Achieving Sustained Competitive Advantage: A Family Capital Theory
Posted: 11 Nov 2009
Date Written: 2006
Abstract
Family owned businesses have competitiveadvantage over nonfamily firms; as a group they outperform the Standard &Poors 500. No clear and cohesive theory provides a structure for analysis ofthe family firm's performance and capabilities. This study attempts to providean explanation by introducing the concept of "family capital," aconcept derived from social capital. Social capital identifies the relationships that exist among people. Familycapital is defined as those family relationships unique to family businesses.Both social and family capital are resources that are appropriable and acollective good. They provide avenues for communication and sense-making of theenvironment, and both need maintenance and provide closure (a pressure to actwithin accepted social norms). The dimensions of family capital are identified as information channels andfamily norms (obligations, reputation, collective trust, and identity and moralinfrastructure). Each dimension provides benefits and efficiencies to theorganization. Family capital may be considered a strategic resource.(TNM)
Keywords: Information sharing, Family capital, Family firms, Competitive advantages, Firm ownership, Social capital, Firm performance, Family networks, Information networks, Social networks, Trust relationships
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