High Spiritual Capital Improves Business Performance

Higher levels of spiritual capital—the motivation and work ethic people get from a relationship with God—have positive effects on business success and employment in developing countries, according to a new study.

Higher levels of spiritual capital—the motivation and work ethic people get from a relationship with God—have positive effects on business success and employment in developing countries, according to a new study. Its authors include Mitchell Neubert, a management professor at Baylor University’s Hankamer School of Business in Waco, Texas; Steven Bradley, an associate professor of entrepreneurship at Baylor; Retno Ardianti, a member of the management faculty at Petra Christian University in Surabaya, East Java, Indonesia; and Edward Simiyu, a lecturer in the entrepreneurship and procurements department at Jomo Kenyatta University of Agriculture and Technology in Nairobi, Kenya.

The researchers surveyed groups of people in Nairobi and Surabaya who had received microfinance loans to start businesses such as vegetable stands, bike repair shops, and small farms. After accounting for financial, human, social, and psychological capital, researchers measured spiritual capital by asking participants to report how close they felt to God or Allah. They also asked participants to use a seven-point scale to measure their responses to statements such as “I feel the presence of God or Allah in my relationships” and “I feel a deep sense of responsibility to reduce pain and suffering in the world.”

Researchers analyzed 114 surveys from Kenya and 168 from Indonesia on measures such as total sales, number of employees, and level of innovation. They found that a one-unit increase on the spiritual capital scale led to a 39.7 percent average increase in sales and a 31.3 percent increase in employment. They speculate that people view these businesses as more trustworthy because the owners are living out their faiths.

“More people want to work with them. They’re getting more sales. They’re having the confidence to try new things and venture out,” says Neubert. “In developing countries where the rule of law—contracts and enforcement of appropriate business behavior—is limited, you need other informal indicators of who can be trusted.”

The study finds that people with more spiritual capital were also more innovative. Says Neubert, “A stronger perceived relationship with God, and its influence on how you treat others, may be a source of greater...confidence in implementing new ideas and a heightened awareness of customers’ needs that leads to acting innovatively.”

The study is forthcoming in Entrepreneurship Theory and Practice and appears online at onlinelibrary.wiley.com/doi/10.1111/etap.12172/abstract.