Research on family capital
Social, human, and financial capital are the building blocks of what the research literature calls "family capital". In a book chapter, Astrid Kramer and Brigitte Kroon have summarized the available empirical research about the nature, creation, and consequences of family capital in order to better understand how this contributes to the competitive advantage of family firms (Kramer & Kroon, 2020).
The literature review shows that only a limited number of empirical studies have actually investigated the theoretical assumptions about the family as a unique resource for family firms. In fact, there is only one study that combines social, human, and financial capital in one study (Danes et al., 2009). The other studies have examined the social or human capital of family businesses separately. A number of discussion points emerge from the literature review.
Internal social capital
The majority of empirical documents focus on internal social capital, and in particular on the bond between family members, which is determined by the structure and quality of the network of relations between family members. Remarkably, it is assumed that the internal social family capital is stable and harmonious. However, family dynamics go together with conflicts and cooperation, shared and divergent goals, altruism and selfishness - and all this makes family capital dynamic. This implies that the presence of family relationships does not in itself guarantee that it will benefit the organization. Therefore, research should focus on measuring the quality of relationships between family members, rather than asking objective questions that only examine the number of relationships. The literature pays little attention to how family businesses create social capital outside their own family. Families also build social capital through relationships with others outside the organization and with non-family members in the organization. Such relationships are important because they provide access to information and opportunities for the company. However, little is known about the ability of family firms to create and maintain relationships outside the family.
Human Capital
A similar conclusion is drawn about the human capital in family firms which is all the knowledge, skills and capabilities available to the organization. Most of the literature focuses on the human capital of successors. Just like social capital, human capital develops over time, but also this is not yet given much attention in the literature.
The conclusion is that family capital should be seen as a dynamic process between social capital and human capital, instead as a static process. In practical terms, this means that attention needs to be paid to the development and preservation of family capital, in order to prevent benefits associated with strong family ties and traditions of knowledge transfer from breaking down again. After all, a major family conflict quickly destroys social and human capital!
Literature
- Danes, S. M., Stafford, K., Haynes, G., & Amarapurkar, S. S. (2009). Family capital of family firms. Family Business Review, 22(3), 199-215. doi:10.1177/0894486509333424
- Kramer, A., & Kroon, B. (2020). Family capital in family businesses: Complementarities of human and social capital family capital in family businesses. In J. M. Palma-Ruiz, I. Barros-Contreras, & L. Gnan (Eds.), Handbook of Research on the Strategic Management of Family Businesses (pp. 1-21). https://doi.org/10.4018/978-1-7998-2269-1.ch001.