Understanding the Impact of Family Firms Through Social Capital Theory: A South American Perspective

Abstract

This exploratory study investigates the impact of family firms as a product of their contributions, and proposes a framework, which associates these with the adopted social capital theory. Interviews with owners of six firms operating in three different South American countries not only revealed the more familiar contributions of creating employment and instilling values, but also through business opportunities, growth, a sense of community and increasing knowledge. Aligned with various dimensions of social capital theory, several observable premises emerged, for instance, through the creation of value gained from developing links between individuals, developing local niches, or reciprocity.

How Relational Conflict Harms Family Firm Performance: The Mediating Role of Family Social Capital and the Moderating Role of Family Ownership

“…In their study, social capital’s relational and cognitive dimensions contribute to performance, but the structural dimension displays an inverse U-shaped relationship with performance. Apart from Herrero and Hughes’s ( 2019 ) study, the family business literature is relatively unanimous regarding the positive effects of family social capital on performance (e.g., Duarte Alonso et al, 2020 ). Family social capital has been found to improve firm performance by enhancing knowledge integration (Kansikas & Murphy, 2011 ), knowledge internalization and product development (Chirico & Salvato, 2016 ), innovation (Sanchez-Famoso et al, 2019 ), fostering social cohesion and work climate (Ruiz Jiménez et al, 2013 ), improving family firm resilience during difficult times (Wiatt et al, 2020 ), and creating strong bonds with the community (Duarte Alonso et al, 2020 ).…”