Social capital and next-generation succession in the family firm

Abstract

Building relationships with individuals and organisations and accumulating social capital is critical to the success of a family firm. During times of succession, however, family firms have to deal with the difficult task of transferring social capital from the incumbent to the successor. Existing literature on succession planning focuses largely on the transfer of physical and human capital and ignores the development and transfer of social capital within family firms. Hence, the purpose of this paper is to explore an alternate perspective of next-generation succession in family businesses. Specifically, we examine the importance of the incumbent's and successor's social networks and develop a conceptual model that depicts the connections between the optimum configuration of post-succession social capital in the family business, transferred social capital (i.e. social capital that is transferred from the incumbent to the successor), and new social capital brought into the position by the successor.