Social Capital in Family Firms: The Roles of Trust and Openness

Abstract

Organizations can accumulate knowledge through social relationships and thereby attain competitive advantages. Especially for family firms, these social relationships are relevant to bridging resource constraints and developing entrepreneurial opportunities through complementary knowledge. We approach this research gap by building on rich data taken from 92 interviews and further data sources from seven case firms. All case firms were family firms from Switzerland in which the owning families had significant influence on the management of the company. Building on within-case and cross-case pattern analysis, we show how family influence affects family social capital in family firms. This capital, in turn, affects levels of trust and control, which have stimulating and inhibiting influences, respectively, on openness and resistance to strengthening and expanding social relationships. As a result, multiple forms of social capital emerge at different levels of analysis, namely, organizational social capital and external social capital.