When family social capital is too much of a good thing

2019-01-24T10:59:49Z (GMT) by Ines Herrero Mathew Hughes
Family social capital (FSC) is theoretically predicted to benefit family firm performance, but empirical results repeatedly disappoint this expectation. To bridge the disconnect between theory and empirical evidence, we conceptualize FSC as a multidimensional construct in which its dimensions exhibit a mix of positive and negative consequences resulting in a ‘too much of a good thing’ effect. At high levels, the structural dimension of FSC can cause the family firm to form a structured group and become trapped in its established networks, preventing new knowledge from entering the family firm. With a hand-collected dataset, we test a curvilinear relationship between the structural dimension of FSC and family firm financial performance, and linear effects from its relational and cognitive dimensions. We further examine whether possessing organizational social capital (OSC) mitigates the negative consequences of high FSC. We reveal that the form and combination of FSC matters more than its amount. We contribute to theory a co-dependent view of FSC and OSC (as two different social capitals) that appreciates their concurrent effects.