Ownership Social Capital and Firm Performance: Evidence Form a Dutch Sample of Private Firms

Posted: 9 Feb 2012

See all articles by Marta M. Berent-Braun

Marta M. Berent-Braun

Nyenrode Business University

Lorraine M. Uhlaner

EDHEC Business School

Roberto H. Flören

Nyenrode Business University

Date Written: June 10, 2011

Abstract

This study applies social capital theory to the ownership group in private firms. Extant research on ownership focuses primarily on the type or structure of ownership, whether as independent or control variable, to predict various firm effects. However, especially in the private firm, owners are individual actors whose attitudes and behaviors play an integral role in the firm’s performance. Based on social capital theory, this study provides empirical support for the hypothesis that shared vision of the ownership group and the quality of the relationships between owners are positively associated with financial performance of the business. Furthermore, it hypothesizes a mediating effect of shared vision and the quality of the relationships on the association between family orientation and financial performance. Also, the moderating effect of the overlap between ownership and management is tested. The results of data analysis obtained from 790 Dutch multiply-owned, private businesses indicate that shared vision has a positive influence on financial performance of the business but does not mediate the relationship between family orientation and financial performance. However, the relation between shared vision and financial performance is mediated by the quality of the relationships between owners. Finally, results show that the overlap between ownership and management moderates relationship between shared vision and financial performance.

Keywords: ownership group, social capital theory, family orientation, financial performance

JEL Classification: G32, G34, L20, M10

Suggested Citation

Berent-Braun, Marta M. and Uhlaner, Lorraine M. and Flören, Roberto H., Ownership Social Capital and Firm Performance: Evidence Form a Dutch Sample of Private Firms (June 10, 2011). Available at SSRN: https://ssrn.com/abstract=2001974 or http://dx.doi.org/10.2139/ssrn.2001974

Marta M. Berent-Braun (Contact Author)

Nyenrode Business University ( email )

Straatweg 25
P.O. Box 130
Breukelen, 3620 AC
Netherlands

Lorraine M. Uhlaner

EDHEC Business School ( email )

24 avenue Gustave Delory
Roubaix, 59057
France

Roberto H. Flören

Nyenrode Business University ( email )

Straatweg 25
P.O. Box 130
Breukelen, 3620 AC
Netherlands

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