Analysing the external social capital of family firms (original) (raw)
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Family Business Review
Family social capital (FSC) is acknowledged to be a unique asset that can provide firms with competitive advantages. Certain scholars, however, have questioned whether nonfamily firms can reproduce FSC and benefit from its advantages. If so, FSC may not be as unique as has been assumed. Our study analyzes three types of bonding social capital: capital held by nonfamily firms, and capital held by family and nonfamily members of family firms. We assess the effects that these types of bonding social capital exert on performance. Our empirical analysis of 400 firms suggests that FSC is unique and that nonfamily firms can only attempt to imitate it imperfectly.
The Development of Organizational Social Capital: Attributes of Family Firms
Journal of Management Studies, 2007
We develop and extend social capital theory by exploring the creation of organizational social capital within a highly pervasive, yet often overlooked organizational form: family firms. We argue that family firms are unique in that, although they work as a single entity, at least two forms of social capital coexist: the family's and the firm's. We investigate mechanisms that link a family's social capital to the creation of the family firm's social capital and examine how factors underlying the family's social capital affect this creation. Moreover, we identify contingency dimensions that affect these relationships and the potential risks associated with family social capital. Finally, we suggest these insights are generalizable to several other types of organizations with similar characteristics.
A Measure of Variations in Internal Social Capital Among Family Firms
Drawing on the social capital literature, this study develops a new measure to assess the internal social capital using a sample of family firms and its effect on economic and noneconomic performance. We collected data from two independent samples to explore the importance of family businesses' internal social capital as assessed by a new instrumentthe internal social capital among family business (ISC-FB). Results from confirmatory factor analyses, convergent and discriminant validity assessments, and predictive and incremental validity offered support for the ISC-FB's construct validity. Finally, we cross-validated the hypothesized factor structure with a second sample of family firms. Implications and future research using this measure are proposed.
Family Business Review, 2019
The unique form of social capital among family involved in the business, or family social capital (FSC), has both positive and negative effects on the family firm. To better understand how FSC exists across family firms and advance related theory, we develop a taxonomy of FSC. Using configuration analyses on two samples of family firms, we find that three clusters of family firms exist, which include firms with Instrumental, Identifiable, and Indistinguishable FSC. The specific configurations of each cluster are noted, and effects on economic and noneconomic outcomes are identified to advance understanding of the heterogeneous nature of family firms.
Journal of Entrepreneurship, 2013
Although psychological perspectives suggest that executives' perceptions do matter when it comes to predict the outcomes of strategic processes, little research has dealt with CEO perceptions in family firms. In this article we focus on the social capital resources of family firms and investigate which resources are perceived as competitive (dis)advantages and which factors affect the differences in perceptions among family firms' CEOs. We rely on a multiple case study that involved seven family firms operating in the transportation industry. The case study analysis shows that a number of advantages and disadvantages are commonly perceived by family business CEOs in relation to both internal and external dimensions of
Can Family Firms Innovate? Sharing Internal Knowledge From a Social Capital Perspective
Many studies focus their analysis on the effects of knowledge management on the development of organizational innovations. Innovation is posited, in this paper, to be a managerial priority that facilitates the creation of competitive advantage. The data, information and knowledge that contribute to innovation processes are available in social capital. Social capital is understood as the networks, norms and trust that enable participants to act together more effectively to pursue shared objectives . From this foundation, we argue that the effectiveness of these networks can be determined by whether the personnel who interact perceive the relationship to be worthwhile, equitable, productive and satisfying. Only individuals can apply their own experience and contextual understanding to interpret the details and implications of a particular situation in order to determine what is the appropriate action or actions to take. Internal social capital enhances the ability of members within a firm to know who to contact for relevant knowledge. This means that internal social capital facilitates the development of innovation through the acquisition of knowledge from internal and external networks. However, there are some problems in family firms. The utilization of internal capital does not guarantee that appropriate information is used in appropriate circumstances or that information is appropriately updated . The influence of the family on the company may inhibit or foster the exploitation of this knowledge. In this context, we try to test the influence of social capital on innovation on family firms. We develop a measure of the extent of family control of family companies -familiness -and examine the moderator role of this variable in the relationship between social capital and product innovation. The results of our empirical study of 282 family firms show that social capital has a positive relationship with product innovation. That is, the active connections among people -"the trust, mutual understanding, shared values and behaviors that bind the members of human networks and communities and make cooperative action possible" (Cohen and Prusak, 2001) -allow companies to generate innovations. Second, we also found that familiness plays a moderator role in the relationship between social capital and innovation. In this case, we have found that cultural dimension of familiness positively moderates the relationship between social capital and innovation.
Family Business Review, 2015
This study examines the relationship between bonding and bridging ownership social capital (OSC) for a random sample of 679 privately held small and medium-sized firms. Results confirm the positive effects of bonding OSC (quality of relationships and shared vision) on bridging OSC (network mobilization) as well as two- and three-way moderator effects of family firm identity and ownership–management overlap. Moderator effects are more robust, however, for the shared vision indicator of bonding OSC. Implications for social capital theory, social and organizational identity theory, and family firm research and practice are discussed.
The singularities of social capital in Family Business: an overview
The singularities of social capital in Family Business: an overview, 2010
Entrepreneurial networks, family values, altruism, personal attitudes, family commitment, interpersonal dynamics, knowledge transfer, corporate culture or emotional costs are only some of the topics to which the family business literature has paid particular attention in recent years. A common feature of these issues is that they can be analyzed as components of the social capital, a concept that refers to the institutions, norms and networks that promote cooperation and enable collective action.
Entrepreneurship Theory and Practice, 2006
We draw on the concept of community-level social capital and apply it to the situation of a family-controlled public corporation. While traditional agency theory argues that agency costs are minimized in a family-controlled business (FCB) due to an improved alignment of owner and manager interests, we argue instead that FCBs endure additional agency costs uniquely related to the family firm organizational structure. To mitigate these additional costs, we propose that FCBs use board interlocks to build and maintain community-level social capital. That is, the intercorporate network of FCBs generates shared understandings, values, problem solving techniques, and approaches to dealing with family issues. Further, the network generates a level of social support for family business owners and managers grappling with challenges endemic to family control of public corporations. We generate a number of propositions that can be used in future research to test the theory developed here. We conclude with the assertion that the community-level social capital generated by the network of FCBs is an important reason for the survival and persistence of individual family firms, despite the existence of additional family-related costs.