Can China’s family firms create intellectual capital?

Abstract

Intellectual capital is a firm’s knowledge and knowing capability that enriches and aggregates the firm’s human capital. In so doing, it increases a firm’s capacity for innovation and strategic differentiation. Since intellectual capital is a function of the firm’s social capital, and because China’s family firms tend to exhibit a unique social capital profile, we develop three propositions about the relationship between social capital, capacity for knowledge transfer, and intellectual capital formation. These propositions arise from our cross-case study methodology, based on findings from case studies of intellectual capital formation in fifteen family firms, located in the city of Wenzhou, China. Consistent with the resource-based view of the firm, we show that the processes involved in creating intellectual capital are both socially complex and causally ambiguous, and are distributed heterogeneously among China’s growing population of family firms.