How Familial Is Family Social Capital? Analyzing Bonding Social Capital in Family and Nonfamily Firms

Abstract

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.

When family social capital is too much of a good thing

“…It consists of a 12-item scale ranging from 1 to 5 based on a second-order aggregation of 3 dimensions with 4 items for each dimension (structural, relational and cognitive dimensions). This is one of the few scales that exists in the literature to measure FSC and was formally validated by its authors and subsequent work (Herrero, 2018). The 12-item FSC possessed high reliability, with a Cronbach alpha of 0.934 and a rho coefficient of 0.95.…”

“…We aimed at interviewing the firm's CEO, which was in the vast majority of the cases a family member, but when this was not the case it was necessary to interview a family manager (even if not CEO), as, empirical evidence in the literature suggest that a nonfamily CEO is not the appropriate person to answer family issues (Herrero, 2018). Although focusing on owner-managers of these firms may not capture the attitudes of other family members, this choice involved the perspective of the key decision-maker within the family firm (Carney, 2005) and has been used in previous research (Carr et al, 2011).…”

Tracing the Roots of Constructive Conflict Management in Family Firms

“…The cognitive dimension reflects the business family's values, history, and common beliefs, which promote collaborative familiness. This dimension consists of a view of conflict as a problem to solve through cooperation among family members in the business (Deutsch, 2011a(Deutsch, , 2011b, and its temporal (2013); Herrero (2018).…”

CEO social capital in family businesses and its effect on investment opportunities: Asset or liability?

“…Both objectives affect human and social capital and can also have negative effects on performance. Family aspirations and values therefore influence the value creation process through the different opportunities available to companies because of their different sensitivities to non-economic objectives (Herrero, 2018). On this topic, Chrisman et al (2003) Social capital requires time to develop, and therefore its value depends on the temporal stability of relationships (Arregle et al, 2007).…”