategy for orchestrating resources (Lanivich et al., 2023). Therefore, the way resources are combined and leveraged can drive financial performance. Given the presence of entrepreneurial ecosystem support in two out of three lower innovating start-ups, resource mobilization could indicate the ability to aggregate scattered and unevenly distributed resources into a cohesive whole.

Entrepreneurial ecosystem support, reflective of weak ties in our study, is characterized by relations with a wide range of social acquaintances (Burt, 1992) suggesting a lesser need for relational investment from already resource-constrained start-ups which can help in the more efficient use and allocation of resources. Entrepreneurial ecosystem support is particularly beneficial for lesser-known start-ups, as it enables them to leverage reputation and brand returns from strategically centered resource providers, thereby gaining quicker access to other resource holders such as banks and investors (Elfring and Hulsink, 2007).

Interestingly, past research has found that start-ups collaborating with peers in incubators, a core entrepreneurial support organization embedded in the entrepreneurial ecosystem, are less likely to introduce radical innovations to the market and that mentors primarily facilitate incremental rather than radical innovation (Del Sarto et al., 2022). This seems to corroborate with our lower innovating pathways. In more stable industries, innovations may not require the same degree of novelty for success but instead benefit from the ability to learn, respond to the market and operate efficiently for performance advantages (Thornhill, 2006).

Accordingly, lower innovators achieving high financial performance may focus on orchestrating and optimizing available resources rather than pursuing radical innovation (Baker and Nelson, 2005; Lee and Kim, 2021). Additionally, many start-ups tend to operate modestly in scope and scale, opting to compete with smaller counterparts rather than challenging larger incumbents (Bhide, 2000). Lower innovating start-ups may rely on innovation leaders to disrupt the market and capitalize on weak appropriability due to the relatively easy codification of certain innovations. For example, many patents can be circumvented at modest costs, allowing for cost-effective imitations that can still generate profitable returns (Mansfield, 1985).

Several practical implications for entrepreneurs and policymakers emerge from our study. De Carolis et al. (2009) posed pertinent questions regarding the differential progression of ventures and the varying abilities of entrepreneurs to leverage their social capital effectively. While cognitive biases were found to play a role, our findings contribute by highlighting the critical importance of an entrepreneur’s skills. Specifically, social competence and resource mobilization abilities. Thus, our work emphasizes the need to prioritize the development of these skills in entrepreneurial training programs as they have the potential to significantly impact start-up financial success. Particularly for start-ups, where resource constraints are common, these skills are indispensable due to the substantial influence entrepreneurs have over firm development. It is worth noting that higher levels of innovation are not always essential for strong performance, and the ability to innovate does not guarantee financial success (Criscuolo et al., 2012). Therefore, cultivating learnable and modifiable capabilities such as social competence and resource mobilization can facilitate the translation of innovation efforts into financial performance, regardless of innovation levels.

For entrepreneurs leading higher innovating start-ups, it is beneficial to develop strong social competence, such as effective communication and relationship-building. For example, entrepreneurs can participate in workshops that focus on pitching, storytelling and emotional intelligence to enhance their ability to persuade and connect with stakeholders. Additionally, strategically engaging with the entrepreneurial ecosystem through attending investment forums, participating in industry-specific networking events and actively contributing to online forums and communities can help establish a strong presence, building relationships with potential collaborators, investors, mentors and customers.

On the other hand, entrepreneurs leading lower innovating start-ups should focus on strengthening their resource mobilization capabilities, such as identifying and finding critical resources, allocating resources efficiently and adapting to changing circumstances. For instance, attending workshops on lean start-up methodologies, financial management and resource optimization can generate knowledge on how to do more with less. They can seek guidance from mentors with experience in bootstrapping and scaling resource-constrained ventures.

For policymakers, it is essential to tailor policy instruments to the innovation levels of start-ups, recognizing the distinct needs of higher versus lower innovators. Designing targeted training and mentorship programs that cater to the specific skill development and resource needs of entrepreneurs based on their start-up’s innovation level (e.g. social competence for higher innovators, resource mobilization for lower innovators) could be effective. Policymakers may wish to consider specialized accelerator programs providing customized training, mentorship and networking opportunities based on the start-up’s innovation focus. They can establish innovation grants or funding schemes that have different eligibility criteria and support structures for higher and lower innovators.

Policymakers may also wish to create policies and initiatives that facilitate access to networks and resources within the entrepreneurial ecosystem, considering the different requirements of higher and lower innovators. This can involve setting up online platforms that connect start-ups with mentors, investors and service providers based on their innovation level and resource needs or organizing targeted start-up events and conferences that cater to the specific interests of higher and lower innovators.

While entrepreneurial ecosystems are often promoted to foster high-growth ventures, they also hold promise for less ambitious start-ups. For those with resource constraints, the broader ecosystem community offers resource versatility, enabling access to a range of resources that may otherwise be unavailable. Moreover, collaboration within the ecosystem can create value for both start-ups and resource providers. By operating within the entrepreneurial ecosystem, start-ups can lower transaction costs through cooperative community logics, facilitating the leveraging of resources and enabling quick adaptation to internal and external demands (Kraatz and Zajac, 2001). This strategic approach enhances agility and reduces the likelihood of missed opportunities (Sapienza et al., 2006). However, it is important to recognize that non-versatile resources diminish in value over time due to their limited reconfigurability or adaptability to new uses (Mauri and Michaels, 1998). Therefore, policymakers must consider the long-term implications of resource utilization within the entrepreneurial ecosystem.

The contributions mentioned should be viewed alongside certain research limitations. Firstly, while fsQCA enables the identification of various factor configurations leading to a specific outcome, it only allows for the selection of one outcome variable, which may limit the comprehensiveness of the analysis (Kent and Argouslidis, 2005). Additionally, the use of a subjective self-reported measure for performance, although repeatedly shown to correlate with objective measures (Wall et al., 2004), introduces potential biases, despite its similarity to archival measures in effect sizes (Köseoglu et al., 2013). Caution is warranted in interpreting results due to the subjective nature of the measure and its framing against industry benchmarks. Furthermore, other relevant factors affecting performance, such as sales revenue or market share, were not included and should be explored in future research.

Moreover, differences in industry, firm size and individual characteristics of the entrepreneur can result in distinct resource-seeking strategies, emphasizing the need for nuanced analysis. We acknowledge several potential sources of bias in our methods. A self-selection bias is possible as participation was voluntary. This means that there may be systematic differences between those who chose to respond and those who did not, that, alongside a 16% response rate, may limit generalizability of findings. This issue was partially abated through discussion with project directors of the accelerator who verified that the characteristics of the start-ups in our sample were representative of accelerator participants in general. There is also a possibility for single-source bias as data was collected from a single accelerator program, which may not be representative of all start-up accelerators. Accelerators can have different driving strategies and goals which condition the types of ventures accelerated that merit attention (Cohen et al., 2019).

Future research could benefit from drawing on larger sample sizes and distinguishing between various types of firms and industries, as well as exploring the heterogeneous structure of firms. While social capital can facilitate access to essential resources, these resources may also have adverse effects. For example, family financial support, as identified by Sieger and Minola (2017), may act as a “poisoned gift” by negatively impacting entrepreneurial intention. Further, future studies could explore additional relational factors, such as the role of mentors, advisors and board members, in shaping the financial performance of start-ups with varying levels of innovativeness. These actors may provide critical guidance, resources and legitimacy that complement the entrepreneur’s social competence and resource mobilization abilities.

Integrating various network perspectives, such as network structure and relations, with individual skills could offer further insights into how these elements influence start-up innovativeness and subsequent financial performance. Further exploration and integration of different constructs that may affect this relationship are warranted for a more comprehensive understanding of start-up dynamics. Lastly, researchers could build on this dynamic perspective by investigating how relational factors and resource disparities evolve over time as start-ups progress through different stages of growth. Longitudinal studies could shed light on how the relative importance of social capital, social competence, resource mobilization and entrepreneurial ecosystem support may shift as start-ups mature and their resource needs change or as entrepreneurs become more skilled at managing relations.