How social capital influences performance in family firms: the moderating role of nepotism

Abstract

Although a large body of research has explored how organizational social capital (OSC) benefits organizational performance, results are not conclusive. Consequently, scholars have called for more research on the factors that may moderate the effects of OSC on organizational performance. We address this research gap and examine the role of nepotism, which is the preferential treatment of family members in human resource management (HRM)-related decisions, such as development or rewards, in the relationship between OSC and organizational performance. Using a sample of 77 family firms in Switzerland, we found that the relationship between OSC and organizational performance is stronger in firms with higher nepotism. This research contributes to the HRM literature by exploring how the preferential treatment of family members in HRM-related decisions (i.e. greater nepotism) can provide benefits to family firms in terms of the impact of OSC on organizational performance.