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<strong>Strategic</strong> <strong>Resources</strong><br />

<strong>and</strong> <strong>Family</strong> <strong>Firm</strong> <strong>Performance</strong><br />

Ilse Anje Matser


<strong>Strategic</strong> <strong>Resources</strong> <strong>and</strong> <strong>Family</strong> <strong>Firm</strong> <strong>Performance</strong><br />

Strategische resources en de prestaties van familiebedrijven<br />

(met een samenvatting in het Nederl<strong>and</strong>s)<br />

Proefschrift<br />

ter verkrijging van de graad van doctor aan de Universiteit Utrecht op gezag van de rector<br />

magnificus, prof.dr. G.J. van der Zwaan, ingevolge het besluit van het college voor<br />

promoties in het openbaar te verdedigen op vrijdag 18 januari 2013<br />

des middags te 2.30 uur<br />

door<br />

Ilse Anje Matser<br />

geboren op 28 september 1969<br />

te Veenendaal


Promotoren: Prof.dr. A. Buijs<br />

Prof.dr. R.H. Flören<br />

Ontwerp omslag: Steven Koelemeijer<br />

Realisatie: Kerckebosch Media, Zeist<br />

ISBN: 978-90-807379-0-7<br />

© 2012, Ilse A. Matser<br />

Alle rechten voorbehouden. Niets uit deze uitgave mag worden verveelvoudigd, opgeslagen in een<br />

geautomatiseerd gegevensbest<strong>and</strong>, of openbaar gemaakt, in enige vorm of op enige wijze, hetzij<br />

elektronisch, mechanisch, door fotokopieën, opname of enige <strong>and</strong>ere manier, zonder voorafga<strong>and</strong>e<br />

schriftelijke toestemming van de uitgever.<br />

Voor zover het maken van kopieën uit deze uitgave is toegestaan op grond van artikel 16b<br />

Auteurswet 1912 juncto het Besluit van 20 juni 1974, Stb. 351, zoals gewijzigd bij Besluit van 23<br />

augustus 1985, Stb. 471 en artikel 17 Auteurswet 1912, dient men de daarvoor wettelijk<br />

verschuldigde vergoedingen te voldoen aan de Publicatie- en Reproductierechten Organisatie<br />

(Postbus 3060, 2130 KB Hoofddorp). Voor het overnemen van (een) gedeelte(n) uit deze uitgave<br />

in bloemlezingen, readers en <strong>and</strong>ere compilatiewerken (artikel 16 Auteurswet 1912) dient men<br />

zich tot de uitgever te wenden.


Voor mijn ouders Anje en Piet Matser


Acknowledgments<br />

Welcome to the world of family business! In 2011, the <strong>Family</strong> <strong>Firm</strong> Institute (FFI), an<br />

international organization for family business advisors <strong>and</strong> researchers, celebrated its twentyfifth<br />

anniversary. Its short history illustrates the fact that family business research is a<br />

relatively new field of research. For many years, the general opinion among scholars has been<br />

that family involvement is limited to a temporary phase in the life cycle of a business. In<br />

general, it has been assumed that as firms grow, the need for external capital <strong>and</strong> professional<br />

management leads to changes in management <strong>and</strong> ownership, resulting in a more dispersed<br />

group of owners <strong>and</strong> an external CEO (Flören, 2004).<br />

However, the growing number of centers <strong>and</strong> programs devoted to the study of family<br />

business at universities worldwide <strong>and</strong> the wide variety of international academic conferences<br />

on the topic (Astrachan, 2010) attest to the importance of family business as a separate field<br />

of research. Other evidence suggests this as well. In 2011, the <strong>Family</strong> Business Review<br />

ranked among the top 20 business journals in Thomas Reuters’ Journal Citation Report (FFI,<br />

2011). Furthermore, the number of submissions to <strong>Family</strong> Business Review grew from 32 in<br />

2004 to 232 in 2010 (FFI, 2011). In 2010, two new academic journals were launched in this<br />

field: the Journal of <strong>Family</strong> Business Strategy <strong>and</strong> the Journal of <strong>Family</strong> Business<br />

Management. In addition, Astrachan (2010) identifies a significant increase in the number of<br />

articles dealing with family businesses in mainstream journals. Public authorities have also<br />

shown an increasing interest in the topic. For instance, the European Commission has<br />

formulated in an official statement that family firms differ from SMEs <strong>and</strong> that they deserve<br />

more specific attention (European Commission, 2009).<br />

Despite the growing acknowledgement of the importance of family business research, many<br />

business management students do not appear to come into contact with the peculiarities of<br />

family business management during their studies. When I studied business administration at<br />

Vrije Universiteit in the early 1990s, the topic of family businesses was not mentioned at all.<br />

As a result, certain courses, such as “strategic management,” “leadership,” <strong>and</strong><br />

“organizational development” hardly connected with my own experience <strong>and</strong> background in<br />

a second-generation family business active in the designer furniture sector. When I was a<br />

child, my family <strong>and</strong> I lived in an apartment above our store. We often discussed customers at<br />

the dinner table <strong>and</strong> the family business has always been an integral part of our lives, in good<br />

<strong>and</strong> in bad times. I worked for our family company for a short period at the start of my career.<br />

Recently, my brother has taken over the business from my parents. My personal background,<br />

in fact, has inspired me to initiate the research that has resulted in the dissertation presented<br />

here.<br />

My position as a lecturer in business management at Utrecht University combined with my<br />

experience in the family business led me to the conviction that the topic of family businesses<br />

deserves a more prominent place in business curricula. As a visiting professor at Nelson<br />

i


M<strong>and</strong>ela Metropolitan University, South Africa, I became acquainted with Elmarie Venter<br />

<strong>and</strong> Shelley Farrington, both of whom are family business scholars. That exchange stay<br />

motivated me to take my first steps towards research with regard to family businesses.<br />

When I started reviewing articles <strong>and</strong> books in this field, I began to notice the plentitude of<br />

research topics to explore. What interested me most is the notion that family firms have<br />

specific characteristics that can make them very successful in what they do, while other<br />

factors can have a negative or even devastating effect on their performance. This is<br />

particularly important if the firms’ owner-managers are ignorant of the existence of these<br />

positive or negative characteristics, or if they neglect to manage them. I am confident that<br />

new insights stemming from an increase in research related to family businesses will prove a<br />

welcome contribution to current theoretical <strong>and</strong> practical underst<strong>and</strong>ing of business<br />

management. There is a need to increase our underst<strong>and</strong>ing of the drivers that influence<br />

family firms, which in turn will help owners of family businesses to optimally manage the<br />

influence of the family effect. Ideally, the positive effects could be leveraged <strong>and</strong> the negative<br />

effects should be minimized in such a way that the positive effects can dominate.<br />

Writing this dissertation has been a challenging journey with many ups <strong>and</strong> downs. It has<br />

brought me into contact with many interesting people <strong>and</strong> places, I learned a lot about doing<br />

research <strong>and</strong> the subject itself proved to be a source of motivation to continue.<br />

The biggest challenge I faced during this journey is the lack of time to perform in my role as<br />

the managing director of the Dutch Centre for <strong>Family</strong> <strong>Firm</strong>s (CFB) <strong>and</strong> professor at<br />

<strong>Windesheim</strong>, while trying to make my deadlines with regard to this dissertation. The support<br />

I received from family, friends <strong>and</strong> colleagues has been of great help to keep making<br />

progress, however small, <strong>and</strong> make it to the end.<br />

First, I wish to thank my supervisors Arie Buijs <strong>and</strong> Roberto Flören. Arie, since that ‘braai’ at<br />

the guest house of the Mountain Zebra National Park in South Africa where we decided that I<br />

should write this dissertation you have been a great support for me. Besides being a great<br />

supervisor for the past years you gave me the confidence I needed, the most valuable thing to<br />

succeed. Roberto, as the expert of family business in the Netherl<strong>and</strong>s, I am very thankful for<br />

your guidance, feedback <strong>and</strong> support. You have the ability to give ‘small notes of advice’ that<br />

are very true <strong>and</strong> very helpful.<br />

Second, I am grateful to the members of the reading committee, Tineke Bahlmann, Johan<br />

Lambrecht, Sascha Kraus, Enno Masurel <strong>and</strong> Elmarie Venter, for reading <strong>and</strong> commenting on<br />

this thesis.<br />

Third, doing research meant making long hours in my study but also working together with<br />

fellow researchers <strong>and</strong> colleagues. Working together with Lorraine Uhlaner, Marta Berent,<br />

Judith van Helvert, Shelley Farrington, Elmarie Venter, Sascha Kraus, Stefan Mark <strong>and</strong> Coen<br />

Rigtering has not only improved the content of this dissertation but we have also had a great<br />

deal of fun. I’m looking forward to continue to work together with you.<br />

ii


I would also like to thank the support I got from the CFB, its board members <strong>and</strong> its partners.<br />

As managing director of a centre that has a mission to increase the knowledge on family<br />

firms, the centre has given me a lot of opportunities that were beneficial for this dissertation.<br />

I am indebted to many colleagues who supported me during this journey. I am indebted to my<br />

colleagues at UCEME in Utrecht during the start of my dissertation <strong>and</strong> later those at<br />

<strong>Windesheim</strong> in Zwolle. Especially in this final year, my colleagues in Zwolle helped me out<br />

so I had more time to finish my dissertation. Thank you for this.<br />

Judith van Helvert <strong>and</strong> Evelyn Groot Bruinderink, thank you for being willing to act as my<br />

‘paranimphs’, assisting me in the defense. Judith at work <strong>and</strong> Evelyn at home helped me were<br />

they could. Evelyn, you contributed also by making sure that there was also time for having<br />

fun. Judith, we were colleagues in Utrecht <strong>and</strong> now at Zwolle <strong>and</strong> at the centre. It’s always<br />

great to work with you, I think we are the best team ever.<br />

Finally, I would like to thank my parents, Anje <strong>and</strong> Piet, my children Louise <strong>and</strong> Hugo <strong>and</strong><br />

my husb<strong>and</strong> Steven. Thank you for all your love.<br />

iii


Table of contents<br />

Acknowledgments………………………………………………………………………..<br />

List of Tables…………………………………………………………………………….<br />

List of Figures ……………………………………………………………………………<br />

1: <strong>Family</strong> involvement, strategic resources, <strong>and</strong> firm performance: An introduction…...<br />

1.1 Introduction.............................................………………………………………….....<br />

1.2 The three-circle model: family firms as a subgroup of privately owned firms……...<br />

1.3 The family factor’s influence on the business: theoretical concepts………………..<br />

1.3.1 Bivalent characteristics …………………………………………………….<br />

1.3.2 Familiness………………………………………………………………….<br />

1.3.3 Management of strategic resources………………………………………..<br />

1.4 Existing research findings……………………………………………………………<br />

1.5 Research question, framework, definitions <strong>and</strong> Dutch context……………………..<br />

1.5.1 Research question <strong>and</strong> research framework……………………………….<br />

1.5.2 Defining the family firm…………………………………………………...<br />

1.5.3 <strong>Family</strong> firms in the Netherl<strong>and</strong>s…………………………………..............<br />

1.6 Dissertation overview.....................................................................................<br />

2: Ownership social capital in privately held firms: the role of family involvement........<br />

2.1 Introduction................................................................................................................<br />

2.2 Background on ownership social capital ...................................................................<br />

2.3 Research framework <strong>and</strong> hypotheses.........................................................................<br />

2.3.1 Direct relations among components of ownership social capital................<br />

2.3.2 Complex relations among components of ownership social capital............<br />

2.4 Method........................................................................................................................<br />

2.5 Results.........................................................................................................................<br />

2.6 Discussion <strong>and</strong> conclusion..........................................................................................<br />

3: The relationship between ownership social capital <strong>and</strong> product innovation: The<br />

moderating role of family involvement..............................................................................<br />

3.1 Introduction..................................................................................................................<br />

3.2 Background on product innovation <strong>and</strong> the role of (family) owners...........................<br />

3.3 Research framework <strong>and</strong> hypotheses...........................................................................<br />

3.4 Method.........................................................................................................................<br />

3.5 Results..........................................................................................................................<br />

3.6 Discussion <strong>and</strong> conclusion..........................................................................................<br />

4: The relationship between spousal social capital in copreneurial firms <strong>and</strong> firm<br />

performance......................................................................................................................<br />

4.1 Introduction.................................................................................................................<br />

4.2 Spousal social capital: background <strong>and</strong> hypotheses....................................................<br />

4.2.1 The copreneurial relationship as a strategic resource...................................<br />

4.2.2 Three dimensions of spousal social capital..................................................<br />

4.3 Method........................................................................................................................<br />

4.3.1 Sample <strong>and</strong> data collection...........................................................................<br />

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4.3.2 Variables.......................................................................................................<br />

4.4 Results.........................................................................................................................<br />

4.4.1 Factor analysis..............................................................................................<br />

4.4.2 Descriptive statistics <strong>and</strong> correlations..........................................................<br />

4.4.4 Structural model............................................................................................<br />

4.5 Discussion <strong>and</strong> conclusion...........................................................................................<br />

5: Securing post-succession continuity in family firms through knowledge transfer........<br />

5.1 Introduction..................................................................................................................<br />

5.2 Research framework <strong>and</strong> hypotheses...........................................................................<br />

5.2.1 Post-succession continuity............................................................................<br />

5.2.2 The knowledge transfer climate....................................................................<br />

5.2.3 Moderator: Is the successor a family member?............................................<br />

5.3 Method.........................................................................................................................<br />

5.4 Results..........................................................................................................................<br />

5.5 Discussion <strong>and</strong> conclusion...........................................................................................<br />

6: Conclusions <strong>and</strong> implications........................................................................................<br />

6.1 Research findings.........................................................................................................<br />

6.2 Overall conclusions......................................................................................................<br />

6.3 Theoretical implications..............................................................................................<br />

6.4 Limitations <strong>and</strong> directions for future research.............................................................<br />

6.5 Practical implications...................................................................................................<br />

Summary.............................................................................................................................<br />

Samenvatting (in Dutch)....................................................................................................<br />

References.........................................................................................................................<br />

Curriculum Vitae.............................................................................................................<br />

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List of Tables<br />

Table 1.1: Social capital research in major management <strong>and</strong> family business journals….<br />

Table 1.2: Empirical trends in social capital studies of private firms……………………<br />

Table 1.3: <strong>Family</strong> business in relation to all businesses in the Netherl<strong>and</strong>s……………..<br />

Table 1.4: Representation in business sectors……………………………………………<br />

Table 1.5: Number of owners per business in the Netherl<strong>and</strong>s………………………….<br />

Table 1.6: Dissertation overview…………………………………………………………<br />

Table 2.1: Factor analysis of multi-item variables included in the study………………...<br />

Table 2.2: Correlations between variables used in the study……………………………..<br />

Table 2.3: Prediction of ownership social capital………………………………………...<br />

Table 3.1: Factor analysis of multi-item variables included in the study………………...<br />

Table 3.2: Correlations between variables used in the study…………………………….<br />

Table 3.3: Prediction of product innovation……………………………………………...<br />

Table 4.1: Overview of sample characteristics…………………………………………...<br />

Table 4.2: Average variance extracted <strong>and</strong> shared variance estimates…………………...<br />

Table 4.3: Means, st<strong>and</strong>ard deviations, <strong>and</strong> zero-order correlations ……………………..<br />

Table 5.1: Possible factors influencing the knowledge-management process…………...<br />

Table 5.2: Descriptive statistics <strong>and</strong> correlation matrix………………………………….<br />

Table 5.3: Predicting profit growth………………………………………………………<br />

Table 6.1: Summary of research findings……………………………………………….<br />

List of Figures<br />

Figure 1.1:The three-circle model……………………………………………………….<br />

Figure 1.2: Matrix of family <strong>and</strong> business dimensions………………………………….<br />

Figure 1.3: Möbius strip………………………………………………………………….<br />

Figure 1.4: Research framework…………………………………………………………<br />

Figure 2.1: Research framework including direct effects………………………………..<br />

Figure 2.2: Interaction term shared vision <strong>and</strong> quality of relationships…………………<br />

Figure 2.3: Interaction term shared vision <strong>and</strong> family involvement......…………………<br />

Figure 3.1: Model of ownership social capital <strong>and</strong> product innovation…………………<br />

Figure 3.2 Interaction term family involvement <strong>and</strong> network mobilization …………….<br />

Figure 4.1 Research framework…………………………………………………………<br />

Figure 4.2 Structural model……………………………………………………………..<br />

Figure 5.1 Interaction term family succession <strong>and</strong> knowledge transfer climate………..<br />

Figure 6.1 Research framework…………………………………………………………<br />

Figure 6.2 Adjusted research framework………………………………………………..<br />

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1: <strong>Family</strong> involvement, strategic resources, <strong>and</strong> firm<br />

performance: An introduction<br />

1.1 Introduction<br />

Past research has raised many interesting questions regarding the effect of family<br />

involvement on businesses. With the resource-based view as the primary theoretical<br />

framework, this dissertation looks at strategic resources in private firms <strong>and</strong> how those<br />

resources are influenced by family involvement. Furthermore, the research investigates to<br />

what extent the development of these strategic resources have an impact on firm<br />

performance. The focus is on the development of tacit knowledge <strong>and</strong> social capital, as these<br />

components of strategic resources have been identified in the literature as elements for which<br />

family involvement may have a strong, positive influence.<br />

In this chapter, the outline of this dissertation <strong>and</strong> underlying themes are presented. Section<br />

1.2 introduces the distinctive characteristics of family firms, making use of the core concept<br />

of family business research: the three-circle model. Section 1.3 explores the distinctive<br />

characteristics of family firms using the concept of bivalent characteristics. Resource-based<br />

theory is introduced as a theoretical framework that may be appropriate for the dynamics of<br />

family businesses. Furthermore, the unique challenge that family businesses face is<br />

introduced – the need to manage the interests of the family <strong>and</strong> the business in such a way<br />

that their overlap results in synergies. Section 1.4 highlights several gaps in the existing<br />

empirical research. This leads to the main research question <strong>and</strong> research framework, which<br />

are formulated in section 1.5, where the quest for finding suitable definitions for family<br />

businesses is explored <strong>and</strong> an overview of the prevalence of family firms in the Dutch<br />

economy is provided. The final section provides an outline of this thesis.<br />

1


1.2 The three-circle model: family firms as a subgroup of privately owned<br />

firms<br />

The business l<strong>and</strong>scape in the Netherl<strong>and</strong>s consists of a rich mixture of firms with an<br />

emerging focus on entrepreneurship (EIM, 2011). Most companies are privately held: the<br />

owner or owners are private persons whose shares are not traded on a public stock exchange.<br />

The objectives of privately held firms are to remain viable <strong>and</strong> healthy, <strong>and</strong>, if possible,<br />

create growth. From the owners’ perspective, the firm’s main priority is to meet the owners’<br />

values, goals, <strong>and</strong> needs. Key for an underst<strong>and</strong>ing of the dynamics of privately owned firms<br />

is recognition of the fact that the interests of owners <strong>and</strong> the firm are not always compatible.<br />

When business owners <strong>and</strong> the managers who run the business are not the same, the two<br />

parties might face a conflict of interest (Tutelman & Hause, 2008). However, even if the<br />

business is managed by a sole owner, a distinction can be made between interests as an owner<br />

<strong>and</strong> those as a manager. Tutelman <strong>and</strong> Hause (2008) stress that it is important to balance<br />

these various interests to ensure the long-term continuity of the business.<br />

<strong>Family</strong> firms are a subgroup of privately owned firms. Within the entrepreneurship literature<br />

there is a growing interest for the unique challenges this subgroup is facing (Kraus, Craig,<br />

Dibrell <strong>and</strong> Märk, 2012). The family system is as relevant as the business <strong>and</strong> the ownership<br />

systems. In family firms, these three systems interact with each other, making the balancing<br />

act even more complex. The family firm can be regarded as an open-system model<br />

comprising three overlapping, interacting, <strong>and</strong> interdependent subsystems of owners, family,<br />

<strong>and</strong> managers (Moores, 2008). This view builds on the “systems approach” to organization<br />

(Morgan, 1986): The main principle of the system approach is that organizations, like<br />

organisms, are open to their environment <strong>and</strong> in order to survive must achieve an appropriate<br />

relation with that environment. A focus of the open-systems approach is that organizations<br />

can be defined in terms of interrelated subsystems. The notion of family firms as<br />

organizations consisting of three subsystems, was introduced by Tagiuri <strong>and</strong> Davis in 1982<br />

(reprinted in 1996) <strong>and</strong> is known as the three-circle model (see Figure 1.1). This view has<br />

largely been accepted by the community of family business scholars as the key symbolic<br />

generalization of the prevailing family business paradigm (Moores, 2008).<br />

In the three-circle model, the overlap of the three systems indicates that individuals have up<br />

to three roles simultaneously. A family member who st<strong>and</strong>s at the “core” of the system is a<br />

family member, an owner, <strong>and</strong> a manager of the business. With each role comes different<br />

obligations, interests, <strong>and</strong> goals. As a family member, the prime concern is the welfare <strong>and</strong><br />

the harmony of the family. As an owner, the focus is on ensuring stable returns on<br />

investments <strong>and</strong> the continuity of the firm. As a manager, the primary interest is the firms<br />

“operational effectiveness” (Tagiuri & Davis, 1996). These varying interests explain the<br />

potential conflicts among roles in family businesses.<br />

2


Figure 1.1: The three-circle model<br />

Ownership<br />

Source: Tagiuri & Davis, 1996<br />

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<strong>Family</strong><br />

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Business<br />

2<br />

Each individual directly involved in the business can be placed<br />

in one of seven sectors:<br />

1- a family member who is neither an owner nor an employee;<br />

2- an employee who is neither a family member nor an owner;<br />

3- an owner who is neither a family member nor an employee;<br />

4- a family member who is also an owner but not an employee;<br />

5- a family member who is also an employee but not an owner;<br />

6- an owner who is also an employee but not a family member;<br />

7- a family member who is also an owner <strong>and</strong> an employee.<br />

Flören (2004) highlights the difference between family <strong>and</strong> non-family firms in terms of the<br />

openness of the systems. In non-family firms, conflicts at home or at work typically remain in<br />

their own environments, while the same is not true for family firms. If, for example, two<br />

sisters who co-own <strong>and</strong> run a family firm argue about the strategic course for the firm, the<br />

dispute will have consequences in the family sphere. Such spillover effects can be found in<br />

various dimensions of family firms, including finances, work-life balance, <strong>and</strong> risk<br />

perceptions.<br />

Another aspect incorporated into the three-circle model is the dynamic nature of the family<br />

business system. Individuals’ roles <strong>and</strong> positions may change during the life cycle stages of<br />

the individuals, the family, <strong>and</strong> the business as a whole (Hoy & Sharma, 2010). One such<br />

change could be the spouse of the founder joining the business when the workload increases<br />

(Steier, 2007). At a later stage, children may join the family firm, first as employees <strong>and</strong> later<br />

as owners. In the succession phase, parents <strong>and</strong> their children may work together. Later, when<br />

parents retire as managers, they might stay involved in the firm as owners. If this<br />

evolutionary succession path is followed, family business systems can become increasingly<br />

large <strong>and</strong> complex in later generations. A family business can evolve, for example, from a<br />

founder-managed company to a sibling partnership in the second generation <strong>and</strong> to a cousinlinked<br />

consortium in the third generation (e.g., Gersick, Lansberg, Desjardins & Dunn, 1999).<br />

This evolutionary path may prove impossible or undesirable for many family firms, for<br />

instance when the business does not have the growth potential to financially support a<br />

growing number of family members; undesirable when owners’ visions diverge, family<br />

members are uninterested or incompetent, or family members or family branches begin to<br />

compete (Lambrecht & Lievens, 2008). These signals can be interpreted as indications that it<br />

is time to “prune” the family tree, which ensures that the remaining family owners <strong>and</strong><br />

managers are the same people, or that the shareholders are concentrated in a single family<br />

branch. Lambrecht <strong>and</strong> Lievens (2008) discuss the principle of keeping the management or<br />

ownership of a business within a small group of family members. They argue that pruning the<br />

family tree can potentially enhance family business continuity <strong>and</strong> family harmony. One<br />

3


example of where this process has been successful is the Van Bommel shoe factory, where<br />

recently a pruning process has been completed. The ninth generation currently runs the<br />

business as a sibling partnership.<br />

1.3 The family factor’s influence on the business: theoretical concepts<br />

The previous section introduced the family firm as a subgroup of privately owned firms with<br />

the three-circle model as the key symbolic generalization. In this section, the effects arising<br />

from the interrelationships among the family, the business, <strong>and</strong> its owners are introduced. In<br />

this regard, the notion that the family effect on the business can lead to both positive <strong>and</strong><br />

negative outcomes is highly relevant.<br />

1.3.1 Bivalent characteristics<br />

In order to study family businesses as a st<strong>and</strong>-alone discipline, it is necessary to identify<br />

theoretically founded, empirical evidence of the distinctiveness of family firms. A milestone<br />

in this regard is the research done by Anderson <strong>and</strong> Reeb (2003). The impact of that study is<br />

reflected in its high ranking on the frequently cited articles list in family business research<br />

(Chrisman, Kellermans, Kam, Chan & Liano, 2010). Anderson <strong>and</strong> Reeb compare the<br />

performance of large, publicly traded family <strong>and</strong> non-family firms in the United States. They<br />

find that family firms outperform non-family firms in specific circumstances, such as when<br />

the former have a family member as managing director. This outcome has led to more<br />

research focused on the question of why family firms outperform non-family firms. For<br />

instance, Miller <strong>and</strong> Le Breton-Miller (2005) undertook a large qualitative research project to<br />

reveal the success factors of 58 large family firms that had been successful for an extended<br />

period of time. They identify four factors that drive successful strategies: comm<strong>and</strong>,<br />

continuity, community, <strong>and</strong> connections. The findings of this research have been successfully<br />

tested using a sample of small, first-generation family firms (Miller, Le Breton-Miller, &<br />

Scholnick, 2008). The results of the study done by Miller et al., (2008) reflect the prediction<br />

done by Dyer (2006). He argues that within family businesses, the subgroup of clan family<br />

firms, ceteris paribus, will have the highest performance. Clan family firms are firms who are<br />

owned <strong>and</strong> managed by family members highly committed to both the success of the firm <strong>and</strong><br />

the family. Small, first-generation family firms are the stereotype of this subgroup (Dyer,<br />

2006). The four success factors (Miller & Le Breton-Miller, 2005) are in line with the<br />

findings presented in other influential articles focusing on the potential positive<br />

characteristics of family firms (e.g., Aldrich & Cliff, 2003; Chrisman, Chua & Sharma, 2005;<br />

Sharma, 2004).<br />

Research into the positive outcomes of family involvement for a business typically adopts a<br />

normative approach to the distinctiveness of family firms. However, too much emphasis on<br />

the positive aspects may lead to an underestimation of the potential harmful effects of family<br />

influence on a business. To fully capture the effect of family involvement on a business, all<br />

factors – both positive <strong>and</strong> negative – count.<br />

4


As early as 1982, Tagiuri <strong>and</strong> Davis (1996) acknowledged that family firms have several<br />

unique, inherent attributes, <strong>and</strong> that each of these key attributes can be a source of benefits<br />

<strong>and</strong> a source of disadvantages. Given their latent positive <strong>and</strong> negative potential, these<br />

attributes are labeled as bivalent attributes. These bivalent attributes are the immediate<br />

consequences of the overlap of the family, business, <strong>and</strong> ownership systems. Jaffe (2007)<br />

refers to this notion when he argues that the characteristics of a family business can lead to<br />

conflict or difficulties if they become extreme.<br />

Tagiuri <strong>and</strong> Davis (1996) identified seven bivalent attributes of the family firm:<br />

• Simultaneous roles,<br />

• A lifelong common history,<br />

• Emotional involvement <strong>and</strong> ambivalence,<br />

• A private language,<br />

• Mutual awareness <strong>and</strong> privacy,<br />

• A shared identity, <strong>and</strong><br />

• The meaning of the family company.<br />

The bivalent attributes are mutual related <strong>and</strong>, in some cases, probably do overlap. For<br />

example, the role of the founder reflects attributes two <strong>and</strong> three – lifelong common history,<br />

<strong>and</strong> emotional involvement <strong>and</strong> ambivalence, respectively. The founder often plays a crucial<br />

role in building a successful firm, but if the founder neglects to train or create sufficient<br />

favorable conditions for a new generation to come into play, the whole business may age<br />

(Jaffe, 2007). This negative effect can be even worse when the incumbent leader is reluctant<br />

to let go <strong>and</strong> when the business culture is not innovative (“this is the way we do things around<br />

here”). The positive effect of a lifelong common history can be a deep tacit knowledge that is<br />

transferred to the next generation.<br />

In family firms, the simultaneous roles as owner <strong>and</strong> manager can explain the reduced need<br />

for governance mechanisms, as interests are aligned. This absence of significant agency<br />

costs, is seen as a competitive advantage for family firms relative to firms with dispersed<br />

ownership <strong>and</strong> external managers (Schulze, Labatkin, Dino & Buchholtz, 2001). A negative<br />

effect stemming from role overlap arises when family harmony prevents decision making in<br />

the firm. This occurs, for instance, when there is clearly one capable successor but all siblings<br />

are installed as new directors because family harmony is prioritized. Schulze et al. (2001)<br />

argue in this respect that there are specific agency costs for family firms that should be take<br />

into account. For example children in management positions can acts as free riders because<br />

they know that their parents will not discipline them.<br />

With respect to shared identity <strong>and</strong> the meaning of the family company, Sharma (2004)<br />

suggests that the alignment of goals that different stakeholders are striving to achieve is an<br />

important predictor of family firm performance. A mismatch can lead to serious conflicts that<br />

can harm the family business. A shared identity helps to align such goals.<br />

5


Jaffe (2007) describes the attribute of private language as family members having a special<br />

shorth<strong>and</strong> language – they share information quickly <strong>and</strong> therefore get things done<br />

efficiently. However, this does not imply that families know how to communicate about<br />

sensitive issues. Issues that are not discussed can develop into conflicts that can eventually<br />

make it impossible to continue to work together. Furthermore, Flören (2004) suggests that<br />

taboo subjects exist within families <strong>and</strong>, by implication, within family businesses. Such<br />

topics are left buried in order to avoid disrupting the family harmony.<br />

Another aspect relates to the phenomena of mutual awareness <strong>and</strong> privacy; family members<br />

have a keen awareness of each other’s circumstances. This gives them insights into how they<br />

can support one another. At the same time, this awareness can stimulate the feeling that one is<br />

“living in a fishbowl” – maintaining a private life outside the family business is not easy,<br />

which can make family members feel oppressed (Tagiuri & Davis, 1996).<br />

This discussion of the bivalent attributes reveals the complexity confronted by stakeholders in<br />

a family firm. In the next section, the resource-based view is introduced as a theoretical<br />

framework that can be used to analyze the distinct attributes in detail.<br />

1.3.2 Familiness<br />

Tagiuri <strong>and</strong> Davis (1996) suggest that family firms have unique resources that create positive<br />

<strong>and</strong> negative outcomes for the firm. This notion has more recently been referred to as the<br />

“familiness” of the firm (Sirmon & Hitt, 2003). Habbershon <strong>and</strong> Williams (1999) describe<br />

familiness as the unique bundle of resources created by the interaction of family <strong>and</strong> business<br />

that can stimulate competitive advantage. In this thesis, the resource-based view (RBV) is<br />

used as the theoretical foundation for underst<strong>and</strong>ing the distinctive attributes of a family firm.<br />

The theoretical assumptions of the RBV can be specified to fit the family firm context<br />

(Habbershon & Williams, 1999).<br />

The RBV is one of the most influential theoretical frameworks in the field of strategic<br />

management (Barney, Wright & Ketchen, 2001; Newbert, 2007). Wernerfelt (1984)<br />

introduced the notion that firms can be analyzed by focusing on their resources rather than<br />

their products. A resource is defined by Wernerfelt (1984, p. 172) as “anything which could<br />

be thought of as a strength or weakness of a firm.” The key objective of RBV is to establish a<br />

causal relationship between resources <strong>and</strong> a long-term competitive advantage. Barney (1991)<br />

argued that resources should have four characteristics to establish a competitive advantage.<br />

Such resources, which are labeled “strategic resources,” should be: valuable, rare, difficult to<br />

imitate, <strong>and</strong> non-substitutable. Examples include reputation, patents, <strong>and</strong> unique knowledge<br />

(Barney, 1991; Crook, Ketchen, Combs, & Todd, 2008). Barney based the RBV on two<br />

assumptions: resources are heterogeneously distributed among firms <strong>and</strong> they are imperfectly<br />

mobile. These assumptions allow for differences in firm resource endowments to exist <strong>and</strong><br />

persist over time. Both assumptions therefore allow for resource-based competitive<br />

advantages.<br />

6


The RBV has proven its value as an appropriate theoretical framework in the field of family<br />

business research (Chrisman, Chua & Zahra, 2003). Within this framework, the competitive<br />

advantage of a firm can be discussed by referring to the firm’s underlying resources, specific<br />

strategies <strong>and</strong> skills, <strong>and</strong> thereby allows for differentiation among family firms instead of<br />

regarding the family effect as a specific advantage that is common to all family firms.<br />

Habbershon <strong>and</strong> Williams (1999) stipulate that this focus on underlying resources, specific<br />

strategies <strong>and</strong> skills is the appropriate level of analysis for assessments of family firm<br />

advantages. This is also acknowledged by Melin <strong>and</strong> Nordqvist (2007), who state that<br />

overemphasizing the similarities between family firms downplays the differences <strong>and</strong> can<br />

lead to an overly simplistic view on family firms. The RBV, therefore, is an appropriate<br />

framework for focusing on the distinctive resources of family firms <strong>and</strong> for analyzing the<br />

firms’ unique traits.<br />

Various scholars, in turn, discuss possible sources of competitive advantage among family<br />

firms (Carney, 2005: Eddleston, Kellermans & Sarathy, 2008; Habbershon & Williams,<br />

1999; Miller & Le Breton-Miller, 2005; Miller et al., 2008; Sirmon & Hitt, 2003). Sirmon<br />

<strong>and</strong> Hitt (2003) discuss five possible family-firm-specific resources <strong>and</strong> their corresponding<br />

positive outcomes:<br />

• Human capital is defined as the acquired knowledge, skills, <strong>and</strong> capabilities of<br />

individuals. The positive attributes related to human capital that stem from family<br />

influence include extraordinary commitment, warm relationships <strong>and</strong> the potential for<br />

deep, firm-specific tacit knowledge.<br />

• Social capital is the goodwill or other benefits generated by various social relations<br />

(Adler & Kwon, 2002). Social capital in the family firm is based on strong network<br />

ties, shared languages <strong>and</strong> narratives, trust, norms <strong>and</strong> obligations. All of these<br />

components are embedded in the family <strong>and</strong> can lead to the development of human<br />

capital.<br />

• Patient financial capital is capital that is invested for an extended period of time <strong>and</strong><br />

thus carries little threat of liquidation on short notice. In this regard, the generational<br />

outlook of family members creates a focus on a long-time horizon instead of shortterm<br />

results.<br />

• Survivability capital represents the pooled personal resources that family members are<br />

willing to loan, contribute, or share for the benefit of the family business. Such capital<br />

can help the firm through poor economic times.<br />

• Governance structure is relevant in that the mutually-shared objectives, trust <strong>and</strong><br />

family bonds found in family firms reduce more formal governance costs.<br />

However, familiness is not always a positive characteristic. Habbershon <strong>and</strong> Williams (1999)<br />

coins the terms “distinctive familiness” <strong>and</strong> “constrictive familiness” to differentiate between<br />

the positive <strong>and</strong> negative sides of familiness. “Distinctive familiness” st<strong>and</strong>s for the<br />

enhancement of family <strong>and</strong> business capital stocks that occurs as a consequence of a balanced<br />

flow of capital between these systems. On the other h<strong>and</strong>, “constrictive familiness” reflects<br />

the negative outcome caused by an excess flow of capital in one direction. Sharma (2008)<br />

7


emphasizes in this respect the need for a balance in the input <strong>and</strong> output of resources from the<br />

family to the business <strong>and</strong> vice versa.<br />

In general, the RBV emphasizes that the availability of appropriate resources is a necessary,<br />

but insufficient, condition for achieving a long-term competitive advantage. <strong>Resources</strong> must<br />

be managed in a way that leads to capabilities that make it possible to achieve a competitive<br />

advantage (Sirmon & Hitt, 2003). Therefore, the management of these strategic resources is<br />

discussed in the next section.<br />

1.3.3 Management of strategic resources<br />

Tagiuri <strong>and</strong> Davis (1996) suggest that the success of a business will depend on whether the<br />

bivalent characteristics are effectively managed. The effective management of these attributes<br />

should result in a positive outcome for the business dimension, as well as for the family <strong>and</strong><br />

ownership dimensions. The idea that long-term prosperity of the family business system<br />

requires positive outcomes in both the business dimension <strong>and</strong> the family dimension is<br />

widely acknowledged (e.g., Ward, 1987; Litz, 2008; Sharma, 2004). Sharma (2004) argues<br />

that recognition of the intertwinement of family <strong>and</strong> business leads to the definition of highperforming<br />

family firms as organizations that take financial <strong>and</strong> non-financial goals into<br />

account when attempting to meet the expectations of various stakeholders, including the<br />

family, the business, <strong>and</strong> owners. Figure 1.2 depicts the performance of family firms in a<br />

matrix. The expression “warm hearts <strong>and</strong> deep pockets” st<strong>and</strong>s for those family business<br />

systems that have achieved high levels of emotional <strong>and</strong> financial capital, the preferred state a<br />

the family firm. Sharma proposes that family firms can overcome low levels in one of the two<br />

dimensions in the short term. However, in the long term, family firms need to achieve<br />

positive scores in both dimensions.<br />

Figure 1.2: Matrix of family <strong>and</strong> business dimensions<br />

Business dimension<br />

Positive<br />

Negative<br />

Source: Sharma, 2004<br />

Positive<br />

<strong>Family</strong> dimension<br />

Negative<br />

I<br />

II<br />

Warm hearts <strong>and</strong> deep pockets Pained hearts but deep pockets<br />

High financial <strong>and</strong> high emotional High financial but low emotional<br />

capital<br />

capital<br />

III<br />

IV<br />

Warm hearts but empty pockets Pained hearts <strong>and</strong> empty pockets<br />

Low financial but high emotional capital Low financial <strong>and</strong> low emotional<br />

capital<br />

Litz (2008) takes a somewhat broader approach by proposing that a family business system<br />

can be compared to a Möbius strip, which is a mathematical concept. A Möbius strip can be<br />

described as “a b<strong>and</strong> of paper given a 180 degree twist prior to having its two ends<br />

8


connected” (see Figure 1.3, based on Litz, 2008, p. 219). In other words, each system’s<br />

output becomes another system’s input. This phenomenon occurs in family firms when crosssystem<br />

transfers occur. Consider, for example, a next-generation member who becomes an<br />

employee of the family business. The family’s child <strong>and</strong> the firm’s wages are transferred<br />

across systems to become the other systems’ inputs: workforce for the firm <strong>and</strong> income for<br />

the family. Litz joins Sharma (2004) in arguing that if long-term success is to be possible,<br />

there must be synergy within the subsystems (net positive effect of the transfers within each<br />

dimension) <strong>and</strong> symmetry in the overall balance of transfers between the two subsystems.<br />

Figure 1.3: Möbius strip<br />

Source: turbosquid.com<br />

The viewpoints discussed in this section demonstrate that family business scholars widely<br />

acknowledge the idea that family firms have distinctive characteristics that stem from the<br />

interaction of the family, business, <strong>and</strong> ownership subsystems. These characteristics are<br />

bivalent, as they carry latent positive <strong>and</strong> negative potential. Furthermore, when these<br />

characteristics have a positive effect (distinctive familiness), they can be regarded as strategic<br />

resources that lead to competitive advantage. Before the research questions for this<br />

dissertation are presented, it is necessary to underst<strong>and</strong> the implications of the results from<br />

previous research on this topic. These research results are discussed in the next section.<br />

1.4 Existing research findings<br />

Relatively little empirical research has focused on the concept of familiness (Astrachan,<br />

2010). Astrachan notes in this respect that “the sources from which these strategic resources<br />

emerge, the ways in which they can change over time, <strong>and</strong> the means through which they can<br />

be nurtured <strong>and</strong> preserved, are not well explored” (2010, p.8). Sirmon <strong>and</strong> Hitt (2003)<br />

identify human, social, survivability, <strong>and</strong> patient capital, as well as governance structures as<br />

possible family-firm-specific strategic resources (see section 1.3.2). More specifically, social<br />

capital <strong>and</strong> tacit knowledge, as elements of human capital, are regarded as key strategic<br />

resources for which family involvement plays an important role (e.g., Arregle, Hitt, Sirmon &<br />

Very, 2007; Cabrera-Suárez, De Saá-Pérez & Garcia-Almeida, 2001; Pearson, Carr & Shaw,<br />

2008; Royer, Simons, Boyd & Rafferty, 2008; Sharma, 2008; Sirmon & Hitt, 2003). In<br />

9


additional, social capital theory is viewed as a promising theory for further development of<br />

the “familiness” construct (Arregle et al., 2007; Pearson et al., 2008).<br />

In order to analyze whether these proposition hold, the findings of previous empirical<br />

research on the topics of social capital <strong>and</strong> tacit knowledge are reviewed in this section. This<br />

review also helps to identify the gaps in the existing knowledge on these topics <strong>and</strong> highlights<br />

areas in need of additional research. As social capital is the core construct considered in<br />

Chapters 2, 3, <strong>and</strong> 4, the empirical findings related to social capital are bundled <strong>and</strong> discussed<br />

in this section. The empirical findings from previous research on tacit knowledge are<br />

discussed in Chapter 5.<br />

Tacit knowledge<br />

Tacit knowledge differs from explicit knowledge in that it is knowledge stored in routines,<br />

values, norms, etc., rather than in h<strong>and</strong>books (Grant, 1991). Furthermore, actors need skills to<br />

apply tacit knowledge, which are gained through experience (Chirico, 2008), <strong>and</strong> tacit<br />

knowledge is difficult to transfer (Cabrera-Suárez et al., 2001). Therefore, Hoy <strong>and</strong> Sharma<br />

(2010) identified not only the specific knowledge of a firm but also the transferability of that<br />

knowledge as key strategic resources to manage. Research on possible hurdles in the<br />

knowledge management process reveals three main categories of barriers in the knowledge<br />

transfer process: trust; conflicts <strong>and</strong> rivalry; <strong>and</strong> social structure <strong>and</strong> networks (see Chapter<br />

5). These findings reveal a strong link between tacit knowledge, as a component of human<br />

capital, <strong>and</strong> social capital. The transfer of tacit knowledge appears to be one of the potential<br />

positive outcomes of social capital (Zahra, Hayton, Neubaum, Dibrell & Craig, 2008).<br />

Furthermore, the transfer of tacit knowledge during business transfer is a topic attracting<br />

considerable interest (Zahra, Neubaum & Larranetta, 2007). The theoretical construct of the<br />

tacit knowledge climate (Cabrera-Suárez et al., 2001) therefore seems to be an appropriate<br />

construct to test among family <strong>and</strong> non-family firms.<br />

Social capital<br />

Social capital is a concept that can be studied at multiple levels. In this dissertation, the focus<br />

is on the group level: owner groups in private firms <strong>and</strong> copreneurs. Lee’s review (2009) <strong>and</strong><br />

Payne, Moore, Griffis, <strong>and</strong> Autry’s (2010) systematic analysis of social capital in the<br />

management domain are the starting points of this review.<br />

Payne et al. (2010) analyze social capital research in 14 major management journals. These<br />

journals were selected because they had previously been used in similar management<br />

reviews. As the focus of this dissertation is on private firms, especially family firms, Payne et<br />

al.’s (2010) analysis is extended to include key journals within the field of family business<br />

research that are not among the selected management journals. This is done on the basis of<br />

the list of journals used by Debicki, Matherne III, Kellermans, <strong>and</strong> Chrisman (2009) in their<br />

analysis of the contributions in the family business research field. This leads to the inclusion<br />

of eight additional journals that featured three or more family business articles between 2001<br />

10


<strong>and</strong> 2007 (the review period used by Debicki et al., 2009). The Journal of <strong>Family</strong> Business<br />

Strategy, a journal launched in 2010 with a specific focus on family business research, is also<br />

included.<br />

Payne et al. (2011) distinguish between conceptual <strong>and</strong> empirical papers. They also use a<br />

typology to distinguish between the individual or collective level <strong>and</strong> an internal or an<br />

external focus. This framework leads to a two by two matrix. Every article is labeled using<br />

these criteria. In this dissertation, the focus is on the empirical findings at the group level.<br />

Therefore, the articles included are those labeled as “collective” <strong>and</strong> “empirical” in Payne et<br />

al.’s (2011) gross list. These articles are covered in column two of Table 1.1. Payne’s time<br />

frame ranges from 1989 to 2008. Therefore, this review extends the time frame to include<br />

2009, 2010, <strong>and</strong> 2011. For these years, the selected journals were searched for articles in<br />

which social capital was the core construct. The results were limited to articles in which<br />

“social capital” was used as a key work or in the abstract. The numbers of articles that were<br />

found in this manner in the various journals are given in column four of Table 1.1. The same<br />

procedure was followed for the nine additional journals. For this group, the search covered<br />

the period from 1998 to 2011. These results are shown in column four in the lower part of the<br />

table.<br />

The next step was to filter these findings based on the criteria that reflected the focus of this<br />

dissertation: empirical research with a quantitative approach, a context of private firms in a<br />

for-profit sector, <strong>and</strong> the group level as the level of analysis. The numbers of articles that met<br />

these criteria are given in columns three <strong>and</strong> five. Column three covers the articles in Payne<br />

et al.’s (2011) review that met these criteria, while column five covers the articles published<br />

in the additional years by the journals reviewed by Payne et al. <strong>and</strong> those published in the<br />

additional journals from 1998 to 2011.<br />

11


Table 1.1: Social capital research in major management <strong>and</strong> family business journals, 1998-2011<br />

Journals reviewed by Payne et al. (2011)<br />

Review period 1998-2008 Met criteria 2009-2011 Met criteria<br />

Academy of Management Journal 11 3 0 0<br />

Academy of Management Review 0 0 0 0<br />

Administrative Science Quarterly 3 1 0 0<br />

Entrepreneurship Theory & Practice 0 0 11 2<br />

Journal of Business Venturing 1 0 7 1<br />

Journal of Management 0 0 2 0<br />

Journal of Management Studies 4 1 1 0<br />

Journal of Organizational Behavior 2 0 1 0<br />

Management Science 2 0 2 0<br />

Organization Science 4 0 3 0<br />

<strong>Strategic</strong> Management Journal 8 2 3 1<br />

Journal of Applied Psychology 0 0 3 0<br />

Personnel Psychology 0 0 0 0<br />

Organizational Behavior & Human Decision Processes 0 0 0 0<br />

Total number of articles from Payne’s et al. review 35 7 33 4<br />

Additional journals based on review by Debicki et al. (2009)<br />

Review period 1998-2011 Met criteria<br />

Corporate Governance 9 0<br />

<strong>Family</strong> Business Review 4 2<br />

International Small Business Journal 10 3<br />

Journal of Business Research 10 1<br />

Journal of Small Business Management 9 3<br />

Organization Studies 7 1<br />

Small Business Economics 18 3<br />

New family business journal launched in 2010<br />

Journal of <strong>Family</strong> Business Strategy 4 1<br />

Total number of articles from additional journals 71 22<br />

The analysis of Payne et al.’s (2011) review highlights the Academy of Management Journal<br />

<strong>and</strong> <strong>Strategic</strong> Management Journal as key contributors with roughly half of the total<br />

empirical articles on social capital. In 2009-2011, Entrepreneurship Theory & Practice paid a<br />

lot of attention to social capital (11 articles). From 2009 to 2011, 33 articles were published<br />

on this topic in comparison to a total of 35 articles in the previous ten years. These figures<br />

indicate that the construct of social capital <strong>and</strong>, more specifically, empirical studies of this<br />

construct at a collective level are viewed as increasingly relevant. The relatively large number<br />

of articles from the additional journal list can be viewed as a signal that the social capital<br />

theory is seen as relevant within the fields of family businesses, <strong>and</strong> small <strong>and</strong> medium sized<br />

enterprises. A comparison of the figures from column three <strong>and</strong> five to the total for all<br />

selected articles shows that only one-fifth of all articles met the specific criteria of<br />

quantitative research within private firms at the group level. Overall, while the figures in<br />

Table 1.1 reflect the growing interest in social capital theory, they also emphasize that<br />

relatively little attention has been paid to quantitative research at the group level. The key<br />

findings from the individual papers are discussed in Table 1.2.<br />

12


Table 1.2: Empirical trends in social capital studies of private firms<br />

Study<br />

Journal 1<br />

Sample Key constructs of social capital Key findings on social capital<br />

Aartsad et<br />

al. (2010)<br />

ETP<br />

Acquaah<br />

(2007)<br />

SMJ<br />

Audretsch<br />

et al.<br />

(2011)<br />

ISBJ<br />

Berent-<br />

Braun &<br />

Uhlaner<br />

(2012)<br />

SBE<br />

Bamford<br />

et al.<br />

(2006)<br />

JSBM<br />

Brewton<br />

et al.<br />

(2010)<br />

JFBS<br />

Carr et al.<br />

(2011)<br />

ETP<br />

Chua et<br />

al. (2011)<br />

JBV<br />

Hydroelectric<br />

micro-power<br />

start-ups<br />

(Norway)<br />

CEOs of<br />

medium <strong>and</strong><br />

large firms<br />

(Ghana)<br />

Participants<br />

in a new<br />

venture<br />

workshop,<br />

(US)<br />

Non-r<strong>and</strong>om<br />

group of FB<br />

(18<br />

countries)<br />

New<br />

ventures in<br />

bank sector<br />

(US)<br />

Small <strong>and</strong><br />

mediumsized<br />

family<br />

firms (US)<br />

Small family<br />

businesses<br />

(US)<br />

New<br />

ventures with<br />

varying<br />

levels family<br />

involvement<br />

(US)<br />

Dyadic social capital measured with<br />

network structure<br />

Three types of networking: firms,<br />

government, <strong>and</strong> community; firms:<br />

buyers, suppliers, <strong>and</strong> competitors<br />

Mobilization of contacts (structural<br />

dimension)<br />

Results indicate that firms lacking social<br />

capital can enhance performance through<br />

cohesion with firms rich in social capital.<br />

Entrepreneurs can benefit by mimicking the<br />

networking patterns of successful colleagues.<br />

Social capital developed from managerial<br />

networking <strong>and</strong> social relationships with top<br />

managers at other firms, government officials<br />

(political leaders <strong>and</strong> bureaucratic officials),<br />

<strong>and</strong> community leaders enhances<br />

organizational performance.<br />

Positive relationships are found for groups<br />

with pre-existing professional interactions for<br />

founding a firm after the workshop (=<br />

accelerator).<br />

Owner focus on shared wealth Owner focus on shared wealth acts as a<br />

mediating variable for the relationship<br />

between family governance practices <strong>and</strong> the<br />

financial performance of the family business.<br />

Size of top management team (TMT),<br />

exit of founder/ CEO<br />

Adjustment strategies, family-tobusiness<br />

intermingling, way of life<br />

Collective/internal social capital<br />

stemming from family members; split<br />

into structural, cognitive, <strong>and</strong><br />

relational dimensions<br />

<strong>Family</strong> involvement: ownership,<br />

governance, <strong>and</strong> management<br />

The exit of the founder/CEO has negative<br />

impact on performance. The size of the top<br />

management team has a moderating effect.<br />

The set of social capital variables contributes<br />

significantly to the explanation of firm<br />

resilience for rural, but not urban, firms. Of<br />

note is the negative relationship between firm<br />

resilience <strong>and</strong> the crossover of family <strong>and</strong> firm<br />

tasks for rural firms. The lone significant<br />

social capital variable for urban businesses<br />

was the meaning of the firm for the business<br />

owner.<br />

Scales are developed <strong>and</strong> tested to measure<br />

internal social capital in family firms. A<br />

positive association is found with knowledge<br />

sharing, cohesion, work satisfaction, <strong>and</strong><br />

family satisfaction, while a weak link is found<br />

with firm performance.<br />

<strong>Family</strong> involvement increases the ability to<br />

borrow family social capital. <strong>Family</strong><br />

involvement has a positive influence on new<br />

venture debt financing.<br />

1 AMJ = Academy of Management Journal, ETP = Entrepreneurship Theory & Practice, FBR = <strong>Family</strong><br />

Business Review, ISBJ = International Small Business Journal, JFBS = Journal of <strong>Family</strong> Business Strategy,<br />

JBV = Journal of Business Venturing, JMS = Journal of Management Sciences, JSBM = Journal of Small<br />

Business Management, SMJ = <strong>Strategic</strong> Management Journal, SBE = Small Business Economics.<br />

13


Study<br />

Journal 2<br />

Danes et al.<br />

(2009) FBR<br />

Fang et al.<br />

(2010) ISBJ<br />

Fitzgerald et<br />

al. (2010)<br />

JSBM<br />

Maurer et al.<br />

(2011)<br />

OS<br />

Miller et al.<br />

(2007) ISBJ<br />

Molina-<br />

Morales &<br />

Martinez -<br />

Fernández<br />

(2009) SMJ<br />

Pennings et<br />

al. (1998)<br />

AMJ<br />

Pérez-Luno<br />

et al. (2011)<br />

JBR<br />

Sample Key constructs of social capital Key findings on social capital<br />

Small <strong>and</strong><br />

medium-sized<br />

family firms (US)<br />

CEOs or Top<br />

management team<br />

tenants of<br />

incubator<br />

program (Taiwan)<br />

<strong>Family</strong> social capital (FSC):<br />

djustment strategies, family<br />

functioning, family-to-business<br />

intermingling, way of life,<br />

generation, <strong>and</strong> family/firm<br />

congruity<br />

Tenant-incubator social capital:<br />

relationship, shared cognition, <strong>and</strong><br />

incubator’s referral position<br />

Copreneurs (US) FSC: receptivity of the family to<br />

the community, family functional<br />

integrity, <strong>and</strong> community support<br />

Project leaders in<br />

firms in machine<br />

engineering<br />

industry<br />

(Germany)<br />

Small business<br />

owners (family<br />

<strong>and</strong> non-family)<br />

(US)<br />

Key-informant<br />

SMEs (Spain)<br />

Accounting firms<br />

1880-1990<br />

(Netherl<strong>and</strong>s)<br />

R&D managers in<br />

medium-firms<br />

(Spain)<br />

Intra-organizational social capital<br />

structural: the number of intraorganizational<br />

ties; relational:<br />

strength of ties <strong>and</strong> trust<br />

Membership in network: years,<br />

personal friendship, activities,<br />

shared vision, continuance,<br />

resource sharing<br />

FSC has no short-term effect, but it has a<br />

long-term significant effect on gross<br />

revenue variance <strong>and</strong> owners’ success<br />

perceptions. Adjustment strategies have a<br />

positive effect.<br />

Tenants of incubation programs uniquely<br />

leverage their social capital with their<br />

incubator <strong>and</strong>, in turn, enhance their own<br />

interorganizational learning <strong>and</strong><br />

performance.<br />

Business owners’ engagement in at least<br />

one socially responsible activity is<br />

positively associated with a positive<br />

attitude about the community <strong>and</strong> a wellfunctioning<br />

family.<br />

No association is found between the<br />

structural dimension of social capital <strong>and</strong><br />

intra-organizational knowledge transfer.<br />

There is a positive association for tie<br />

strength, while the relation between intraorganizational<br />

trust <strong>and</strong> intraorganizational<br />

knowledge transfer is<br />

insignificant.<br />

A shared vision <strong>and</strong> high risk resource<br />

sharing among network members<br />

significantly benefit members’ businesses.<br />

<strong>Strategic</strong> networking (cooperation) has a<br />

positive impact.<br />

Social interaction <strong>and</strong> trust The impact of social capital decreases<br />

beyond a certain point of development. In<br />

fact, the effect of social interactions <strong>and</strong><br />

trust on firm value creation follows an<br />

inverted U-shaped curve.<br />

Social capital proxy of<br />

professionals' ties to potential<br />

clients<br />

Relational side of external social<br />

capital<br />

Human <strong>and</strong> social capital strongly predict<br />

firm dissolution (source of competitive<br />

advantage). Effects depend on specificity<br />

(uniqueness) <strong>and</strong> non-appropriability (the<br />

ownership status of the capital).<br />

Social capital per se exerts a weak<br />

influence on radical innovations. Social<br />

capital <strong>and</strong> the tacitness of knowledge<br />

have a positive join effect on radical<br />

innovations (SC as moderator) but no<br />

moderation with knowledge complexity.<br />

2 AMJ = Academy of Management Journal, ETP = Entrepreneurship Theory & Practice, FBR = <strong>Family</strong><br />

Business Review, ISBJ = International Small Business Journal, JFBS = Journal of <strong>Family</strong> Business Strategy,<br />

JBV = Journal of Business Venturing, JMS = Journal of Management Sciences, JSBM = Journal of Small<br />

Business Management, SMJ = <strong>Strategic</strong> Management Journal, SBE = Small Business Economics.<br />

14


Study<br />

Journal 3<br />

Reagans et<br />

al. (2003)<br />

ASQ<br />

Samuelsson<br />

& Davidson<br />

(2009)<br />

SBE<br />

Sorenson et<br />

al. (2009)<br />

FBR<br />

Stam &<br />

Elfring<br />

(2008) AMJ<br />

Oh et al.<br />

(2004) AMJ<br />

Uhlaner et<br />

al. (2007)<br />

SBE<br />

Werbel &<br />

Danes<br />

(2010)<br />

JSBM<br />

Wu (2008)<br />

JMS<br />

Yli-Renko et<br />

al. (2001)<br />

SMJ<br />

Sample Key constructs of<br />

social capital<br />

Project teams of<br />

medium-sized<br />

firms<br />

New venture<br />

longitudinal<br />

(Sweden)<br />

Small family<br />

firms (US)<br />

Founding teams,<br />

ICT sector<br />

(Netherl<strong>and</strong>s)<br />

Members of work<br />

groups in SMEs<br />

(Korea)<br />

Private family <strong>and</strong><br />

non-family firms<br />

(Netherl<strong>and</strong>s)<br />

New small family<br />

businesses (US)<br />

Hong Kong-based<br />

Chinese familyowned<br />

SMEs,<br />

manufacturing<br />

sector<br />

Young firms in<br />

five hightechnology<br />

sectors<br />

(UK)<br />

Network status:<br />

internal density <strong>and</strong><br />

external range<br />

Instrumental social<br />

capital of all team<br />

members <strong>and</strong> social<br />

reinforcement<br />

Collaborative<br />

dialogue <strong>and</strong> ethical<br />

norms<br />

Network centrality<br />

<strong>and</strong> bridging ties<br />

Group closure,<br />

intergroup<br />

horizontal bridging,<br />

<strong>and</strong> intergroup<br />

vertical bridging<br />

Ownership<br />

commitment,<br />

collective norms,<br />

<strong>and</strong> shared goals<br />

Spousal workfamily<br />

conflict<br />

(WFC) <strong>and</strong> spousal<br />

commitment<br />

Network ties,<br />

repeated<br />

transactions, <strong>and</strong><br />

trust, with<br />

information sharing<br />

as mediating<br />

variable<br />

Relation with major<br />

client: social<br />

interaction,<br />

customer network<br />

ties, <strong>and</strong><br />

relationship quality<br />

Key findings on social capital<br />

Social network variables have positive effects on team<br />

performance. The use of these network criteria to build teams<br />

would improve their performance.<br />

SC is relatively successful in explaining progress in the<br />

creation process for a minority of innovative ventures, but<br />

has limited success for the imitative majority. The building<br />

up of instrumental social capital is important for making<br />

progress in both types of ventures.<br />

Collaborative dialogue <strong>and</strong> ethical norms cultivates family<br />

social capital (FSC). FSC is positively related to firm<br />

performance.<br />

High network centrality <strong>and</strong> extensive bridging ties<br />

strengthen the link between entrepreneurial orientation <strong>and</strong><br />

performance. Support is found for interactive effects between<br />

internal <strong>and</strong> external social capital.<br />

U-shaped curvilinear relationship is found between group<br />

closure <strong>and</strong> group effectiveness. Positive relations are found<br />

with intergroup vertical bridging but not with horizontal<br />

bridging.<br />

The results indicate a positive association between family<br />

ownership <strong>and</strong> collective norms <strong>and</strong> goals, a positive<br />

relationship between collective norms <strong>and</strong> goals <strong>and</strong> owner<br />

commitment, <strong>and</strong> a positive relationship between owner<br />

commitment <strong>and</strong> firm performance.<br />

When the spouse experiences WFC, then the spouse is likely<br />

to be a resource constraint. Spousal commitment to a new<br />

venture exacerbates this relationship.<br />

Strong indications that the information benefit is one of the<br />

key benefits of social capital, that information sharing<br />

contributes to firm performance, <strong>and</strong> that different<br />

dimensions of social capital have different levels of influence<br />

on firm performance. Some dimensions of social capital may<br />

be necessary but insufficient for competitiveness<br />

improvement.<br />

Social interaction <strong>and</strong> network ties are positively related to<br />

knowledge acquisition, but the quality of that relationship is<br />

negatively related to knowledge acquisition.<br />

The papers included in the table reflect the variety of ways in which social capital can be<br />

measured. On the basis of the internal-external focus of social capital (Adler & Kwon, 2002),<br />

3 AMJ = Academy of Management Journal, ETP = Entrepreneurship Theory & Practice, FBR = <strong>Family</strong><br />

Business Review, ISBJ = International Small Business Journal, JFBS = Journal of <strong>Family</strong> Business Strategy,<br />

JBV = Journal of Business Venturing, JMS = Journal of Management Sciences, JSBM = Journal of Small<br />

Business Management, SMJ = <strong>Strategic</strong> Management Journal, SBE = Small Business Economics.<br />

15


the papers can be divided into four categories: focus solely on the internal dimension of<br />

social capital (e.g., Bamford, Bruton & Hinson, 2006; Molina-Morales & Martinez-Perez,<br />

2009); focus on the external dimension (e.g., Audretsch, Aldridge & S<strong>and</strong>ers, 2011, Yli-<br />

Renko, Autio & Sapienza, 2001); combination of internal <strong>and</strong> external focuses (e.g., Oh,<br />

Chung & Labianca, 2004; Wu, 2008); <strong>and</strong> focus solely on the family dimension (e.g., Danes,<br />

Stafford, Haynes & Amaraputkar, 2009; Sorenson, Goodpaster, Hedberg & Yu, 2009). The<br />

last category is ambiguous, as the family dimension is partly external <strong>and</strong> partly internal<br />

depending on the role of family members within the firm. The consequence of these different<br />

viewpoints is that the variety of key constructs to measure social capital is even greater. The<br />

empirical research that has been carried out to date has been based on constructs ranging<br />

from ethical norms, adjustment strategies, social reinforcement, <strong>and</strong> network memberships to<br />

network positions <strong>and</strong> bridging ties. Most of these constructs can be labeled as external or<br />

internal elements of social capital. Although this variety makes it difficult to draw general<br />

conclusions, some tentative propositions can be made.<br />

The majority of the papers show that social capital has a positive influence on the dependent<br />

variable, such as firm performance. However, the link between social capital <strong>and</strong> firm<br />

performance is mixed, with different papers indicating positive (Sorenson et al., 2009;<br />

Uhlaner, Flören, Geerlings, 2007), weak (Carr, Cole, Ring & Blettner, 2011), or insignificant<br />

results (Danes et al., 2009). There is also evidence that the relation with the performance<br />

variable is U-shaped curvilinear (Molina-Morales & Martinez-Perez, 2009; Oh et al., 2004).<br />

Furthermore, social capital can act as a moderator (e.g., Peréz-Luno et al., 2011) or a<br />

mediator (e.g., Berent-Braun & Uhlaner, 2012), <strong>and</strong> there is evidence that social capital is<br />

only effective in combination with other variables, such as knowledge sharing (Yli-Renko et<br />

al., 2001) or human capital (Pennings, Lee & Van Witteloostuijn, 1998).<br />

Overall, there is evidence of the potential positive effects of social capital. However, more<br />

rigorous research is needed to develop a clear picture on the impact of social capital in the<br />

context of private firms for several reasons. First, the focus on the group of owners has<br />

largely been neglected. Such a focus seems relevant, especially when the relational <strong>and</strong><br />

cognitive aspects of social capital are investigated. Uhlaner et al.’s (2007) finding that the<br />

commitment of owners has a positive impact on firm performance can be taken as a starting<br />

point in this respect. To achieve this focus, it would be helpful to make the roles of the<br />

respondents more transparent. In some studies covered here, it is unclear whether the CEO is<br />

also a shareholder of the firm (e.g., Acquaah, 2007).<br />

Second, the influence of the family on the development of social capital needs more attention.<br />

For instance, in what specific roles do family members influence the development of social<br />

capital? Is this process different from those involving non-family owners?<br />

A third aspect that has largely been ignored is the potential value of exploring the diverse<br />

links among attributes of various dimension of social capital. Stam <strong>and</strong> Elfring (2008) find an<br />

interaction effect between internal <strong>and</strong> external social capital, which seems to offer an<br />

interesting path for exploration. Lee (2009) makes a similar statement, recommending that<br />

16


esearch include the structural, relational, <strong>and</strong> cognitive dimensions of social capital, <strong>and</strong><br />

focus on how these various dimensions interact <strong>and</strong> influence each other.<br />

The review presented in this section demonstrates the need for more empirical research in the<br />

field of social capital <strong>and</strong> tacit knowledge within the context of private firms. Furthermore, it<br />

reveals specific topics of interest. With these findings in mind, the research questions for this<br />

dissertation are formulated in the next section.<br />

1.5 Research question, framework, definitions <strong>and</strong> the Dutch context<br />

The gaps in the extant research identified in the previous section lead to the research question<br />

for this dissertation, which is formulated in section 1.5.1. As part of this introduction to the<br />

family business research field, family businesses definition issues are discussed in section<br />

1.5.2. The research done in this dissertation takes place in the context of Dutch private firms,<br />

with a specific focus on family firms. Therefore, some key figures on family firms in the<br />

Netherl<strong>and</strong>s are presented in section 1.5.3.<br />

1.5.1 Research question <strong>and</strong> research framework<br />

Problem statement<br />

In the previous section, social capital <strong>and</strong> tacit knowledge were identified as key strategic<br />

resources for family firms. The review of available research results reveals many interesting<br />

questions regarding the development of these strategic resources. Against the background of<br />

the dominance of family firms in the economic l<strong>and</strong>scape it seems important to gain a better<br />

underst<strong>and</strong>ing of how these strategic resources influence family firms. For example, do these<br />

resources stem from family involvement or are they merely influenced by family<br />

involvement? How <strong>and</strong> when do these strategic resources translate into competitive<br />

advantages?<br />

Research objectives<br />

The primary aim of this dissertation is to contribute to the underst<strong>and</strong>ing of how <strong>and</strong> when<br />

family involvement stimulates the development of strategic resources in privately held firms.<br />

The research focuses on social capital <strong>and</strong> on tacit knowledge as element of human capital.<br />

As stated earlier, the literature suggests that these components are potential key strategic<br />

resources for family firms. The secondary objective of this research is to underst<strong>and</strong> the<br />

extent to which these strategic resources affect the added value realized by the business.<br />

Research question<br />

How does family involvement influence the development of components of social capital <strong>and</strong><br />

tacit knowledge in privately held firms, <strong>and</strong> to what extent does the development of these<br />

strategic resources have an impact on firm performance?<br />

17


In order to answer the research question, the following issues must be addressed:<br />

1. What specific components of social capital <strong>and</strong> tacit knowledge are positively or<br />

negatively influenced by family involvement?<br />

2. Which contingency factors other than family involvement influence the development of<br />

components of social capital <strong>and</strong> tacit knowledge in privately held firms?<br />

3. Do components of social capital <strong>and</strong> tacit knowledge have a positive impact on firm<br />

performance?<br />

Figure 1.4 illustrates the research framework for the study of strategic resources in privately<br />

held firms on which this dissertation is based. This framework is based on the theoretical<br />

outline of a resource-based framework for assessing the strategic advantage of family firms<br />

(Habbershon & Williams, 1999). Habbershon <strong>and</strong> Williams’ framework identifies the<br />

organizational resources of family businesses <strong>and</strong> determines under which conditions they<br />

meet the criteria for creating a sustainable competitive advantage. Following this logic,<br />

resources have to result in capabilities, which in turn have to lead to competitive advantage<br />

<strong>and</strong> should result in higher performance.<br />

Figure 1.4: Research framework<br />

CONTINGENCY FACTORS RELATED TO BUSINESS CONTEXT<br />

<strong>Firm</strong> characteristics,ownershipcharacteristics,<br />

businesscycle<br />

STRATEGIC RESOURCES<br />

SOCIAL CAPITAL<br />

Bondingownershipsocial capital<br />

Bridgingownership social capital<br />

Spousalsocial capital<br />

HUMAN CAPITAL<br />

Tacit knowledge transfer climate<br />

CONTINGENCY FACTORS RELATED TO FAMILY CONTEXT<br />

<strong>Family</strong> involvement,family successor<br />

FIRM PERFORMANCE<br />

Product innovation<br />

Financial performance<br />

Post succession<br />

continuity<br />

18


1.5.2 Defining the family firm<br />

The three-circle model discussed in section 1.2 has become the key symbolic generalization<br />

of a family business (Moores, 2008). However, rigorous family business research also<br />

requires a clear definition. Unfortunately, this definition is still subject to an on-going debate.<br />

A consequence of this debate is that there is not one definition that is accepted by all family<br />

business scholars. It seems that it is not the distinction between a family firm <strong>and</strong> a firm that<br />

is clearly not a family firm that is difficult, the problem is more in defining the ‘grey area’ in<br />

between (Kraus, Harms & Fink, 2011). <strong>Family</strong> business scholars take different approaches in<br />

their efforts to overcome this definition dilemma. As several approaches are used to define<br />

family firms in this dissertation, it is necessary to underst<strong>and</strong> the positive <strong>and</strong> negative<br />

aspects of each approach. Major definition streams among researchers include:<br />

The components-of-involvement approach: Chrisman et al. (2005) argue that family<br />

involvement in ownership, governance, <strong>and</strong> management is what makes a firm a family firm.<br />

This is consistent with the three-circle model <strong>and</strong> implies that a sound definition has to reflect<br />

these components. An example of such a definition is that formulated by Flören (2002),<br />

which has been used in various studies in the Netherl<strong>and</strong>s. <strong>Firm</strong>s are defined as family firms<br />

when two out of three criteria (ownership, board membership, <strong>and</strong> strategic decision making)<br />

are met. Recently, the GEEF (European Group of Owner Managed <strong>and</strong> <strong>Family</strong> Enterprises)<br />

definition has been recommended by the European Commission (2009). In order to be<br />

categorized as a “family business” according to this definition, a firm must meet the<br />

following criteria: 1) the majority of ownership (directly or indirectly) rests in the h<strong>and</strong>s of a<br />

natural person <strong>and</strong>/or family; <strong>and</strong> 2) at least one representative of the family or kin is<br />

involved in the management or administration of the firm.<br />

The essence approach: Rather than capturing the components of family involvement, the core<br />

argument of this approach is that family involvement per se is not enough. <strong>Family</strong><br />

involvement must lead to behavior that produces certain distinctiveness (Chrisman et al.,<br />

2005). Litz’s (1995) definition of family businesses is formulated in this manner. To the<br />

criterion of family influence in ownership <strong>and</strong> management, Litz (1995) adds the intentions<br />

of the family with regards to intra-organizational family-based relatedness (the intention of<br />

achieving intra-generational succession). This leads to subcategories of potential family<br />

businesses <strong>and</strong> potential non-family businesses, which reflect the dynamic element of this<br />

definition.<br />

Early attempts in this approach focused mainly on defining family firms in such a way that<br />

they could be distinguished from non-family firms. More recent attempts acknowledge that<br />

this dichotomous categorization does not reflect the variation in the degrees of family<br />

involvement (Sharma, 2004). The significant variation among family firms in the “real<br />

world”– ranging from small “mom-<strong>and</strong>-pop” shops in retail business to very large<br />

multinationals – makes it difficult to cover all of them with one definition. Chrisman et al.<br />

(2007) state that an acknowledgement of the differences within families <strong>and</strong> how these<br />

19


differences influence firm behavior can contribute to the ability to explain variations within<br />

the subgroup of family firms.<br />

Categorization in family firm typologies: <strong>Family</strong> firms can be divided into subgroups based<br />

on different characteristics. For example, Sharma’s (2002) typology identifies 72 distinct<br />

categories based on the extent of family involvement in terms of ownership <strong>and</strong> management.<br />

A less complex categorization can be based on family relationships among the owners: one<br />

owner-manager, husb<strong>and</strong> <strong>and</strong> wife teams (copreneurs), sibling partnerships, <strong>and</strong> cousin<br />

consortiums. To acquire more in-depth knowledge about the family effect on the business, it<br />

seems fruitful to focus research on specific types of family firms, as such a focus makes it<br />

possible to analyze specific dynamics within each subgroup.<br />

Scales of family involvement: Shanker <strong>and</strong> Astrachan (1996) use a three-tier categorization<br />

ranging from broad (little family involvement) to middle (some family involvement) to<br />

narrow (a lot of family involvement). Another way of dealing with the varying degrees of<br />

family involvement is to work with a continuous scale, rather than a binary attribute, to assess<br />

the involvement of the family in the businesses. Such a scale makes it possible to include<br />

questions that relate to the components of the family involvement <strong>and</strong> to the essence of that<br />

involvement. They may cover family relationships between owners of the firm, whether the<br />

family has considerable influence on the business strategy, <strong>and</strong> whether the business could be<br />

described as a family business.<br />

In this dissertation, family firms are defined in various ways given the different research<br />

methods that are used in the various studies. For each study, the most appropriate definitions<br />

are chosen. In Chapter 2 <strong>and</strong> 3, family involvement is measured on a continuous scale. The<br />

scale is based on the Guttman family influence scale, which was developed by Uhlaner<br />

(2005). The use of a continuous scale instead of a binary attribute allows for a more in-depth<br />

underst<strong>and</strong>ing of how family involvement impacts the business. Chapter 4 is dedicated to<br />

copreneurs, an example of a specific type of family firm. In Chapter 5, the approach is to<br />

distinguish between succession of family or non-family members in family <strong>and</strong> non-family<br />

firms. The definition developed by Flören (2002) is used to distinguish between family <strong>and</strong><br />

non-family firms, as this definition is widely used <strong>and</strong> accepted in the Netherl<strong>and</strong>s. The<br />

decisions to use the various definitions <strong>and</strong> consequences for each approach are discussed in<br />

the research methods section of each study. Clearly, a consequence of the use of more than<br />

one definition is that the various outcomes are more difficult to compare. This is one of the<br />

limitations of this dissertation, as discussed in Chapter 6. However, it also leads to<br />

opportunities to compare the results with current research findings of other family business<br />

research projects.<br />

20


1.5.3 <strong>Family</strong> firms in the Netherl<strong>and</strong>s<br />

The empirical data used in this dissertation cover Dutch privately held firms. This section,<br />

therefore, provides a demographic overview of family businesses in the Netherl<strong>and</strong>s. The<br />

focus on the Netherl<strong>and</strong>s is welcome when the limited extant data on family business is<br />

considered (Expertgroep Familiebedrijven, 2007). 4 The need for more research on family<br />

firms was one recommendation given in a report that emphasized the vital role of family<br />

businesses in the Dutch economy (Expertgroep Familiebedrijven, 2007). As a follow up to<br />

that report, the Dutch Minister of Economic Affairs initiated a research project in 2008. This<br />

study, which was undertaken by Nyenrode Business Universiteit (Flören, Uhlaner & Berent-<br />

Braun, 2010), highlights the prevalence of family firms in the Netherl<strong>and</strong>s. The collected data<br />

indicate that approximately 260,000 businesses in the Netherl<strong>and</strong>s can be labeled as family<br />

firms (according to the GEEF definition), which is about 69% of all businesses (excluding the<br />

self-employed). Table 1.3 provides the distribution of family businesses by company size.<br />

Table 1.3: <strong>Family</strong> businesses in relation to all incorporated businesses in the Netherl<strong>and</strong>s (excluding self-<br />

employed)<br />

Employees<br />

(including director)<br />

Companies <strong>Family</strong> businesses, % <strong>Family</strong> businesses<br />

(estimated)<br />

2-9 304,418 72.9 221,921<br />

10-49 58,046 56.0 32,506<br />

50-99 6,939 49.7 3,449<br />

100-199 3,047 44.8 1,526<br />

200 or more 2,348 27.6 648<br />

Total 375,158 69.3 260,050<br />

Source: Flören et al. (2010)<br />

Notably, the idea that family businesses are only small “mom <strong>and</strong> pop shops” does not hold.<br />

Among firms with more than 50 employees, there is still a significant proportion of family<br />

businesses.<br />

Flören et al.’s (2010) study reveals some key characteristics of Dutch family firms. Some of<br />

these were discussed in Flören et al. (2010), while others could be retrieved from additional<br />

analyses of the data.<br />

Business sectors<br />

The data reveal the dominance of family firms in most business sectors with one exception:<br />

the financial services sector. The notion that almost all agricultural businesses are family<br />

business holds: 87% can be described as family firms.<br />

4 This report was written by the Expert Group on <strong>Family</strong> Business, a group established by the Dutch<br />

National Chamber of Commerce.<br />

21


Table 1.4: Representation in business sectors<br />

Business sector <strong>Family</strong> businesses, %<br />

Agriculture/fishing 87%<br />

Manufacturing 65%<br />

Construction 69%<br />

Wholesale/retail 79%<br />

Hospitality 76%<br />

Transport <strong>and</strong> communication 77%<br />

Financial services 43%<br />

Business services 55%<br />

Other services 5 86%<br />

Source: Flören et al. (2010)<br />

<strong>Firm</strong> age <strong>and</strong> generation<br />

There is no difference between the average age of the family businesses <strong>and</strong> non-family<br />

businesses. On average, the businesses included in the study have been in existence for 41<br />

years. The data reveal that 73.4% of the family firms are in the h<strong>and</strong>s of the first generation,<br />

16.4% are run by the second generation, <strong>and</strong> 10.2% are held by the third generation or later.<br />

Number of owners <strong>and</strong> their family relations<br />

Owners play a crucial role in privately owned firms. The majority of firms can be labeled as<br />

multiple-owner private firms. The data reveal that the number of owners of family businesses<br />

is significant lower than that of non-family businesses. Almost 90% of family firms have one<br />

or two owners, while the corresponding figure for non-family firms is only 62%.<br />

Furthermore, the percentage of firms with more than 100 owners is significantly higher in<br />

non-family firms.<br />

Table 1.5: Number of owners per business in the Netherl<strong>and</strong>s (excluding self-employed)<br />

Number of owners <strong>Family</strong> businesses, % Non-family businesses, %<br />

1 47.2 20.6<br />

2 41.9 41.4<br />

3-10 9.2 24.4<br />

11-50 0.6 2.3<br />

51-100 0.5 0.1<br />

More than 100 1.6 11.1<br />

Source: Flören et al. (2010)<br />

Respondents were asked to describe their family business as a reflection of the family<br />

relations among owners. The typologies used stem from the evolutionary path family firms<br />

can follow (e.g., Gersick et al., 1999) <strong>and</strong> reflect the family relations between the owners.<br />

The majority (56%) describe their businesses as single-owner-managed firms. Within the<br />

5 Other services sectors include: temporary work agencies, advertising agencies, architectural services,<br />

engineering services, law offices, economic services, detective <strong>and</strong> investigative services, <strong>and</strong> research <strong>and</strong><br />

computer-service agencies.<br />

22


group of business-owning families, three subgroups are roughly equally present: copreneurial<br />

firms (15.7%), parents <strong>and</strong> their children (10.9%), <strong>and</strong> sibling partnerships (11.8%). Cousin<br />

consortiums are a relatively small subgroup with a proportion of only 3.4%.<br />

1.6 Dissertation overview<br />

The research questions are addressed in Chapters 2 to 5. In Chapter 2, family involvement is<br />

tested as an antecedent of ownership social capital to analyze whether it matters if owners<br />

also have blood ties. In Chapter 3, the relation between social capital <strong>and</strong> product innovation<br />

is theoretically <strong>and</strong> empirically explored. Chapters 2 <strong>and</strong> 3 contribute to the literature by<br />

exploring the antecedents <strong>and</strong> effects of ownership social capital.<br />

Chapters 4 <strong>and</strong> 5 take two specific situations into account. In Chapter 4, the specific context<br />

of copreneurs as an important subgroup of family firms is considered. In this group, the three<br />

circles have a relatively large overlap. The chapter investigates the meaning of this overlap<br />

for the creation of social capital <strong>and</strong> the effects of spousal social capital on the performance<br />

of copreneurs. In Chapter 5, the dynamics of the three-circle model during the succession<br />

phase are explored, as is the question of whether it matters if the family stays involved in the<br />

business after succession. The transfer of tacit knowledge between successor <strong>and</strong> incumbent,<br />

<strong>and</strong> its effect on post-succession continuity are tested.<br />

Chapter 6 presents the overall conclusions. The limitations of the research are also discussed<br />

<strong>and</strong> suggestions for future research directions are presented. Finally, implications for<br />

governments, business owners, <strong>and</strong> advisors are provided. Table 1.6 presents an overview of<br />

this dissertation.<br />

23


Table 1.6: Dissertation overview<br />

Ch Topic Research<br />

issues<br />

1 Introduction<br />

2 Antecedents of bonding <strong>and</strong> bridging<br />

ownership social capital <strong>and</strong> the<br />

influence of family involvement<br />

3 Bonding <strong>and</strong> bridging ownership<br />

social capital <strong>and</strong> relation with<br />

product innovation<br />

4 Copreneurial bonding <strong>and</strong> bridging<br />

social capital <strong>and</strong> relation with firm<br />

performance<br />

5 Influence of knowledge transfer<br />

climate during succession <strong>and</strong><br />

relation with post-succession<br />

continuity<br />

6 Conclusions, implications,<br />

limitations, <strong>and</strong> recommendations for<br />

future research<br />

Key construct Sampling method Methods of<br />

analysis<br />

1 <strong>and</strong> 3 Ownership<br />

social capital<br />

2 <strong>and</strong> 3 Ownership<br />

social capital<br />

1,2, <strong>and</strong> 3 Spousal<br />

social capital<br />

1,2, <strong>and</strong> 3 Tacit<br />

knowledge<br />

transfer<br />

R<strong>and</strong>om stratified<br />

sample of private<br />

firms<br />

R<strong>and</strong>om stratified<br />

sample of private<br />

firms<br />

Snowball sample<br />

of copreneurs<br />

Non-r<strong>and</strong>om<br />

sample of private<br />

firms<br />

Multiple<br />

regression<br />

analysis<br />

Multiple<br />

regression<br />

analysis<br />

Structural<br />

equation<br />

modeling<br />

Multiple<br />

regression<br />

analysis<br />

This table concludes the introduction of this dissertation. In the next chapter the first research<br />

that was undertaken to find answers for the research questions formulated in this introduction<br />

will be discussed.<br />

24


2: Ownership social capital in privately held firms: the role of<br />

family involvement 6<br />

2.1 Introduction<br />

This study focuses on ownership social capital <strong>and</strong> how it may be influenced by the degree of<br />

family involvement in a business. <strong>Family</strong> involvement is a central topic in family business<br />

research (Chrisman et al., 2005), while social capital is included in discussions of a wide<br />

range of topics at several levels of analysis: national <strong>and</strong> regional (e.g., Putnam, 1993;<br />

Fukuyama, 1995), organizational (Leana & Van Buren, 1999), individual (Burt, 1992), <strong>and</strong><br />

group (Oh et al., 2004). The latter includes the special case of the owning group (Berent-<br />

Braun, 2010). Regardless of the level of analysis, social capital definitions suggest that social<br />

relationships generate benefits (Adler & Kwon, 2002) <strong>and</strong> that such relationships can act as<br />

levers for other types of capital, including human, financial, emotional, <strong>and</strong> physical capital<br />

(Arregle et al., 2007a; Montemerlo & Sharma, 2010; Steier, 2007). In addition, social capital<br />

is identified as a type of asset that is firm specific but generic in its application (Gedajlovic &<br />

Carney, 2010). This implies that social capital is broadly applicable <strong>and</strong> that its effectiveness<br />

is similar for a variety of purposes. For instance, ties within a business group can provide<br />

information on business opportunities, <strong>and</strong> they can also serve as a source of financial capital<br />

<strong>and</strong> as a way of lowering transaction costs.<br />

Researchers have identified various positive consequences of social capital. For example, a<br />

direct benefit of social capital is that it offers access to information for the individual or group<br />

(Adler & Kwon, 2002). A recent meta-analysis by Westlund <strong>and</strong> Adam (2010) concludes that<br />

social capital is positively linked to the economic performance of the firm, a finding that is<br />

consistent with past research (Lee, 2009; Sorenson et al., 2009). However, empirical research<br />

that explores the possible antecedents of social capital (such as family involvement) remains<br />

limited (Sharma, 2008). The aim of this paper, therefore, is to explore such relationships,<br />

especially in the context of the owning group. The primary research question is the following:<br />

“Do differences in family involvement across private firms explain differences in the levels<br />

of ownership social capital associated with such firms?”<br />

This approach makes it possible to distinguish between family <strong>and</strong> ownership social capital.<br />

Recently, family social capital has received attention from family business scholars (Arregle<br />

et al., 2007a; Carr et al., 2011; Pearson et al., 2008; Sorenson et al., 2009). These studies<br />

identify the family social network <strong>and</strong> the interrelationships among family members as<br />

antecedents of the creation of organizational social capital that have positive outcomes for<br />

firm performance. As this research focuses on family as a source of social capital <strong>and</strong> tests<br />

these propositions only in family businesses, scholars do not allow for the possibility that it is<br />

not family per se but rather the owning group that serves as the source of social capital. This<br />

6 This chapter is based on the paper by Matser, Uhlaner, Berent-Braun, <strong>and</strong> Flören (2011), which was presented<br />

at the 7 th Workshop on <strong>Family</strong> Business Management, May 2011, Witten, Germany. Winner of the best paper<br />

award.<br />

25


study fills this gap by separating the role of owners from the role of family in creating social<br />

capital within the context of private firms.<br />

Scholars identify two types of social capital (Adler & Kwon, 2002; Lin, 1999). Bonding<br />

social capital focuses on internal ties within a collective, while bridging social capital refers<br />

to direct <strong>and</strong> indirect external links with actors beyond the immediate collective (Sharma,<br />

2008). The present research examines the relationship between family involvement <strong>and</strong> both<br />

the bonding <strong>and</strong> bridging forms of social capital. The hypotheses are tested using data from a<br />

large-scale quantitative research study of Dutch private firms carried out in 2009. The sample<br />

used for the current study encompasses 708 privately held small <strong>and</strong> medium-sized firms<br />

with multiple owners.<br />

This chapter makes three key contributions to the literature. First, it enhances the general<br />

underst<strong>and</strong>ing of the concept of ownership social capital <strong>and</strong> its possible antecedents,<br />

especially family involvement, as well as other characteristics of company <strong>and</strong> ownership<br />

structures. Second, the focus on owners makes it possible to distinguish between ownership<br />

<strong>and</strong> family as the source of social capital. This helps improve the underst<strong>and</strong>ing of the<br />

concept of social capital not only within the family business context but also for the wider<br />

field of private firms held by a group of owners. Third, it provides insights into the<br />

interrelationships between bonding <strong>and</strong> bridging social capital in the context of the owning<br />

group, as well as some information on whether these interrelationships serve as potential<br />

sources of synergy or have a negative overall effect. Therefore, this paper contributes not<br />

only to the field of family business research but also to the wider field of research on social<br />

capital.<br />

The next section provides a short overview of the relevant literature on social capital <strong>and</strong> a<br />

more detailed explanation of the concept of ownership social capital. It is followed by a<br />

presentation of the framework <strong>and</strong> the rationale for the hypotheses. The method section<br />

describes the sample, data collection, variables, <strong>and</strong> data analysis, while the final sections<br />

present the results, discussion, <strong>and</strong> conclusions.<br />

26


2.2 Background on ownership social capital<br />

Business owners are a social group distinguished from other social entities in the firm by<br />

their possession of ownership rights in the company (Berent-Braun & Uhlaner, 2010). As an<br />

ownership group is a set of two or more business owners, ownership social capital (e.g.,<br />

Berent-Braun, 2010) can be seen as a type of group social capital. Given the general<br />

definition of social capital proposed by Nahapiet <strong>and</strong> Ghoshal (1998), ownership social<br />

capital can be defined as the sum of the actual <strong>and</strong> potential resources embedded within,<br />

available through, <strong>and</strong> derived from the network of relationships possessed by the business<br />

owners. Although some aspects of ownership social capital are rooted in earlier research on<br />

organizational social capital (Leana & Van Buren, 1999), group social capital (Oh et al.,<br />

2004), family social capital (Arregle et al., 2007; Danes et al., 2009), <strong>and</strong> relational<br />

governance (Mustakallio, Autio & Zahra, 2002), the notion of ownership social capital was<br />

first introduced by Uhlaner (2008) <strong>and</strong> further elaborated upon by Berent-Braun (2010).<br />

Social capital scholars have repeatedly noted that when social capital is being considered,<br />

both bonding <strong>and</strong> bridging aspects are important (e.g., Adler & Kwon, 2002; Lin, 1999;<br />

Payne et al., 2011; Sharma, 2008). Yet, the vast majority of the extant empirical research<br />

examines either the role of bridging social capital or the role of bonding social capital in<br />

isolation. The bridging aspects of social capital include networking with external partners to<br />

access information <strong>and</strong> resources (e.g., Elfring & Hulsink, 2007; Uzzi, 1997). In contrast,<br />

bonding social capital maintains <strong>and</strong> preserves the group, <strong>and</strong> is defined <strong>and</strong>/or measured as<br />

trust, collective goal orientation, or stewardship (Davis, Schoorman, & Donaldson, 1997) in<br />

the organizational (Leana & Van Buren, 1999) <strong>and</strong> family social capital literature (e.g.,<br />

Arregle et al., 2007a). Nahapiet <strong>and</strong> Ghoshal (1998) highlighted three distinct dimensions<br />

within social capital that are now widely accepted (e.g., Carr et al., 2011; Maurer, Bartsch &<br />

Ebers, 2011; Pearson et al., 2008): the structural, relational, <strong>and</strong> cognitive dimensions.<br />

The structural dimension of social capital reflects the configuration of networks that link a<br />

social unit’s members to each other (internal network) or to outside individuals <strong>and</strong> units<br />

(external network) (Nahapiet & Ghoshal,1998). The structural dimension includes such facets<br />

as network ties, configuration, <strong>and</strong> appropriable organization (Nahapiet & Ghoshal, 1998).<br />

An important feature of the network is “appropriable social organization” (Coleman, 1988;<br />

Hazleton & Kennan, 2000), which is the ability of networks or organizations that are formed<br />

for one purpose to be utilized for other purposes (Hazleton & Kennan, 2000). This aspect is<br />

emphasized in the family business literature. Sorenson et al. (2009) indicate “collaborative<br />

dialogue” <strong>and</strong> “ethical norms” as inputs from the family sphere that lead to the development<br />

of family social capital. Arregle et al. (2007a) discuss the building of organizational social<br />

capital through family social capital. In this study, family involvement is the focal element of<br />

the structural dimension of social capital because family involvement influences the nature<br />

<strong>and</strong> type of relationships among members of the business owning group.<br />

27


Most studies on social capital in the family business literature focus on bonding aspects of<br />

social capital (e.g., Mustakallio et al., 2002; Montemerlo & Sharma, 2011; Uhlaner et al.,<br />

2007). In particular, the relational <strong>and</strong> cognitive dimensions of bonding social capital are the<br />

elements on which family factors are expected to have a potential positive effect. The<br />

relational dimension refers to those assets created <strong>and</strong> leveraged through relationships. Key<br />

aspects are trust <strong>and</strong> trustworthiness, norms <strong>and</strong> sanctions, obligations <strong>and</strong> expectations, <strong>and</strong><br />

identity <strong>and</strong> identification (Nahapiet & Ghoshal, 1998). The cognitive dimension refers to<br />

those resources providing shared representations, interpretations, <strong>and</strong> systems of meaning<br />

among a collective (Nahapiet & Ghoshal, 1998). In line with studies of organizational social<br />

capital (Leana & Van Buren, 1999) <strong>and</strong> family social capital (Mustakallio et al., 2002), as<br />

well as more recent research on ownership social capital (Berent-Braun, 2010), the cognitive<br />

<strong>and</strong> relational dimensions of bonding ownership social capital are included in this study as<br />

the shared vision (or collective goal orientation of the owners), <strong>and</strong> the quality of<br />

relationships among the members of the owning group (reflected in such elements as trust,<br />

cooperation, cohesiveness, <strong>and</strong> team spirit).<br />

Gedajlovic <strong>and</strong> Carney (2010) argue that family firms have a relatively good starting position<br />

from which to develop, sustain, <strong>and</strong> appropriate value from bridging social capital. Therefore,<br />

elements of bridging ownership social capital are also included in the research framework.<br />

Bridging ownership social capital refers to the relationships owning group members have<br />

with external networks <strong>and</strong> other resources that can benefit the owning group as well as the<br />

company. To investigate how bonding ownership social capital <strong>and</strong> bridging ownership social<br />

capital interact, Lin’s (1999) model of social capital is useful. Lin’s model highlights the<br />

causal sequence from investments in social capital towards returns on social capital. A crucial<br />

step in the process of realizing a positive return is the mobilization of the accessible<br />

components of social capital. In this study, the focus in relation to bridging ownership social<br />

capital is on precisely this aspect namely, network mobilization. In line with Lin’s model<br />

(1999) the various elements of ownership social capital are depicted in Figure 2.1. The<br />

hypothesized relationships are discussed in the next section.<br />

28


Figure 2.1: Research framework including direct effects<br />

H1<br />

Bonding ownership social capital Bridging ownership social capital<br />

Quality of relationships<br />

among owning group<br />

Shared vision<br />

among owning group<br />

<strong>Family</strong> involvement<br />

H6<br />

Network<br />

mobilization<br />

of owning group<br />

H2 H7<br />

H3<br />

H8<br />

Control variables<br />

Company size, sector , age of business, expansion, number of owners, ownership-management overlap,<br />

board of directors<br />

2.3 Research framework <strong>and</strong> hypotheses<br />

2.3.1 Direct relations among components of ownership social capital<br />

<strong>Family</strong> involvement as an antecedent of elements of ownership social capital<br />

H4<br />

H5<br />

The first two hypotheses suggest that family involvement <strong>and</strong> cognitive <strong>and</strong> relational<br />

elements of bonding ownership social capital are positively associated with each other. In this<br />

regard, scholars have described the potential positive influence of the family on the<br />

development of organizational social capital (Arregle et al., 2007a; Gedaljovic & Carney,<br />

2010; Montemerlo & Sharma, 2011; Pearson et al., 2008; Salvato & Melin, 2008; Sharma,<br />

2008; Sorenson et al., 2009). For example, the overlap between the family system <strong>and</strong> the<br />

business system creates an opportunity to build a strong organizational identity. A shared<br />

organizational identity, in turn, will have a positive influence on the development of<br />

organizational social capital (Arregle et al., 2007a). In addition, the related concept of<br />

ownership commitment has frequently been cited as a strength of the family-owned firm<br />

(Uhlaner et al., 2007). Uhlaner et al. (2007) use social identity theory to argue that owner<br />

commitment <strong>and</strong> shared collective norms may be stronger in a family owning group. This<br />

commitment is not necessarily attributable to altruistic motives, as implied by stewardship<br />

29


theory, but results from a stronger need to be affiliated with the “in” group associated with<br />

the owning group, on the one h<strong>and</strong>, <strong>and</strong> the family on the other. Membership within the “in”<br />

group leads to greater sense of self-worth <strong>and</strong> social esteem (Ellemers, 2001; Uhlaner et al.,<br />

2007). In a mixed sample of family <strong>and</strong> non-family firms, Uhlaner et al. (2007) find that<br />

family ownership strongly predicts the presence of collective goals relative to individual<br />

goals. The current study examines a specific aspect of collective goals that focuses inward<br />

toward the firm—a shared vision of the firm’s objectives. All else equal, the mechanisms of<br />

social identity <strong>and</strong> the drive to be accepted by the “in” group may be expected to lead to a<br />

higher level of shared vision among members of a family owning group.<br />

A key aspect of the relational dimension of bonding ownership social capital refers to<br />

developing a high level of trust within the owning group. Pearson et al. (2008) argue that the<br />

family context helps in the development of high-quality relationships. Their argument is<br />

based on the fact that owners have obligations to both the family <strong>and</strong> the business, <strong>and</strong> that<br />

this creates an environment that stimulates collective action. Similarly, Carr et al. (2011, p.<br />

1211) state that “the relational dimension of internal social capital represents the norms of<br />

obligations, trust <strong>and</strong> a level of family <strong>and</strong> firm identity that can exist within family firms <strong>and</strong><br />

that are not easily developed in non-family firm situations.” Therefore, greater cooperation<br />

<strong>and</strong> cohesiveness is expected in owning groups when there is a family linkage among the<br />

business owning group. In sum, the proposition is that family involvement has a positive<br />

effect on the development of elements of bonding ownership social capital. More<br />

specifically:<br />

Hypothesis 1: <strong>Family</strong> involvement is positively associated with the quality of relationships<br />

among members of the owning group.<br />

Hypothesis 2: <strong>Family</strong> involvement is positively associated with a shared vision among<br />

members of the owning group.<br />

The rationale for the relationship between family involvement in the business <strong>and</strong> bridging<br />

ownership social capital contrasts with the rationale for the relationship between family<br />

involvement <strong>and</strong> bonding elements of ownership social capital. Bridging requires the<br />

development <strong>and</strong> mobilization of resources outside the owning group.<br />

In this regard, past research proposes that family firms are typically introverted rather than<br />

extroverted (De Lema & Durendez, 2007). This suggests that family members often look<br />

inward, rather than outward, when searching for social contacts beneficial to the firm. Arregle<br />

et al. (2007a) argue that the self-sufficiency that often characterizes family firms increases<br />

their dependency on (internal) family members <strong>and</strong> simultaneously reduces their dependency<br />

on external resources. For instance, the decision to keep the business in the family can lead<br />

owners to favor family members <strong>and</strong>, as a consequence, fail to retain competent employees or<br />

to attract competent people from outside the firm. Therefore, the closeness of a family, which<br />

stimulates the development of bonding social capital, may have the opposite effect on<br />

bridging capital, leading to an inward-looking attitude among the business owners. Along<br />

30


these lines, McFayden <strong>and</strong> Cannella Jr. (2004) suggest that given the maintenance costs of<br />

social capital, bridging <strong>and</strong> bonding social capital are mutually exclusive to some extent.<br />

Thus, if family business owners rely heavily on “their own people,” they might begin to<br />

believe that they do not need help, information, or advice from “outsiders.” As a result, they<br />

may miss valuable resources that reside in those outside contacts. Strong solidarity within the<br />

family, which increases bonding social capital, may lead to over-embeddedness within the<br />

ownership group, resulting in group think <strong>and</strong> passivity (Adler & Kwon, 2002; Zahra, 2010).<br />

These observations lead us to suggest:<br />

Hypothesis 3: <strong>Family</strong> involvement is negatively associated with the owning group’s network<br />

mobilization.<br />

Relationships between elements of bonding ownership social capital <strong>and</strong> bridging ownership<br />

social capital<br />

As mentioned in the introduction, most empirical studies on social capital focus specifically<br />

on either bridging social capital or bonding social capital. By combining external <strong>and</strong> internal<br />

aspects of social capital, this study offers some insights into how these distinct aspects<br />

interact. These insights, in turn, shed light on the complexity of the social capital concept.<br />

Hypotheses 4 <strong>and</strong> 5 suggest that elements of bonding ownership social capital influence the<br />

mobilization of bridging ownership social capital. Lin’s (1999) model of social capital <strong>and</strong><br />

Adler <strong>and</strong> Kwon‘s (2002) opportunity-motivation-ability framework are useful for exploring<br />

this possible relationship.<br />

Lin’s (1999) model of social capital contains building blocks highlighting the causal<br />

sequence from investments to returns on social capital. A crucial step in the realization of<br />

social capital is the process of social capital mobilization – the way an individual is enabled<br />

or disabled to mobilize such capital. Lin’s (1999) model emphasizes that individuals take<br />

action to enhance the mobilization of resources. Shared vision <strong>and</strong> good relations among the<br />

members of a business-owning group can act as a catalyst for the mobilization of potential<br />

social capital. This relates to the opportunity-motivation-ability framework developed by<br />

Adler <strong>and</strong> Kwon (2002), which states that aspects of both bonding <strong>and</strong> bridging social capital<br />

must be present for social capital to be activated. In terms of the business-owning group, this<br />

implies that although weak ties (Granovetter, 1992) can be a valuable resource, owners must<br />

be motivated to use their networks to help the firm. Adler <strong>and</strong> Kwon (2002) argue that such<br />

motivation stems from bonding social capital, as it reflects deeply internalized norms <strong>and</strong> a<br />

feeling of a shared destiny.<br />

In line with Lin (1999) <strong>and</strong> Adler <strong>and</strong> Kwon (2002), components of bonding social capital are<br />

argued to be a condition for the mobilization of bridging social capital. When there is a<br />

shared vision <strong>and</strong> trust within a group, the individuals within that group will be inclined to<br />

mobilize <strong>and</strong> use their resources for the benefit of the company. Furthermore, because<br />

bonding social capital maintains the closeness of the group, it ensures that any resources<br />

31


owners bring in from the outside will be utilized within the context of the firm. To<br />

summarize:<br />

Hypothesis 4: The quality of relationships is positively associated with the mobilization of the<br />

owners’ network.<br />

Hypothesis 5: A shared vision is positively associated with the mobilization of the owners’<br />

network.<br />

2.3.2 Complex relations among components of ownership social capital<br />

Whereas McFayden <strong>and</strong> Cannella Jr. (2004) argue that bridging <strong>and</strong> bonding social capital<br />

are mutually exclusive to some extent, other scholars suggest the opposite (e.g., Miller,<br />

Besser & Malshe, 2007; Reagans & McEvily, 2003; Stam & Elfring, 2008). Even within<br />

bonding <strong>and</strong> bridging dimensions of social capital, various components could potentially<br />

interact with each other. For instance, how does a shared vision among owners affect the<br />

quality of the relationships among those owners? Thus far, little empirical research has<br />

centered on the interactions among the structural, cognitive, <strong>and</strong> relational dimensions of<br />

social capital (Lee, 2009).<br />

Long’s (2011) theoretical framework on family social capital development can serve as a<br />

starting point for a more in-depth investigation of the potential interactions. Long (2011)<br />

applies social exchange theory to the development of social capital, which leads to a<br />

multilevel, iterative model. The starting point is the “relations which are ontologically prior<br />

to structure <strong>and</strong> shared cognition <strong>and</strong> necessary for the development of the latter” (Long,<br />

2011, p. 1231). Repeated exchanges among group members contribute to the development of<br />

a shared vision <strong>and</strong> group cohesion. These developments also serve as a reference for future<br />

exchanges among group members, making the development of social capital a multi-loop<br />

event. In line with this argumentation, good relationships among owners, in combination with<br />

a shared vision, can be expected to provide an extra stimulus for the mobilization of bridging<br />

ownership social capital. Therefore:<br />

Hypothesis 6: The positive relationship between the shared vision among owners <strong>and</strong> the<br />

mobilization of the owners’ network will be stronger in firms with a higher quality of<br />

relationship among owners.<br />

In this study, the potential moderating effects of family involvement on the relationship<br />

between bonding elements <strong>and</strong> bridging social capital is investigated further. The level of<br />

family involvement is viewed as a key element of the structural dimension of social capital.<br />

The direct effects of family involvement on bonding <strong>and</strong> bridging elements of ownership<br />

social capital are hypothesized as mixed, with a positive effect on bonding <strong>and</strong> a negative<br />

effect on bridging. Arregle et al. (2007a) propose that the development conditions in families<br />

(such as closure <strong>and</strong> interdependency), in combination with the overlap of the family <strong>and</strong><br />

business systems, lead to a potential to develop social capital in the firm that stems from<br />

32


social capital within the family. This proposition, which is supported by empirical findings<br />

presented by Carr et al. (2011), Danes et al., (2009) <strong>and</strong> Sorenson et al. (2009), relates to the<br />

aspect of “appropriable social organization” (the ability to utilize a network for another<br />

purpose than its original intention; Hazleton & Kennan, 2000) discussed earlier in this<br />

chapter. Here the proposition is that the network that is formed within the family will be used<br />

for the benefit of the firm. Therefore, family involvement in a business should have a positive<br />

effect on the relation between bonding <strong>and</strong> bridging elements of ownership social capital.<br />

These observations lead to the following:<br />

Hypothesis 7: The relationship between the quality of relationships among owners <strong>and</strong> the<br />

mobilization of the owners’ network is stronger for firms with high family involvement than<br />

for firms with low family involvement.<br />

Hypothesis 8: The relationship between a shared vision among owners <strong>and</strong> the mobilization<br />

of the owners’ network is stronger for firms with high family involvement than for firms with<br />

low family involvement.<br />

2.4 Method<br />

Sample <strong>and</strong> data collection<br />

The empirical analysis was conducted using a r<strong>and</strong>om sample of Dutch private businesses<br />

(excluding self-employed) registered with the Dutch Chamber of Commerce. The sample was<br />

stratified according to sector <strong>and</strong> size. The sample represents all sectors of the Dutch<br />

economy in correct proportions to the entire population of Dutch businesses. The size classes<br />

were based on the number of employees (including the director) as follows: 2-9, 10-49, 50-<br />

99, 100-199, <strong>and</strong> 200 or more. In order to ensure an appropriate number of companies in each<br />

size class, the larger companies were overrepresented relative to the distribution within the<br />

general population. In addition, 31 firms that were members of the <strong>Family</strong> Business Network<br />

Netherl<strong>and</strong>s were approached in order to collect data from family firms with larger groups of<br />

family owners.<br />

The data was collected in May <strong>and</strong> June 2009 by means of telephone interviews with the<br />

primary directors of the companies in question. In each case, a key informant approach was<br />

adopted, which is an accepted approach for such studies (Kumar, Stern & Anderson, 1993;<br />

Uhlaner et al., 2007). Of the 3,563 firms originally contacted, 1,500 agreed to participate,<br />

resulting in a response rate of 42.1%. Of these 1,500 firms, 937 reported having two or more<br />

individual owners <strong>and</strong> were thus administered the more detailed survey 7 , which included<br />

questions on ownership social capital. As the study focuses on social capital within a group of<br />

owners, the sample was restricted to firms with between 2 <strong>and</strong> 20 owners. <strong>Firm</strong>s with more<br />

than 20 owners might be viewed as firms with a more dispersed ownership <strong>and</strong> thus the<br />

respondent may have less knowledge of how the owners function as a group. Another<br />

7 The Dutch questionnaire is available from the author upon request (i.a.matser@uu.nl).<br />

33


estriction was made with regard to the size of the firm. In the present analysis, only firms<br />

with less than 500 employees were included. This was done to make the sample more<br />

homogeneous by leaving out the large firms. The 500 employee cut-off is chosen because it is<br />

a measurement used to define small <strong>and</strong> medium-sized enterprises 8 . 781 of the 937 firms met<br />

the parameters of 2 to 20 owners, <strong>and</strong> up to 500 employees. Due to missing data for some of<br />

these questions, a final data set of 708 cases was used for the analyses.<br />

Variables<br />

Unless otherwise stated, all variables were measured as the mean score of the responses to the<br />

statements. The individual items were measured on a five-point Likert scale where 1 =<br />

strongly disagree <strong>and</strong> 5 = strongly agree (unless otherwise indicated).<br />

Components of bonding ownership social capital were measured using three variables: family<br />

involvement (reflecting the relevant structural dimension of ownership social capital, as the<br />

focus is on potential family influence), shared vision of the owners (representing the<br />

cognitive dimension of ownership social capital), <strong>and</strong> quality of relationships among the<br />

owners (representing the relational dimension of ownership social capital).<br />

Unfortunately, there is no consensus among scholars regarding how best to operationalize<br />

family involvement (e.g., Chrisman et al., 2005; O’Boyle Jr., Pollack & Rutherford, 2012). In<br />

this study, family involvement was measured on a continuous scale instead of dichotomizing<br />

the sample into family <strong>and</strong> non-family groups. The development of this variable is in line<br />

with the approach used in recent studies (Klein, Astrachan, & Smyrnios, 2005; Uhlaner,<br />

2005) <strong>and</strong> stems from the idea that family firms are not homogenous. Shanker <strong>and</strong> Astrachan<br />

(1996) argue that family firms can be categorized from broad to narrow, with narrow subsets<br />

fitting within broader subsets. Such a cumulative scale can be produced using the Guttman<br />

scaling technique tested by Uhlaner (2005). The items used by Uhlaner (2005) are utilized, to<br />

some extent, in this study, although some adjustments had to be made because the items in<br />

the current survey did not perfectly match the items used by Uhlaner (2005). <strong>Family</strong><br />

involvement (Cronbach’s alpha = .70) was measured by asking the respondents to indicate<br />

whether there was a family relation among the owners of the company, whether one family<br />

had considerable influence on the business strategy, <strong>and</strong> whether the business had been<br />

owned by the same family for two or more generations. All of these questions were measured<br />

as binary variables, where 1 = yes <strong>and</strong> 0 = no. The final question related to the number of<br />

directors that were related to the owners. All answers indicating two or more directors were<br />

coded 1, while all other answers were coded 0. The variable was measured as the sum of the<br />

answers to all four questions. The score reflects family involvement <strong>and</strong> can vary from 0 (no<br />

family involvement) to 4 (highest family involvement).<br />

8 The US Small Business Administration defines small <strong>and</strong> medium sized firms (SME) as firms with fewer than<br />

500 employees. This is a broader definition than de European SME definition which defines firms with fewer<br />

than 250 employees as a SME. Since it is expected that especially in larger medium sized firms there will be<br />

firms with more than one owner, the decision has been made to use the US SME definition.<br />

34


Shared vision (Cronbach’s alpha = .70) was measured by asking respondents about the extent<br />

to which they agreed or disagreed with the following statements: “The owners share the same<br />

vision about the business,” “The owners try to pull this company in opposite directions”<br />

(reverse scored), “The owners agree about the key objectives of the business,” <strong>and</strong> “The<br />

owners are committed to managing wealth as a group rather than as individuals.” The first<br />

three items are based on Mustakallio et al.’s (2002) shared vision scale. The last item was<br />

added to test the extent of a shared ownership strategy among the group of owners <strong>and</strong> was<br />

created for this study.<br />

Quality of relationships (Cronbach’s alpha = .93) was measured by asking respondents about<br />

the extent to which they agreed or disagreed with the following statements: “The owners of<br />

this business tend to trust one another,” “The owners are open <strong>and</strong> honest with one another,”<br />

“The owners have good cooperative relationships,” <strong>and</strong> “The owners work together as a<br />

team.” The items are taken from Morris <strong>and</strong> Williams’ (1996) study <strong>and</strong> adapted to the<br />

context of the ownership group as a whole rather than just family members.<br />

Network mobilization (Cronbach’s alpha = .80) was measured by asking respondents to<br />

indicate the extent to which they agreed or disagreed with the following statements: “The<br />

owners of this business speak enthusiastically about the business with people outside the<br />

business” (adjusted from Allen <strong>and</strong> Meyer, 1990), “The owners help to exp<strong>and</strong> the business’s<br />

network by making outside contacts,” <strong>and</strong> “The owners help to seek out or create new<br />

opportunities for the firm” (adjusted from Vilaseca, 2002).<br />

The control variables used in this study include a range of variables characterizing both the<br />

business <strong>and</strong> the ownership structure. Company size was measured as the number of<br />

employees in the firm. Company age was measured as the number of years between the<br />

establishment of the business <strong>and</strong> 2009. As the distributions of company age <strong>and</strong> company<br />

size were skewed, the variables were calculated as the natural logarithms of the original<br />

values. Expansion, which reflects the stage of the business lifecycle, was measured as a<br />

dummy variable where 1 = expansion <strong>and</strong> 0 = other stages of the lifecycle, including start-up,<br />

maturity, or decline. Sector was the final variable used to characterize the business. All<br />

companies included in the sample were classified in one of five sectors depending on their<br />

industrial classification code: manufacturing, construction, retail, agriculture, or services<br />

(including hospitality, transport, financial services, business services, <strong>and</strong> other services),<br />

with a dummy variable created for each category (1 = yes, 0 = no).<br />

Ownership structure characteristics were measured using three variables. In order to measure<br />

the number of owners, respondents were asked to state the number of individual owners. To<br />

offset the skewed distribution, each value was converted into the natural logarithm. Board of<br />

directors 9 was a dummy variable coded 1 given the presence of a board <strong>and</strong> 0 otherwise.<br />

9 The Netherl<strong>and</strong>s has a two-tiered governance structure, which means that many firms have a board of directors<br />

in addition to the top management team. The board plays a supervisory role. However, as a board of directors is<br />

35


Finally, ownership-management overlap was measured as the percentage of managers that<br />

were also owners.<br />

Data Analysis<br />

When creating the scales, several st<strong>and</strong>ard statistical analyses were used, including factor<br />

analysis, inter-item correlations, <strong>and</strong> reliability tests. To ensure that common method bias<br />

was not a problem, a Harman’s single-factor test was applied (Podsakoff & Organ, 1986) <strong>and</strong><br />

the factor loadings for multi-item scales within the same factor analysis were reviewed.<br />

Variance inflation factors (VIF) were controlled to check for multicollinearity among the<br />

predictor variables. The hypotheses were tested using hierarchical multiple regression<br />

analyses. The direct effects of the independent variables were tested by assessing the twotailed<br />

significance of their contributions to explaining the dependent variable.<br />

A bootstrap test was used to estimate the mediation effect (Preacher & Hayes, 2008). This<br />

procedure, which involves repeatedly sampling from the dataset to estimate the indirect<br />

effects <strong>and</strong> building an empirical approximation of the sampling distribution, is more exact<br />

<strong>and</strong> has more statistical power than those based on a normal distribution (e.g., Sobel test)<br />

(Holiday Wayne & Casper, 2012). The analyses were performed using SPSS with Preacher<br />

<strong>and</strong> Hayes’s INDIRECT.SPS Macro (www.quantpsy.com).<br />

2.5 Results<br />

Development of Scales<br />

Table 2.1 presents the results of the principal component factor analysis with orthogonal<br />

rotation for the ownership social capital <strong>and</strong> family involvement variables. All items clearly<br />

load on one of four distinct factors with the relevant factor loading surpassing .62 in each<br />

instance. The unintended factor loadings, which are not shown in the table, are not higher<br />

than .41. The largest factor in the unrotated factor analysis explains 35.73% of the variance,<br />

which allows us to conclude that the variables are independent <strong>and</strong> that common method bias<br />

is not a concern in the present study. The Cronbach alphas are also satisfactory, ranging from<br />

.70 to .93 (see Table 2.1).<br />

Descriptive Statistics <strong>and</strong> Bivariate Statistics<br />

Table 2.2 reports the bivariate Pearson product-moment correlation coefficients as well as<br />

descriptive statistics, including means <strong>and</strong> st<strong>and</strong>ard deviations. As shown in the table, the<br />

firms included in the study had an average of 77 employees. The mean of the business age<br />

was 40 years <strong>and</strong> the businesses had, on average, 3 owners.<br />

not compulsory for most firms (depending on size <strong>and</strong> some additional criteria), firms can voluntarily<br />

implement a board or choose not to do so.<br />

36


Results of Hypothesis Testing<br />

Table 2.3 presents the results of the multiple regression analysis. The VIF scores for Models<br />

1-4 are not higher than 1.73. On the basis of currently accepted st<strong>and</strong>ards, these results<br />

indicate that the variables are free from multicollinearity. Models 5 <strong>and</strong> 6 test for moderating<br />

effects, mathematically leading to high VIF scores.<br />

37


Table 2.1: Factor analysis of multi-item variables included in the study a<br />

Ownership social capital<br />

Bonding Bridging<br />

Quality of<br />

<strong>Family</strong> Network<br />

relationships Shared vision involvement mobilization<br />

Owners tend to trust one another. .87 .20 .05 .19<br />

Owners are open <strong>and</strong> honest with one another. .87 .23 .04 .16<br />

Owners have good cooperative relationships. .88 .22 .03 .19<br />

Owners work together as a team. .82 .26 .11 .21<br />

Owners try to pull the company in opposite directions (scale reversed). .12 .62 .00 -.02<br />

Owners are committed to managing wealth as a group rather than as individuals. .17 .69 .03 .18<br />

Owners share the same vision about the business. .36 .69 -.03 .22<br />

Owners agree about the key objectives of the business. .41 .64 -.03 .33<br />

Owners speak enthusiastically about the business with people outside the business. .22 .08 -.05 .70<br />

Owners help to exp<strong>and</strong> the business’s network by making outside contacts. .15 .19 -.04 .87<br />

Owners help to seek out or create new opportunities for the firm. .20 .20 .04 .85<br />

<strong>Family</strong> relations exist between the owners. .08 .01 .87 -.08<br />

The family has considerable influence on the business strategy. .05 .03 .73 -.01<br />

Two or more directors are related to the owners. .12 -.19 .67 .06<br />

The business has been owned by the same family for two or more generations. -.08 .16 .63 -.02<br />

Cronbach alpha .93 .70 .70 .80<br />

Percentage variance explained 35.73 7.11 9.04 14.67<br />

a Principal component analysis with varimax rotation; four components extracted.<br />

38


Table 2.2: Correlations between variables used in the study<br />

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15<br />

.58 b<br />

1. Network mobilization<br />

2. Quality of relationships .45 b<br />

3. Shared vision .45 b<br />

-.28 b<br />

4. <strong>Family</strong> involvement -.01 .12 b<br />

.02<br />

5. Company size (ln) .00 -.09 a<br />

-.01 -.06<br />

6. Expansion .02 -.02 -.01 -.18 b<br />

.01<br />

7. Company age (ln) -.08 a<br />

-.02 -.01 .33 b<br />

.35 b<br />

-.26 b<br />

8. Service .06 -.03 -.06 -.17 b<br />

-.07 .08 a -.30 b<br />

9. Agriculture -.06 .04 .05 .10 a<br />

-.11 a<br />

.03 .04 -.14 b<br />

10. Manufacturing -.06 -.04 .04 .02 .17 b<br />

-.05 .22 b<br />

-.40 b<br />

-.08 a<br />

11. Construction .02 .01 .02 .13 -.05 -.11 b<br />

.14 b<br />

-.33 b<br />

-.07 -.19 b<br />

12. Retail <strong>and</strong> trade .00 .05 .00 .13 b -.07 .03 .01 -.47 b -.10 a -.27 b -.22 b<br />

13. Number owners (ln) -.09 a<br />

-.22 b<br />

-.09 a -.16 b<br />

.30 b<br />

.02 .08 a<br />

.10 b<br />

.03 -.02 -.06 -.08 a<br />

14. Board of directors -.12 b<br />

-.15 b<br />

-.07 -.06 .26 b<br />

-.02 .16 b<br />

-.13 b<br />

-.03 .15 b<br />

-.02 .01 .12 b<br />

15. Ownership-management .19<br />

overlap<br />

b<br />

.21 b<br />

.13 b<br />

.23 b<br />

-.30 b<br />

-.04 -.11 b<br />

.06 .02 -.14 b<br />

.02 .03 -.37 b<br />

4.41 4.44 4.25 1.71 77 .28 40 .41 .03 .19 .13 .24 3 1.16 63.64<br />

SD c .61 .58 .51 1.40 89 .45 36.80 .49 .17 .39 .34 .43 1.99 .37 38.99<br />

Mean c<br />

Pearson correlation coefficient, two-tailed: a : p < 0.05; b : p < 0.01; N = 708.<br />

c<br />

For the variables company size, company age, <strong>and</strong> number of owners, the means <strong>and</strong> st<strong>and</strong>ard deviations are reported for the original values.<br />

39


The results related to Hypothesis 1, which predicts a positive relationship between family<br />

involvement <strong>and</strong> shared vision, are presented in Model 1, Table 2.3. As no significant results<br />

are found for family involvement (β = -.06, ns), they offer no support for Hypothesis 1.<br />

Model 2 in Table 2.3 shows the results for Hypothesis 2, which suggests family involvement<br />

as a predictor of the quality of relationships among owners. The results are not significant (β<br />

= -.02, ns) in this case as well, indicating no support for Hypothesis 2. Hypothesis 3 predicts<br />

a negative relationship between family involvement <strong>and</strong> network mobilization. The results<br />

are presented in Model 3 but are not significant (β = -.06, ns) <strong>and</strong> thus offer no support for<br />

Hypothesis 3.<br />

The results concerning the prediction of network mobilization are presented in Models 3-6,<br />

Table 2.3. Models 3 <strong>and</strong> 4 show strong support for Hypotheses 4 <strong>and</strong> 5, respectively.<br />

Hypothesis 4 predicts a positive association between the quality of the relationship <strong>and</strong><br />

network mobilization. The results show a positive relationship between the dependent<br />

variable <strong>and</strong> network mobilization (β = .44, p < .001) <strong>and</strong> thus offer support for Hypothesis 4.<br />

In Model 4, shared vision is added to the regression model <strong>and</strong> the relationship with network<br />

mobilization is significant (β = .28, p < .001), lending support to Hypotheses 5. A stepwise<br />

regression analysis shows shared vision as the stronger variable in terms of predicting<br />

network mobilization. A bootstrap test is used to estimate the mediation effect (Preacher &<br />

Hayes, 2008). 5,000 bootstrapping resamples were run with listwise deletion of missing data.<br />

The analyses examine the direct relationship of the quality of relationships to the dependent<br />

variable (network mobilization), as well as the indirect relationship through the mediator<br />

(shared vision) while controlling for the control variables. The total effect of the quality of<br />

relationships on network mobilization (.46) is significant (t = 12.81, SE = .04, p < .001) <strong>and</strong><br />

the direct effect (.29) is still significant (t = 6.84, SE = .04, p < .001). After including shared<br />

vision as mediator, the path coefficient is substantially reduced, suggesting partial mediation.<br />

Furthermore, the bootstrapping technique shows a bias-corrected 99% confidence interval of<br />

0.0998 to 0.2447 for this indirect effect, with the lower <strong>and</strong> upper limits above zero. Taken<br />

together, the bootstrap test reveals a significant partial mediation effect of shared vision on<br />

the relation between quality of relationships <strong>and</strong> network mobilization.<br />

40


Table 2.3: Prediction of ownership social capital<br />

Dependent variable Bonding<br />

ownership social<br />

capital<br />

Bridging ownership social capital<br />

Quality Shared Network mobilization<br />

relation<br />

-ships<br />

vision<br />

Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7<br />

Explanatory β value<br />

variables<br />

d β value d β<br />

value d<br />

β<br />

value d<br />

β value d β value d β value d<br />

Company size (ln) .03 .05 .10 a<br />

.09 a<br />

.09 a<br />

.09 a<br />

.07<br />

Expansion .00 -.01 .00 .00 .00 .00 .02<br />

Age (ln) -.02 -.03 -.05 -.05 -.05 -.05 -.04<br />

Service -.04 -.05 .04 .04 .04 .05 .04<br />

Agriculture .02 .05 -.06 -.07 -.07 a<br />

-.07 -.06 a<br />

Manufacturing -.03 .05 -.01 -.03 -.03 -.03 -.03<br />

Construction -.02 .01 .02 .02 .02 .02 .02<br />

Number of owners<br />

(ln)<br />

-.16 c -.05 .02 .01 .01 .01 .01<br />

Board of directors -.10 b -.05 -.03 -.03 -.03 -.03 -.03<br />

Ownershipmanagement<br />

overlap<br />

.12 b<br />

.12 b .13 c<br />

.12 b<br />

.11 b<br />

.12 b .12 b<br />

<strong>Family</strong> involvement -.06 -.02 -.06<br />

Quality<br />

relationships<br />

.44 c<br />

Shared vision<br />

Moderator QR x SV<br />

Moderator FI x QR<br />

Moderator FI x SV<br />

-.04<br />

.28 c<br />

.28 c<br />

-.03<br />

-.10<br />

-.10<br />

.69 b<br />

.06 -1.18 c<br />

.29 c .26 c<br />

.28 c .17 c<br />

-.10<br />

1.17 c<br />

∆R square .18 c .05 c .03 c .00 .01 b<br />

R square .08 c<br />

.03 a .24 c<br />

.29 c<br />

.29 c<br />

.29 c .34 c<br />

Adj. R square .07 .02 .23 .27 .28 .28 .29<br />

F statistic 5.77 1.97 18.08 22.74 20.83 20.17 22.65<br />

DF (df1, df2) (11, 696) (11, 696) (12, 695) (13, 694) (14, 693) (14, 693) (14, 693)<br />

N = 708.<br />

a : p < 0.05; b : p < 0.01; c : p < 0.001.<br />

d : β values represent st<strong>and</strong>ardized regression coefficients in the multiple regression analysis.<br />

41


Hypotheses 6, 7, <strong>and</strong> 8 propose complex relations among components of ownership social<br />

capital. Hypothesis 6 proposes that the quality of the relationships among the owners will<br />

have a positive moderating effect on the association of shared vision with network<br />

mobilization. The results are presented in Model 5. The results show a positive interaction<br />

term for quality of relationships <strong>and</strong> shared vision in the model predicting network<br />

mobilization (β = .69, p < .01). These results support Hypothesis 6. The nature of the<br />

interaction effect is depicted in Figure 2.2.<br />

Figure 2.2: Interaction term shared vision <strong>and</strong> quality of relationships<br />

Network mobilization<br />

5<br />

4,5<br />

4<br />

3,5<br />

3<br />

2,5<br />

2<br />

1,5<br />

1<br />

Low Shared vision High Shared vision<br />

Low Quality of<br />

relationship<br />

High Quality of<br />

relationship<br />

Both lines in Figure 2.2 are positive, reflecting the positive relation between the shared vision<br />

among owners <strong>and</strong> the mobilization of the owners’ network. The dashed line lays above the<br />

dense line, which highlights the proposition that good relationships among owners together<br />

with a shared vision of the business will lend extra stimulus to the mobilization of bridging<br />

ownership social capital.<br />

Hypotheses 7 <strong>and</strong> 8 propose that family involvement moderates the relationship between the<br />

two elements of bonding ownership social capital <strong>and</strong> network mobilization. The results of<br />

the moderating effect of family involvement on the association between the quality of<br />

relationships <strong>and</strong> network mobilization are not significant (β = -.10, ns). This leads to a<br />

rejection of Hypothesis 7 (Model 6). Model 7 shows the results for Hypothesis 8. The results<br />

indicate a significant positive moderating effect of family involvement on the relationship<br />

between shared vision <strong>and</strong> network mobilization (β = 1.17, p < .001). This lends support to<br />

Hypothesis 8. The nature of this interaction effect is depicted in Figure 2.3.<br />

42


Figure 2.3: Interaction term shared vision <strong>and</strong> family involvement<br />

Network mobilization<br />

5<br />

4,5<br />

4<br />

3,5<br />

3<br />

2,5<br />

2<br />

1,5<br />

1<br />

The dashed line in Figure 2.3 is steeper than the solid line. This indicates that an increase in<br />

the level of shared vision among owning group members in combination with high family<br />

involvement will lead to a faster improvement in the mobilization of the owners’ network. In<br />

firms with low family involvement, the positive effect from a shared vision on network<br />

mobilization almost completely disappears. The slopes in Figure 2.3 confirm the proposition<br />

that the family firm context is a fruitful environment in which to mobilize <strong>and</strong> use the<br />

potential network resources, especially when owners agree on the vision for the firm. While<br />

family involvement has no direct positive effect on the development of bridging or bonding<br />

ownership social capital, this proposed moderating effect is confirmed by the data.<br />

Other Results<br />

Low Shared vision High Shared vision<br />

Low <strong>Family</strong><br />

involvement<br />

High <strong>Family</strong><br />

involvement<br />

Company size is positively related to network mobilization (β = .09, p < .05). The overlap<br />

between ownership <strong>and</strong> management is positively related to all three dependent variables:<br />

shared vision (β = .12, p < .01), quality of relationships (β = .12, p < .05), <strong>and</strong> network<br />

mobilization (β = .12, p < .01). Furthermore, the quality of relationships is predicted by the<br />

number of owners (β = -.16, p < .001) <strong>and</strong> the presence of a board of directors (β = -.10, p <<br />

.01). Finally, network mobilization is negatively related to the agricultural sector (β = -.07, p<br />

< .05).<br />

In terms of the prediction of all components of ownership social capital tested in this study,<br />

owner-management overlap is found to have a positive effect. This suggests that ownermanagement<br />

groups with greater overlap are more likely to have a stronger shared vision,<br />

higher quality of relationships, <strong>and</strong> greater mobilization of network resources. This finding is<br />

43


in line with the expectation that owners will report a higher level of agreement <strong>and</strong><br />

commitment on business-related issues when the roles of owners <strong>and</strong> managers overlap.<br />

The results for the quality of relationships among owners indicate a negative association with<br />

the number of owners, suggesting that the larger the group, the less cohesive it will be, which<br />

is consistent with social psychology research on groups (Baron & Kerr, 2004; Shani & Lau,<br />

2000). The negative effect of the presence of a board of directors on the quality of<br />

relationships when controlling for company size may suggest that a board of directors<br />

somehow reduces the need for the owning group to learn to work together.<br />

2.6 Discussion <strong>and</strong> conclusion<br />

Theoretical <strong>and</strong> practical implications<br />

One aim of this study was to improve the underst<strong>and</strong>ing of the effect of family involvement<br />

on the development of ownership social capital in privately held firms. The hypotheses that<br />

family involvement has a direct positive effect on bonding social capital <strong>and</strong> a negative effect<br />

on bridging social capital were not confirmed by the data.<br />

Overall, the findings suggest that family involvement per se may not have an effect on<br />

ownership social capital. Rather, the results indicate that the interaction of family<br />

involvement with a shared vision among owners predicts the outcome. This is in line with<br />

scholars who propose that the “family system” itself is not a source of advantage but that its<br />

interactions with other organizational systems create value (e.g., Gersick et al., 1997; Zahra<br />

et al., 2008). The findings of the present study highlight the importance of gaining more<br />

insight into how family involvement affects private firms. This study shows that although a<br />

shared vision <strong>and</strong> the quality of relations among owners are important factors, these factors<br />

are not limited to family owners. This is in line with O’Boyle et al. (2012), whose metaanalysis<br />

of the relation between family involvement <strong>and</strong> a firm’s financial performance<br />

showed no significant results. Furthermore, the results indicate that the development of<br />

bridging social capital is positively influenced by owner groups with a shared vision <strong>and</strong><br />

good relationships. <strong>Family</strong> ties among these owners <strong>and</strong> family involvement in the business<br />

only partially influence this outcome. Therefore, scholars should be careful when measuring<br />

family social capital in the context of family firms. In cases where only family firms are in<br />

focus, social capital can be misinterpreted as a resource stemming from the family sphere<br />

whereas it may, in fact, arise from the owning group even when there are no family ties.<br />

The findings of this study also enhance the underst<strong>and</strong>ing of the concept of ownership social<br />

capital. The analyses show that a shared vision <strong>and</strong> good relations among owners (i.e., high<br />

levels of trust, cooperation, <strong>and</strong> cohesiveness) are important for the development of bridging<br />

social capital. Furthermore, in contrast to the view set forth by McFayden <strong>and</strong> Cannella Jr.<br />

(2004), bonding <strong>and</strong> bridging social capital do not appear to be mutually exclusive resources.<br />

The findings suggest that the bonding aspects of ownership social capital are associated with<br />

44


mobilization of bridging ownership social capital. These findings are in line with the<br />

qualitative study undertaken by Salvato <strong>and</strong> Melin (2008), who emphasized that family<br />

businesses need to invest in both external <strong>and</strong> internal social capital. This finding also lends<br />

support to the argument made by some scholars that it is necessary to consider both bonding<br />

<strong>and</strong> bridging social capital at the same level of analysis in order to build a more<br />

complementary view of social capital (Lin, 1999; Payne et al., 2011; Zheng, 2010).<br />

From a managerial perspective, this study emphasizes the importance of good relations <strong>and</strong> a<br />

shared vision among owners. The owning group should be aware of these elements. Time <strong>and</strong><br />

effort spent on building an effective team will probably have a positive effect on the<br />

development of ownership social capital. For example, a yearly review of how the owners<br />

function as a group might be a beneficial activity. Another issue to be aware of is the positive<br />

association between the overlap between management <strong>and</strong> ownership, <strong>and</strong> the bonding <strong>and</strong><br />

bridging components of ownership social capital. If, during the life cycle of the firm, the<br />

overlap between owners <strong>and</strong> managers diminishes, the change might have a negative effect<br />

on the shared vision, the quality of relationships, <strong>and</strong> the mobilization of network resources.<br />

Research limitations <strong>and</strong> implications for future research<br />

This research suffers from several limitations. First, this study tries to cover the construct of<br />

social capital using two scales for bonding social capital <strong>and</strong> one scale for bridging social<br />

capital. The scales were tested <strong>and</strong> found reliable for the data set. However, as there is no<br />

clear consensus with regard to the precise definition of the concept of social capital (Adler &<br />

Kwon, 2002), scholars use a range of scales to measure it. For instance, bridging social<br />

capital is often measured as the number of ties <strong>and</strong> the level of centrality in the network (e.g.,<br />

Kim & Canella, 2008). In this study, the focal element is the mobilization of the embedded<br />

resources (Lin, 1999). More empirical testing of the diverse scales would help in the<br />

development of a clearer theory <strong>and</strong> measurements of social capital.<br />

Second, the effects of social capital on firm outcomes, such as financial performance or<br />

innovation, are not investigated in this study. In particular, the link between bridging social<br />

capital <strong>and</strong> product innovation seems to offer a promising avenue for future research. Several<br />

scholars have shown, for instance, that bridging social capital (measured as the number of<br />

network contacts) is an important organizational resource for the development of innovative<br />

capabilities (e.g., Subramaniam & Youndt, 2005). Another research avenue could be to<br />

include other types of capital in order to develop a complete picture <strong>and</strong> to better underst<strong>and</strong><br />

how interactions among these different resources affect the firm (Sharma, 2008). For<br />

example, human capital seems to interact with social capital (e.g., Florin, Lubatkin, &<br />

Schulze, 2003) <strong>and</strong> financial capital could be taken into account.<br />

45


Conclusions<br />

The aim of this paper was to explore whether family involvement shapes the level of<br />

ownership social capital. The results of the empirical study conducted on a large, r<strong>and</strong>om<br />

sample of privately held Dutch firms, all with two or more individual owners, confirm the<br />

assumption that family involvement affects the development of ownership social capital.<br />

However, this is not a direct effect. <strong>Family</strong> involvement works as a moderator, strengthening<br />

the relation between the shared vision among the owners <strong>and</strong> the mobilization of bridging<br />

ownership social capital. Furthermore, the data show that both a shared vision <strong>and</strong> the quality<br />

of relations among owners have positive effects on the mobilization of the owning group’s<br />

network resources. In this regard, the study supports the model proposed by Lin (1999),<br />

which highlights the sequence of events in the development of social capital. In future<br />

research, these factors should be examined in greater detail.<br />

46


3: The relationship between ownership social capital <strong>and</strong> product<br />

innovation: The moderating role of family involvement 10<br />

3.1 Introduction<br />

A recent global survey undertaken by McKinsey & Company highlights the importance of<br />

innovation to business. In the survey, 84 percent of 2,240 executives indicated that<br />

innovation was extremely or very important to their companies’ growth strategies<br />

(McKinsey, 2010). These practical findings are in line with Schumpeter’s (1934) seminal<br />

work on economic development. In the economic <strong>and</strong> business literature, scholars are<br />

convinced that innovation is important for value creation (e.g., Hitt, Hoskisson, Johnson &<br />

Moesel, 1996). Product innovation is often seen as pivotal for the long-term competitive<br />

advantage of the firm (Sharma & Salvato, 2011). To innovate, firms need to reallocate<br />

resources, combine new resources, or combine existing resources in new ways (Tsai &<br />

Ghoshal, 1998). Social capital – the goodwill or other benefits generated by various social<br />

relations (Adler & Kwon, 2002) – is a recent, yet significant, addition to the list of<br />

innovation-inducing factors (Zheng, 2010). Subramaniam <strong>and</strong> Youndt (2005) specifically<br />

identify social capital as an important organizational resource for fostering innovation:<br />

“Social capital appears to be the bedrock of innovative capabilities” (Subramaniam &<br />

Youndt, 2005, p. 459).<br />

Privately-held firms play a significant role in the economy, <strong>and</strong> can be divided into family<br />

<strong>and</strong> non-family firms. Recently, the focus of family business research has shifted from family<br />

businesses as a whole towards role of the business-owning family (Nordqvist & Melin,<br />

2010). The entrepreneurial mindset of the owning family has been identified as a key element<br />

in the creation of new streams of value within <strong>and</strong> across generations (Uhlaner, Kellermanns,<br />

Eddleston & Hoy, 2012; Berent-Braun & Uhlaner, 2012; Habbershon, Nordqvist &<br />

Zellweger, 2010). In general, however, the role of ownership in private firms is a topic that<br />

has received little attention until recently (Uhlaner, 2008; Berent-Braun, 2010; Hall, Helin,<br />

Brundin & Melin, 2012). Past research on ownership has focused on “having” shares rather<br />

than adopting a more dynamic approach that looks at owners “acting” <strong>and</strong> “doing” ownership<br />

(Hall et al., 2012). The latter, more dynamic approach is specifically interesting when<br />

examining private firms where the shares are in the h<strong>and</strong>s of an owning group. Data provided<br />

by The Global Entrepreneurship Monitor 2002 estimates that almost half of all established<br />

firms are owned by groups (Uhlaner, 2008, p. 8).<br />

The purpose of the present study is to apply this dynamic approach in an investigation of the<br />

relationship between ownership social capital <strong>and</strong> product innovation. The group of owners is<br />

the focal level of analysis <strong>and</strong> the research question concerns whether the social capital of the<br />

10 This chapter is based on a paper by Matser, Uhlaner, Berent-Braun, <strong>and</strong> Flören (2012) that was presented at<br />

the IFERA conference in June 2012 in Bordeaux, France. An earlier version of this chapter was presented at the<br />

XXV RENT Conference in November 2011 in Bodo, Norway.<br />

47


owning group adds value to the product innovation process in privately held Dutch firms.<br />

More specifically, this paper examines the following research question: Does ownership<br />

social capital predict product innovation in privately held firms? The focus is primarily on the<br />

direct effects of bonding (shared vision, trust, <strong>and</strong> cohesiveness of the ownership group) <strong>and</strong><br />

bridging (networking of owners with outsiders) social capital. Furthermore, the moderating<br />

role of family involvement on the relationship between the different dimensions of social<br />

capital <strong>and</strong> product innovation is investigated. An attempt is made to distinguish between a<br />

“family” effect <strong>and</strong> an “ownership” effect through this approach.<br />

This chapter makes three main contributions to the literature. First, it empirically tests the<br />

relationship between social capital <strong>and</strong> innovation. This is important because there is not<br />

enough empirical evidence to allow for a systematic analysis of the relationship between the<br />

two constructs (Zheng, 2010). Second, this research is unique in its focus on ownership social<br />

capital in relation to product innovation. The business-owning group as a level of analysis<br />

seems promising for studies of social capital. Uhlaner (2008) argues that an effective owning<br />

group can be an important source of competitive advantage, while an ineffective group can<br />

undermine or even destroy a firm. This study combines the internal <strong>and</strong> external dimensions<br />

of ownership social capital, which helps to create a complete picture of the concept. Third,<br />

this chapter investigates the moderating role of family involvement. In line with the concept<br />

of bivalent attributes of family firms, a dual effect is expected (Tagiuri & Davis, 1996).<br />

<strong>Family</strong> firms have several unique attributes that can be sources of both benefits <strong>and</strong><br />

disadvantages (Tagiuri & Davis, 1996).<br />

The chapter is structured as follows. The next section provides a short overview of the<br />

relevant literature on product innovation <strong>and</strong> social capital, as well as an explanation of the<br />

concept of ownership social capital. It is followed by a presentation of the framework <strong>and</strong> the<br />

hypotheses. The method section describes the sample, data collection, variables, <strong>and</strong> data<br />

analysis, while the final sections present the results, discussion, <strong>and</strong> conclusions.<br />

3.2 Background on product innovation <strong>and</strong> the role of (family) owners<br />

Innovation studies span a broad range of topics <strong>and</strong> adopt various levels of analysis. Scholars<br />

distinguish between innovation diffusion, innovation adoption, innovativeness, <strong>and</strong><br />

innovating (Damanpour, 1991). The domains studied vary from technology, products,<br />

services, <strong>and</strong> processes, to administrative systems (Zheng, 2010). For the current research,<br />

the distinction between types of innovations – incremental, progressive, <strong>and</strong> radical – is<br />

relevant (Bergfeld & Weber, 2011). “Incremental” innovations use existing established<br />

technologies <strong>and</strong>/or markets. “Progressive” innovations use adjacent technologies <strong>and</strong>/or<br />

markets. “Radical” innovations, in contrast, use entirely new technologies <strong>and</strong>/or markets.<br />

Incremental <strong>and</strong> progressive innovations focus on the full exploitation of existing<br />

opportunities, while radical innovations strive for exploration of new opportunities. Sharma<br />

<strong>and</strong> Salvato (2011) argue that dependence on exploitation alone is unlikely to lead to<br />

competitive performance advantages in the long term, as better services <strong>and</strong> products will<br />

48


always appear in the market at some point. Therefore, stages of radical innovation are<br />

necessary to ensure long-term competitive advantage. Such stages can be followed by periods<br />

of exploitation. Sharma <strong>and</strong> Salvato (2011) refer specifically to family firms but it seems<br />

logical that this premise should hold for all private firms. Therefore, this study not only<br />

focuses on the realization of new products <strong>and</strong> services but it also combines this with the<br />

distinction between “new to the world” <strong>and</strong>/or “new for the firm.” Through this approach, a<br />

scale is created that measures progressively more radical innovation.<br />

The McKinsey study (2010) reveals that the core barriers to successful innovation remain a<br />

challenge for the modern firm. This is reflected in the corporate entrepreneurship literature,<br />

where a dominant theme is the identification of the characteristics <strong>and</strong> circumstances that<br />

make firms entrepreneurial (Nordqvist <strong>and</strong> Melin, 2010). Miller (1983, p.771) defines an<br />

entrepreneurial firm as “a firm that engages in product innovation, undertakes somewhat<br />

risky ventures, <strong>and</strong> is first to come up with ‘proactive’ innovations, beating competitors to the<br />

punch.” A sub-stream within the corporate entrepreneurship literature investigates<br />

entrepreneurship in the context of the family business. An important initiative in this area is<br />

the Global STEP Project (Nordqvist & Zellweger, 2010), which focuses on transgenerational<br />

entrepreneurship—the maintenance of the entrepreneurial spirit through succeeding<br />

generations. One preliminary outcome of the project is the introduction of the family as the<br />

unit of analysis. The proposition is that the family should be regarded as the actor that<br />

undertakes entrepreneurial activities, including innovation (Nordqvist & Melin, 2010).<br />

Habbershon et al. (2010, p. 10) state that there is “increasing evidence that the families who<br />

are in control of these firms need to be considered as drivers <strong>and</strong> enablers of new<br />

entrepreneurial activity in their regional <strong>and</strong> national context.”<br />

Bergfeld <strong>and</strong> Weber (2011) also focus on the role of the family within the innovation process<br />

in their investigation of “dynasties of innovation.” In this qualitative study of old, successful<br />

German family firms, the authors identify a crucial role of owning families as stimulators of<br />

radical innovation <strong>and</strong> corporate renewal. Their research reveals that a successful strategy for<br />

the owning family is to focus on maintaining long-term innovativeness rather than becoming<br />

overly involved in incremental innovation challenges. The ultimate goal is to ensure the<br />

continuity of the firm. Therefore, owning families should set the strategic imperatives, <strong>and</strong><br />

support radical <strong>and</strong> progressive moves. They can mainly do so via their positions on the<br />

firm’s supervisory board.<br />

In Bergfeld <strong>and</strong> Weber’s (2011) study, family owners are viewed as strategic resources for<br />

the firm. In line with Berent-Braun (2010), the current study identifies business owners as a<br />

distinct, important group within the privately held firm. Bergfeld <strong>and</strong> Weber (2011) see<br />

family owners as guardians of a radical innovative climate. Although their findings are<br />

promising (Sharma & Salvato, 2011), they are limited to “old” successful firms <strong>and</strong><br />

qualitative results. To overcome the shortcomings of Bergfeld <strong>and</strong> Weber’s study (2011), this<br />

chapter adopts a quantitative approach <strong>and</strong> uses a sample that includes firms of all ages.<br />

Furthermore, non-family firms are included (Miller et al., 2007) in order to distinguish<br />

49


etween “owner” effects <strong>and</strong> “family” effects, <strong>and</strong> to capture the potential influence of family<br />

owners.<br />

Nordqvist <strong>and</strong> Melin (2010) stress the need to investigate the role of social capital with<br />

regard to entrepreneurship <strong>and</strong> innovation within family firms. Social capital is the goodwill<br />

<strong>and</strong> other benefits generated by various social relations (Adler & Kwon, 2002). Recently,<br />

social capital has become the subject of an increasing amount of attention in the business<br />

literature in general (Lee, 2009) <strong>and</strong> in family business literature in particular (e.g., Arregle et<br />

al., 2007a; Pearson at al., 2008). Nordqvist <strong>and</strong> Melin’s (2010) argument stems from the fact<br />

that social capital has been identified as a likely source of competitive advantage for family<br />

businesses (Carney, 2005; Arregle et al., 2007a; Pearson at al., 2008). Furthermore, social<br />

capital is seen as a key resource in innovation (Subramaniam & Youndt, 2005), due to the<br />

fact that innovation is often a collaborative effort. In fact, social capital is often believed to<br />

play a central role in both incremental <strong>and</strong> radical innovation (Hargadon & Sutton, 1997).<br />

Therefore, the focus in this study is on the role of owners in creating social capital <strong>and</strong> on<br />

how this social capital influences product innovation. “Ownership social capital” is defined<br />

as the sum of the actual <strong>and</strong> potential resources embedded within, available through, <strong>and</strong><br />

derived from the network of relationships possessed by the business owners. This definition<br />

follows the general definition of social capital proposed by Nahapiet <strong>and</strong> Ghoshal (1998). In<br />

line with Adler <strong>and</strong> Kwon (2002), a distinction is made between bonding aspects of<br />

ownership social capital (internal) <strong>and</strong> bridging aspects of ownership social capital (external).<br />

Furthermore, in line with Kellermans, Eddleston, Sararthy, <strong>and</strong> Murphy (2012), this study<br />

investigates the influence of family involvement on the relationship between the role of the<br />

owners <strong>and</strong> the level of new product development in private firms. The dimensions of<br />

ownership social capital, <strong>and</strong> their expected direct <strong>and</strong> indirect relationships with product<br />

innovation are more fully discussed in the next section.<br />

3.3 Research framework <strong>and</strong> hypotheses<br />

Bridging ownership social capital <strong>and</strong> product innovation<br />

Bridging social capital relates to linking <strong>and</strong>/or brokering processes that occur between<br />

unrelated groups <strong>and</strong> people (Gedaljovic & Carney, 2010). Scholars focus on the potential<br />

benefits of bridging social capital, especially in the entrepreneurship literature on new<br />

venture creation (De Carolis & Saparito; 2006; Liao & Welsch, 2005; Pirolo & Presutti,<br />

2010; Steier, 2007). Consistent with a network view, these research perspectives regard<br />

innovation as the outcome of the interactions <strong>and</strong> exchanges of knowledge across a diverse<br />

range of actors in various situations rather than as product of isolated inventors (Zheng,<br />

2010). Zheng’s literature review (2010) concludes that bridging social capital has a<br />

significant positive impact on innovation. The argument that bridging social capital adds<br />

value is closely related to network theory (e.g., Ramos-Rodríguez, Medina-Garrido, Lorenzo-<br />

Gómez & Ruiz-Navarro, 2010). A key concept in network theory is that of structural<br />

50


embeddedness. “Structural embeddedness” reflects the configuration of an<br />

individual/group/organization’s network (Granovetter, 1992), while “network configuration”<br />

describes the pattern of linkages by measuring the density, connectivity, <strong>and</strong> hierarchy<br />

(Nahapiet & Ghoshal, 1998) of an individual or organizational network. Structural<br />

embeddedness creates economic opportunities that are difficult to replicate via contracts,<br />

markets, or vertical integration (Uzzi, 1997).<br />

One assumption made in network theory is that the more ties an actor maintains, the more<br />

opportunities that actor has to be exposed to external information, ideas, <strong>and</strong> knowledge<br />

(Maurer et al., 2011; Zheng, 2010). Bridging ties act as a “scanning device” that allows firms<br />

to detect new trends <strong>and</strong> asymmetries in the market faster than firms lacking such<br />

connections (Stam & Elfring, 2008). In addition to knowledge acquisition, such contacts also<br />

enable greater knowledge sharing (Zheng, 2010). In this respect, Zahra (2010) emphasizes<br />

the importance of established family firms connecting with new ventures in order to<br />

incorporate new developments <strong>and</strong> radical change. Subramaniam <strong>and</strong> Youndt (2005) stress<br />

the brokering aspect of bridging social capital, where “brokering” is defined as the<br />

combination of previously unconnected ideas. This aspect of social capital refers to the<br />

connection of diverse ideas <strong>and</strong> thoughts that leads to unforeseen <strong>and</strong> unusual combinations<br />

with the potential to create radical breakthroughs. In this study, the group of owners of a<br />

private firm is in focus. Based on the arguments mentioned above, the network of the<br />

individual owners can be expected to hold valuable resources for the firm in its efforts to<br />

realize product innovation. Taken together, these arguments lead to the following hypothesis:<br />

Hypothesis 1: The mobilization of the owning group’s network is positively associated with<br />

product innovation.<br />

Bonding ownership social capital <strong>and</strong> product innovation<br />

Bonding social capital focuses on the internal structure of the group—“the linkages among<br />

individuals or groups within the collective <strong>and</strong>, specifically, in those features that give the<br />

collective cohesiveness <strong>and</strong> thereby facilitate the pursuit of collective goals” (Adler & Kwon,<br />

2002, p. 21). The distinction between the relational dimension <strong>and</strong> the cognitive dimension is<br />

relevant with regard to the discussion on ownership social capital.<br />

The relational dimension of social capital draws from Granovetter’s (1973) relational<br />

embeddedness argument, which refers to the quality of the relationships within a network.<br />

The relational dimension of social capital encompasses assets that are created <strong>and</strong> leveraged<br />

through these relationships, such as trust <strong>and</strong> trustworthiness, norms, obligations, identity,<br />

<strong>and</strong> identification (Tsai & Ghoshal, 1998).<br />

Social ties serve as channels for information <strong>and</strong> resource flows (Tsai & Ghoshal, 1998).<br />

When these social ties can be characterized as high on the relational dimension, information<br />

<strong>and</strong> resources can be expected to flow more smoothly. Communication, the fluid diffusion of<br />

information, <strong>and</strong> the sharing <strong>and</strong> assimilation of information are vital elements of innovative<br />

51


capabilities (Subramaniam & Youndt, 2005). Tsai <strong>and</strong> Ghosal (1998) confirm that informal<br />

social relations <strong>and</strong> tacit social arrangements within a firm encourage business units to<br />

combine <strong>and</strong> exchange resources across formal organizational lines <strong>and</strong> levels. This exchange<br />

<strong>and</strong> combination of resources is positively associated with product innovation.<br />

One benefit of trust among members of a group or collective is that it works as a governing<br />

mechanism (Uzzi, 1997): “actors that trust <strong>and</strong> are trusted by others give <strong>and</strong> receive<br />

information <strong>and</strong> knowledge resources freely without fear of being cheated or misled”<br />

(Molina-Morales & Martinez-Fern<strong>and</strong>ez, 2010, p. 264). Molina-Morales <strong>and</strong> Martinez-<br />

Fern<strong>and</strong>ez (2010) find a positive association between trust in an external social network <strong>and</strong><br />

innovation. Taken together, these observations lead to the following hypothesis:<br />

Hypothesis 2a: The quality of relationships among members of the owning group is positively<br />

associated with product innovation.<br />

The cognitive dimension of social capital refers to those resources providing shared<br />

representations, interpretations, <strong>and</strong> systems of meaning among parties (Nahapiet & Ghoshal,<br />

1998). This dimension of social capital “comprises the groups’ shared vision <strong>and</strong> purpose, as<br />

well as unique language, stories <strong>and</strong> culture of a collective that are commonly known <strong>and</strong><br />

understood, yet deeply embedded” (Pearson et al., 2008, p. 957). Shared vision <strong>and</strong> purpose<br />

are constructs that seem particularly relevant to link with innovation: A shared vision among<br />

the owners about the future of the firm <strong>and</strong> a common purpose in terms of organizational<br />

goals are expected to positively influence the development of new products <strong>and</strong> services.<br />

Zheng’s review of research on social capital <strong>and</strong> innovation (2010) shows that research in the<br />

area of shared vision <strong>and</strong> innovation is fragmented <strong>and</strong> scarce. However, the available<br />

findings confirm that shared vision is positively linked to innovation. Therefore, the<br />

following hypothesis is presented:<br />

Hypothesis 2b: A shared vision among the owning group is positively associated with product<br />

innovation.<br />

Bridging ownership social capital as a mediating variable<br />

The relationship between bonding ownership social capital <strong>and</strong> product innovation may be<br />

mediated by bridging ownership social capital. Zheng’s (2010) literature review reveals that<br />

most empirical studies on social capital take either bridging or bonding social capital into<br />

account, but not both. A combination of the bonding <strong>and</strong> bridging aspects of social capital<br />

provides insights into how these distinct aspects interact with each other. Zheng (2010)<br />

emphasizes the importance of taking an integrative view on social capital based on the fact<br />

that the structural part of a network cannot exist independent of the relational part, while the<br />

relational part cannot exist without the structural part. This relates to another aspect of the<br />

complexity of the social capital construct – the difference between potential <strong>and</strong> realized<br />

social capital (Montemerlo & Sharma, 2010).<br />

52


To realize the positive effect of bridging ownership social capital on product innovation,<br />

owners must actively mobilize their network for the benefit of the firm. A possible mediation<br />

effect is explored on the basis of Lin’s model of social capital development (1999). Lin<br />

(1999) argues that a crucial step in the development of social capital is the process of social<br />

capital mobilization, in which individuals act to enhance the mobilization of resources. In this<br />

study, bonding social capital is expected to primarily act as a condition for the realization of<br />

bridging social capital. It is assumed that when there is a shared vision among owners <strong>and</strong><br />

high-quality relationships, the owning group will be inclined to mobilize <strong>and</strong> use its potential<br />

external resources for the benefit of the company. Furthermore, as bonding social capital<br />

maintains the closeness of the network, it ensures that if owners do bring in outside resources<br />

<strong>and</strong> network contacts, those resources <strong>and</strong> contacts will benefit the firm. Therefore, the third<br />

set of hypotheses is the following:<br />

Hypothesis 3a: The quality of relationships among members of the owning group is indirectly<br />

positively associated with product innovation through the network mobilization of the owning<br />

group.<br />

Hypothesis 3b: A shared vision among the owning group is indirectly positively associated<br />

with product innovation through the network mobilization of the owning group.<br />

<strong>Family</strong> involvement as a moderating variable<br />

Given the complex nature of the relation between ownership social capital <strong>and</strong> product<br />

innovation, it seems reasonable to expect complementary effects between certain ownership<br />

characteristics <strong>and</strong> product innovation outcomes. Recent studies in the field of<br />

entrepreneurship <strong>and</strong> innovation incorporate the structure of the firm’s ownership <strong>and</strong><br />

management as a moderator (e.g., Casillas & Moreno, 2010; Classen, Van Gils, Bammens &<br />

Carree, 2012; Zhara, 2010). In the present study, family involvement is expected to moderate<br />

the relation between ownership social capital <strong>and</strong> product innovation.<br />

Miller <strong>and</strong> Friesen (1982) find that product innovation differs considerably between<br />

“entrepreneurial” <strong>and</strong> “conservative” firms. In their research, conservative firms differ from<br />

entrepreneurial firms in that the former have relatively low organizational differentiation,<br />

market homogeneity, low market hostility, <strong>and</strong> unconscious strategies. Such conservatism<br />

can plague family firms. Reliance on family members, the exclusion of outsiders, loyalty to<br />

traditions, <strong>and</strong> insular strategic thinking are factors that lead to conservatism in family firms<br />

(Zahra, 2010). However, family firms are not homogeneous (Westhead & Howorth, 2007)<br />

<strong>and</strong> they tend to become conservative over time (Zahra, 2012). Many of the concerns about a<br />

lack of innovativeness in family firms have to do with life-cycle effects, a suggestion that is<br />

empirically supported by Miller et al. (2007), who found that first-generation family firms<br />

outperform family firms led by later generations as well as non-family firms. Other factors<br />

mentioned in the literature in relation to the lack of innovation in family firms include less<br />

53


isk taking, an inability to react to change, slowness in decision making, <strong>and</strong> a reluctance to<br />

grow (Kraus, Pohjola & Koponen, 2012).<br />

Despite these arguments, the empirical evidence concerning the statement that family firms<br />

are less innovative is equivocal (Llach & Nordqvist, 2010). On the one h<strong>and</strong>, Morck,<br />

Stangel<strong>and</strong>, <strong>and</strong> Yeung (2000) show that Canadian family firms are less active in research<br />

<strong>and</strong> development activities than non-family firms comparable in age, size, <strong>and</strong> sector. On the<br />

other h<strong>and</strong>, Llach <strong>and</strong> Nordqvist (2010) show that Spanish family firms are more innovative<br />

than their non-family counterparts. In line with Subramaniam <strong>and</strong> Youndt (2005) <strong>and</strong> Zheng<br />

(2010), Llach <strong>and</strong> Nordqvist’s (2010) findings highlight social capital as an important<br />

strategic resource that supports innovation.<br />

Zahra (2012) explores the influence of family ownership on organizational learning.<br />

Organizational learning is a capability that stimulates innovation, as it enables the firm to<br />

recognize changing market conditions <strong>and</strong> opportunities to be exploited (Zahra, 2012). Zahra<br />

(2012) identifies opposing effects of family ownership on organizational learning: a positive<br />

effect on the breadth <strong>and</strong> speed of learning, <strong>and</strong> a negative effect on the depth of learning. In<br />

this paper, these opposing effects are also expected, with the role of family involvement<br />

acting as a mediator between ownership social capital <strong>and</strong> product innovation.<br />

Critical voices, viewpoints from outsiders, <strong>and</strong> fresh opinions are necessary for deep learning.<br />

However, these qualities are often lacking in the family firm context (Zahra, 2012).<br />

Especially when there is an orientation towards traditional fundamental values, family<br />

businesses can cling to obsolete products on basis of a belief that former success proves the<br />

appropriateness of the current strategy (Roessl, Fink & Kraus, 2010). The inward orientation<br />

of many family firms can be explained by the closure of the social network, which is<br />

particularly common among family firms (Arregle et al., 2007a). Closure is a necessary<br />

condition for the creation of bonding social capital (Pearson et al., 2008) but it can be<br />

harmful to the development of an external network. This relates to network theory, which<br />

distinguishes between strong <strong>and</strong> weak ties. The importance of weak ties is suggested by<br />

Granovetter (1973) <strong>and</strong> follows the notion that weak ties, in particular, can act as a “bridge”<br />

to valuable, new information. Actors with an extensive network of weak ties – that is,<br />

contacts who are not connected to each other – will have a high level of bridging social<br />

capital (Moran, 2005). Pirolo <strong>and</strong> Presutti (2010) confirm the added value of weak ties,<br />

showing that weak ties act as “local bridges” to distant contacts possessing unique<br />

information. Furthermore, a lack of a tight link to a business partner seems to be a condition<br />

for the achieving level of autonomy necessary to spot new, profitable opportunities (Uzzi &<br />

Gillespie, 2002). Taken together, these observations lead to the following hypothesis:<br />

Hypothesis 4a: The relationship between the mobilization of the owning group’s network <strong>and</strong><br />

product innovation is weaker for firms with high family involvement than for firms with low<br />

family involvement.<br />

54


The closeness of the family is an important ingredient in Zahra’s (2012) explanation of the<br />

positive effect of family ownership <strong>and</strong> family cohesion on the breadth <strong>and</strong> speed of<br />

organizational learning. A combination of high family ownership <strong>and</strong> high family cohesion<br />

will lead to a motivation to learn broadly, <strong>and</strong> a willingness to exchange <strong>and</strong> share<br />

information, which will help to speed up organizational learning (Zahra, 2012). The same<br />

mechanism is expected to work within the context of bonding ownership social capital <strong>and</strong><br />

product innovation. A reliance on family members <strong>and</strong> an inward orientation are beneficial<br />

for the development of bonding ownership social capital, <strong>and</strong> these elements will enhance the<br />

positive effect of bonding ownership social capital on product innovation. Therefore:<br />

Hypothesis 4b: The relationship between the quality of relationships among members of the<br />

owning group <strong>and</strong> product innovation is stronger for firms with high family involvement than<br />

for firms with low family involvement.<br />

Hypothesis 4c: The relationship between the shared vision among the owning group <strong>and</strong><br />

product innovation is stronger for firms with high family involvement than for firms with low<br />

family involvement.<br />

The hypothesized relationships are depicted in Figure 3.1.<br />

55


Figure 3.1: Model of ownership social capital <strong>and</strong> product innovation<br />

3.4 Method<br />

Sample <strong>and</strong> data collection<br />

The research is conducted using a r<strong>and</strong>om sample of Dutch private businesses. This is the<br />

same sample as is used in Chapter 2. Therefore, the discussion of the data set can be found in<br />

section 2.4.<br />

Variables<br />

The discussion of the variables family involvement (reflecting the relevant structural<br />

dimension of ownership social capital, as the focus is on potential family influence), shared<br />

vision of the owners (representing the cognitive dimension of ownership social capital),<br />

quality of relationships among the owners <strong>and</strong> the owners group network mobilization, can<br />

also be found in section 2.4. The same holds for the control variables, company size, company<br />

age, sector, expansion, number of owners, board of directors <strong>and</strong> ownership-management<br />

overlap.<br />

56


Product innovation (Cronbach’s alpha = .67) (not included in Chapter 2) was measured using<br />

three items. First, respondents were asked to indicate the percentage of total sales that could<br />

be attributed to new products or services in the previous fiscal year. Second, respondents<br />

were asked to describe whether the new products or services were new to the world, or only<br />

new for the company or the industry (coded: 1 = no innovations, 2 = new to firm or industry,<br />

3 = new to the world). Finally, respondents were asked to indicate on a five-point Likert scale<br />

whether the business objective was to be the first on the market with new products or<br />

services. Items were converted to st<strong>and</strong>ardized scores <strong>and</strong> then a mean score of the nonmissing<br />

values was calculated to produce the product innovation index.<br />

Data analysis<br />

The first step in the data analysis was to verify the proposed scales for shared vision, quality<br />

of relationships, bridging social capital, product innovation, <strong>and</strong> family involvement. A<br />

confirmatory factor analysis with varimax rotation was used for this step. To check whether<br />

common method bias was a problem, a Harman’s single-factor test was applied (Podsakoff &<br />

Organ, 1986) <strong>and</strong> factor loadings for multi-item scales within the same factor analysis were<br />

reviewed. To ensure that multicollinearity among the independent variables was not a<br />

problem, variance inflation factors (VIF) were calculated. To test the reliability of the scales,<br />

Cronbach’s alpha scores were calculated for each scale.<br />

The hypotheses were tested using hierarchical multiple regression analyses. The direct effects<br />

of the independent variables were tested by entering the variables alone after the controls <strong>and</strong><br />

in the full model that included all of the variables. The effect of each variable was assessed in<br />

terms of the two-tailed significance of its contribution to explaining the dependent variable.<br />

The potential mediation effects were tested applying bootstrap tests following the method<br />

suggested by Preacher <strong>and</strong> Hayes (2008). The analyses were performed using SPSS with<br />

Preacher <strong>and</strong> Hayes’s INDIRECT.SPS Macro (www.quantpsy.com). This procedure, which<br />

involves repeatedly sampling from the dataset to estimate the indirect effects <strong>and</strong> building an<br />

empirical approximation of the sampling distribution, is more exact <strong>and</strong> has more statistical<br />

power than those based on the normal distributions (e.g., the Sobel test) (Holiday Wayne &<br />

Casper, 2012).<br />

3.5 Results<br />

Development of scales, bivariate relationships, <strong>and</strong> descriptive statistics<br />

A principal component factor analysis with varimax rotation is used to develop the scales.<br />

Table 3.1 presents the results of the factor analyses for network mobilization, shared vision,<br />

quality of relationships, product innovation, <strong>and</strong> family involvement. All items clearly load<br />

on one of five distinct factors, with the relevant factor loading surpassing .64 in each<br />

instance. The unintended factor loadings are no higher than .41. The largest factor in the<br />

unrotated factor analysis, quality of relationships, explains 29.80% of the variance, which<br />

57


allows us to conclude that the variables are independent <strong>and</strong> that common method bias is not<br />

a concern. The Cronbach’s alphas are also satisfactory, ranging from .67 to .93 (see Table<br />

3.1).<br />

Descriptive <strong>and</strong> bivariate statistics<br />

Table 3.2 shows the bivariate Pearson product-moment correlation coefficients as well as the<br />

means <strong>and</strong> st<strong>and</strong>ard deviations of all variables. On average, the firms included in the sample<br />

are 40 years old, <strong>and</strong> have 77 employees <strong>and</strong> 3 owners.<br />

Results of hypothesis testing<br />

The results of the multiple regression analysis are presented in Table 3.3. The VIF scores for<br />

Models 1-3 range from 1.09 to 1.719. On the basis of currently accepted st<strong>and</strong>ards, these<br />

results do not indicate a problem of multicollinearity between the independent variables.<br />

Model 5 shows higher VIF scores but these are the result of the inclusion of interaction<br />

effects in the model. The full model (Model 4) explains 14.6% of the variance in the<br />

dependent variable (p < 0.001).<br />

The results related to Hypothesis 1, which predicts a positive relationship between network<br />

mobilization <strong>and</strong> product innovation, are presented in Model 3, Table 3.3. As the results<br />

show a significant relation (β= .14, p < 0.001), they support Hypothesis 1.<br />

Model 1, Table 3.3, shows the results for Hypothesis 2a, which suggests that the quality of<br />

relationships is a predictor of the level of product innovation in a particular firm. The results<br />

indicate that the quality of relationships is positively related to product innovation (β = .09, p<br />

< .05), which lends support for Hypothesis 2a. Model 2 shows the results for Hypothesis 2b,<br />

which predicts a positive relationship between shared vision <strong>and</strong> the level of product<br />

innovation in a firm. As the relationship between shared vision <strong>and</strong> product innovation is not<br />

statistically significant (β = .04, ns), Hypothesis 2b is not supported.<br />

The results concerning network mobilization as a mediating variable are presented in Model<br />

4. When shared vision <strong>and</strong> the quality of relationships are added after the control variables,<br />

the quality of relationships significantly relates to product innovation (Models 1 <strong>and</strong> 2, Table<br />

3.3). However, when entered together with network mobilization in a single model, the<br />

explanatory power of quality of relationships decreases <strong>and</strong> becomes non-significant (β = .09,<br />

p < .05 to β = .05, ns) (Model 4, Table 3.3). The explanatory power of network mobilization<br />

remains significant (β = .14, p < .01, ∆R 2 = 0.013).<br />

58


Table 3.1: Factor analysis of multi-item variables included in the study a<br />

<strong>Family</strong><br />

involvement<br />

Shared vision Product<br />

innovation<br />

Quality of<br />

relationships<br />

Network<br />

mobilization<br />

Owners speak enthusiastically about the business with people outside the<br />

.69 .21 .10 .10 -.04<br />

business.<br />

Owners help to exp<strong>and</strong> the business’s network by making outside contacts. .87 .18 .14 .03 -.04<br />

Owners help to seek out or create new opportunities for the firm. .85 .21 .19 .03 .04<br />

Owners tend to trust one another. .19 .87 .20 .01 .04<br />

Owners are open <strong>and</strong> honest with one another. .16 .86 .25 -.02 .03<br />

Owners have good cooperative relationships. .19 .88 .22 .01 .02<br />

Owners work together as a team. .21 .81 .26 .00 .10<br />

Owners are committed to managing wealth as a group rather than as<br />

.17 .15 .69 -.00 .03<br />

individuals.<br />

Owners share the same vision about the business. .23 .35 .69 .03 .03<br />

Owners try to pull this company in opposite directions. (scale reversed) -.02 .16 .70 -.01 .01<br />

Owners agree about the key objectives of the business. .33 .41 .64 .02 -.03<br />

Products are new to the company <strong>and</strong> industry, or new to the world. .03 .01 .03 .83 -.11<br />

Percentage of sales in previous year stemming from new products. .02 .02 .01 .75 -.06<br />

First on the market with new products. .08 -.03 -.03 .71 .03<br />

Two or more directors are related to the owners. .09 .09 -.21 -.08 .66<br />

Business owned by the same family for two or more generations. -.04 -.04 21 -.02 .64<br />

<strong>Family</strong> relations exist between the owners. -.06 -.06 .01 -.09 .87<br />

The family has a considerable influence on the business strategy. -.02 .17 .01 .04 .73<br />

Cronbach’s alpha .80 .93 .70 .67 .70<br />

Percentage variance explained 13.00 29.80 7.35 5.96 9.35<br />

a<br />

Principal component analysis with varimax rotation; four components extracted.<br />

59


Table 3.2: Correlations between variables used in the study<br />

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16<br />

.58 b<br />

.03 b<br />

1. Network mobilization<br />

2. Quality of relationships .45 b<br />

3. Shared vision .45 b<br />

4. Product innovation .12 b<br />

.04<br />

5. <strong>Family</strong> involvement .01 .12 b<br />

.04 -.10 b<br />

6. Company size (ln) -.00 -.09 a -.01 .22 a -.06<br />

7. Expansion .02 -.02 -.01 .16 b .18 b .02<br />

8. Company age (ln) -.08 a<br />

-.02 -.01 -.06 .33 b .35 b -.26 b<br />

9. Service .06 -.03 -.06 -.05 -.17 b -.07 .08 a -.30 b<br />

10. Agriculture -.06 .04 -.05 -.03 .10 a -.11 b .03 .04 -.14 b<br />

b b b b a<br />

11. Manufacturing -.06 -.06 .04 .15 .01 .17 - .05 .22 - .40 - .08<br />

12. Construction .02 .00 -.02 -.08 a .02 .05 -.11 b .14 b -.33 b -.07 -.18 b<br />

13. Retail <strong>and</strong> trade .00 .05 .00 .00 .13 b -.07 .03 -.08 -.47 b -.10 a -.27 b -.22 b<br />

14. Number owners (ln) -.09 a<br />

-.22 b<br />

-.09 a .13 b -.16 b .30 b .02 .08 a -.10 b -.03 -.02 -.06 -.08 a<br />

15. Board of directors -.12 b<br />

-.15 b<br />

-.10 b .10 b -.06 .26 b -.02 .16 b -.13 b -.03 .15 b .02 .01 .13 b<br />

16. Ownership-<br />

.19<br />

management overlap<br />

b .21 b -.06 -.13 b .23 b -.29 b -.04 -.11 b .06 .03 -.14 b .02 .03 -.37 b -.28 b<br />

Mean c<br />

4.41 4.44 4.25 1.01 1.71 77.46 .28 40.25 .41 .03 .19 .13 .41 3.03 1.16 63.65<br />

SD c .61 .58 .51 .81 1.40 88.98 .45 36.81 .49 .17 .39 .34 .49 1.99 .37 39.00<br />

Pearson correlation coefficient, two-tailed: a : p < 0.05; b : p < 0.01; N = 708.<br />

c<br />

For company size, company age, <strong>and</strong> the number of owners, the means <strong>and</strong> st<strong>and</strong>ard deviations are reported for the original values.<br />

60


Table 3.3: Prediction of product innovation<br />

Dependent variable Product<br />

innovation<br />

Product<br />

innovation<br />

Product<br />

innovation<br />

Product<br />

innovation<br />

Product<br />

innovation<br />

Model 1 Model 2 Model 3 Model 4 Model 5<br />

Explanatory variables β value d β value d β value d β value d β value d<br />

Controls<br />

Company size (ln) .22 c<br />

.22 c<br />

.20 c<br />

.20 c<br />

.20 c<br />

Expansion .12 c .12 c .12 c .12 c .12 c<br />

Age (ln) -.14 c -.14 c -.13 c -.13 c -.14 c<br />

Construction .01 -.02 -.01 -.01 .00<br />

Retail .06 .06 .06 .06 .06<br />

Manufacturing .15 c .15 c<br />

.16 c .16 c<br />

.16 c<br />

Agriculture .02 -.02 -.03 -.01 .03<br />

Number of owners (ln) .07 .06 a .06 .03 a .07<br />

Board of directors .04 .03 .03 .05 .04<br />

Ownership-management overlap -.04<br />

-.03 -.05<br />

-.05 -.06<br />

<strong>Family</strong> involvement -.02 -.02 -.01 -.02 .49<br />

Ownership social capital<br />

Quality of relationships .09 a .05 .07<br />

Shared vision .04 -.04 -.09<br />

Network mobilization .14 c .14 b .25 c<br />

Moderator family involvement<br />

Interaction effect<br />

<strong>Family</strong> involvement x network mobilization<br />

<strong>Family</strong> involvement x quality of relationships<br />

<strong>Family</strong> involvement x shared vision<br />

∆R square .007 a .002 .018 c .013 c .011 b<br />

R square .121 c .116 c .133 c .135 c .146 c<br />

Adj. R square .106 .101 .118 .117 .125<br />

F statistic 7.99 7.63 8.87 7.70 7.332<br />

DF (df1, df2) 12,695 12,695 12,695 14,693 16,691<br />

a : p < 0.05; b : p < 0.01; c : p < 0.001; N = 708<br />

d : β values represent st<strong>and</strong>ardized regression coefficients in the multiple regression analysis.<br />

61<br />

-.81 b<br />

-.28<br />

.56


A bootstrap test is then used to estimate the mediation effect, following the recommendations<br />

of Preacher <strong>and</strong> Hays (2008). 10,000 bootstrapping resamples were run with a list wise<br />

deletion of missing data <strong>and</strong> 95 percent confidence intervals, <strong>and</strong>. The analyses examine the<br />

direct relationship between the quality of relationships <strong>and</strong> the dependent variable (product<br />

innovation) as well as the indirect relationship through the mediator (network mobilization)<br />

while controlling for the control variables. The total effect of the quality of relationships on<br />

product innovation (.12) is significant (t = 1.96, SE = .063, p = .05). However, after network<br />

mobilization is added as a mediator, the path coefficient becomes non-significant, suggesting<br />

mediation. Furthermore, the bootstrapping technique shows a bias-corrected 95% confidence<br />

interval of 0.0233 to 0.0977 for this indirect effect, with the lower <strong>and</strong> upper limits above<br />

zero. Taken together, the results reveal that network mobilization has a significant mediation<br />

effect on the relation between the quality of relationships <strong>and</strong> product innovation, which<br />

lends support for Hypothesis 3a.<br />

In Model 5, the results of the hypotheses predicting family involvement as a moderator are<br />

shown. Hypothesis 4a predicts that family involvement among the owners will have a<br />

negative moderating effect on the relationship between network mobilization <strong>and</strong> product<br />

innovation. The results show a negative interaction term for family involvement <strong>and</strong> network<br />

mobilization in the model predicting product innovation (β = -.81, p < .01). These results<br />

therefore support Hypothesis 4a. The nature of the interaction effect is depicted in Figure 3.2.<br />

Figure 3.2: Interaction term family involvement <strong>and</strong> network mobilization<br />

Product innovation<br />

5<br />

4,5<br />

4<br />

3,5<br />

3<br />

2,5<br />

2<br />

1,5<br />

1<br />

Low Network mobilization High Network mobilization<br />

Low <strong>Family</strong><br />

involvement<br />

High <strong>Family</strong><br />

involvement<br />

62


The solid line in Figure 3.2 is steeper than the dotted line, which indicates that firms with low<br />

levels of family involvement will benefit more from the mobilization of the owners’ network,<br />

resulting in higher scores for product innovation. Overall, the levels of the different slopes<br />

indicate that, when compared with firms with low levels of family involvement, firms with<br />

high family involvement have lower product innovation scores. The horizontal dotted line in<br />

Figure 3.2 confirms that the family firm context is not a fruitful environment for mobilizing<br />

<strong>and</strong> using potential network resources to realize product innovation. In other words, while the<br />

analysis of the data does not reveal a direct effect of family involvement on the development<br />

of new products <strong>and</strong> services, the proposed negative moderating effect of family involvement<br />

on the relation between network mobilization <strong>and</strong> product innovation is confirmed by the<br />

data set.<br />

Hypothesis 4b predicts that family involvement in the owning group will have a positive<br />

moderating effect on the relationship between the quality of relationships <strong>and</strong> product<br />

innovation. Following the same arguments, Hypothesis 4c predicts that family involvement in<br />

the owning group will have a positive moderating effect on the relationship between shared<br />

vision <strong>and</strong> product innovation. The results are presented in Model 5. The results of the<br />

moderating effect of family involvement on these components of bonding ownership social<br />

capital are not significant (interaction with quality of relationships: β = .28, ns; interaction<br />

with shared vision: β = -.56, ns), lending no support for Hypotheses 4b <strong>and</strong> 4c.<br />

Other results<br />

The number of owners is the only ownership characteristic that significantly influences the<br />

dependent variable (β = .06 in Model 2 <strong>and</strong> β = .03 in Model 4; p < .05), albeit not in all<br />

models. The control variables for business characteristics show significant associations for<br />

company size, expansion, age, <strong>and</strong> sector. Younger firms have a higher score on product<br />

innovation (Model 5: β = -.14, p < .001) as do larger firms (Model 5: β = .20, p < .001). The<br />

same holds true for firms in the expansion stage versus those in other life-cycle stages (Model<br />

5: β = .12, p < .001). Of the various business sectors that were included in the analysis, only<br />

manufacturing has a significant positive effect on product innovation (Model 5: β = .16, p <<br />

.001). Those results are consistent through all models.<br />

63


3.6 Discussion <strong>and</strong> conclusion<br />

Theoretical <strong>and</strong> managerial implications<br />

The main aim of this study was to improve the underst<strong>and</strong>ing of the relationship between<br />

ownership social capital <strong>and</strong> product innovation. The analysis provides empirical support for<br />

several of the suggested hypotheses. With regard to bridging ownership social capital, the<br />

results reveal a significant direct relation between the mobilization of the owning group’s<br />

network <strong>and</strong> the realization of new products <strong>and</strong> services. Bonding ownership social capital is<br />

measured in terms of the shared vision among the owning group <strong>and</strong> the quality of the<br />

relationships among members of the owning group. Of these two components, only the<br />

quality of relationships has a significant effect on product innovation. The analysis shows<br />

that the quality of the relationships among members of the owning group has an indirect<br />

effect on product innovation via the mobilization of the network resources of the owning<br />

group. Based upon the theoretical discussion, family involvement is expected to act as a<br />

moderator. Given the bivalent attributes of family involvement, a positive effect on the<br />

relation between bonding ownership social capital <strong>and</strong> innovation, <strong>and</strong> a negative effect on<br />

the relation between bridging ownership social capital <strong>and</strong> product innovation are expected.<br />

However, only the negative moderating effect on the relation between bridging ownership<br />

social capital <strong>and</strong> product innovation is found to be significant.<br />

These results have several theoretical <strong>and</strong> practical implications. First, the findings of this<br />

study enhance the underst<strong>and</strong>ing of the concept of ownership social capital. A starting point<br />

of this study is the recognition of business owners as a distinct <strong>and</strong> important group within<br />

the privately held firm. The empirical results highlight the positive effect of components of<br />

ownership social capital on product innovation. From a theoretical perspective, the analyses<br />

support the view that both bonding <strong>and</strong> bridging ownership social capital play roles in<br />

innovation: good relations among owners as well as the resources in the owners’ external<br />

networks are valuable for the development of new products <strong>and</strong> services. These findings are<br />

consistent with other research showing that social capital in general is important for<br />

stimulating innovation (e.g., Subramaniam & Youndt, 2005).<br />

Furthermore, bonding <strong>and</strong> bridging ownership social capital do not appear to be mutually<br />

exclusive resources. These findings are in line with the qualitative study of family-controlled<br />

businesses by Salvato <strong>and</strong> Melin (2008) <strong>and</strong> a quantitative study of sales managers by Moran<br />

(2005). The results of the present study also support the argument that it is important to<br />

consider both bonding <strong>and</strong> bridging aspects when attempting to build an integrative view of<br />

social capital (Lin, 1999; Payne et al., 2011; Zheng, 2010). In addition, the results are in line<br />

with the argument made by “small world” researchers that high levels of closure <strong>and</strong> tie<br />

strength in the local cluster, together with a large number of weak bridging ties with other<br />

clusters, have a positive effect on innovation (Zheng, 2010). A study by Fleming <strong>and</strong> Marx<br />

(2006) on ties between inventors in Boston <strong>and</strong> Silicon Valley shows the benefits of such a<br />

“small world.” They emphasize that it is neither the cohesive clustering nor the bridging ties<br />

64


in themselves that improve seminal creativity. Rather, the interaction of these two effects<br />

leads to positive outcomes.<br />

From a managerial perspective, this study emphasizes the positive effect of both dimensions<br />

of ownership social capital on product innovation performance. The group of owners in<br />

privately held firms should view both aspects as important. Not only will good relations<br />

between owners have a positive effect on innovation but external network activities will also<br />

add value to the innovation process.<br />

The results reveal no significant direct effect of family involvement on the dependent<br />

variable. However, family involvement is also considered as a moderator. In the latter case, a<br />

significant negative effect is found for the relationship between mobilization of the owning<br />

group’s network resources <strong>and</strong> product innovation. This study shows that the influence of<br />

family ties among the owning group <strong>and</strong> family involvement in the firm have a limited<br />

influence on product innovation. In fact, the effect is less prominent than might be expected<br />

from previous theoretical <strong>and</strong> empirical research (e.g., Arregle et al., 2007a; Pearson et al.,<br />

2008; Sorenson et al., 2009). Therefore, it is suggested that research in this area should not be<br />

limited to the family firm context. When only family firms are taken into account, social<br />

capital can be misinterpreted as a resource stemming from the family sphere when, in fact, it<br />

is a positive outcome regardless of whether there are family ties.<br />

In summary, the results suggest that it is useful to focus on behavioral <strong>and</strong> attitudinal factors<br />

influencing the functioning of a group of owners instead of looking exclusively for a family<br />

effect. Nevertheless, it may be needed to delve deeper into the types of families studied. For<br />

instance, Ensley <strong>and</strong> Pearson (2005) find differences among non-family, parental, <strong>and</strong><br />

familial top management teams with regard to the level of cohesion, conflict, potency, <strong>and</strong><br />

consensus. Their study reveals, for example, that group cohesion is highest in parental teams<br />

followed by non-family top management teams, with familial teams scoring the lowest.<br />

Research limitations <strong>and</strong> implications for future research<br />

This research suffers from several limitations. First, although four of the hypotheses are<br />

supported by significant results, a rather small percentage of variance in the dependent<br />

variable is explained by the proposed full model. Future research might explore additional<br />

sources of capital that can help to explain a greater proportion of variation in product<br />

innovation. For example, Tsai <strong>and</strong> Ghoshal (1998) emphasize the exchange <strong>and</strong> combination<br />

of resources with other business units as important in explaining the level of product<br />

innovation. Research that takes other forms of capital into account, such as human capital,<br />

patient capital, or financial capital, would be helpful in developing a complete picture of how<br />

these different resources affect firm innovation (Sharma, 2008). For example, Subramaniam<br />

<strong>and</strong> Youndt (2005) reveal that social capital works as leverage for investments in human<br />

capital. Furthermore, to improve our underst<strong>and</strong>ing of ownership social capital, it would be<br />

helpful to elaborate on the characteristics of the group of owners. In line with Ensley <strong>and</strong><br />

Pearson (2005), researchers could differentiate among non-family, familial, <strong>and</strong> parental<br />

65


teams. A future study that includes such variables as education, age, <strong>and</strong> work experience of<br />

members of the owning group may also more clearly reveal the antecedents of ownership<br />

social capital.<br />

Another limitation of this study is that it only includes one dimension of innovation – the<br />

development of new product <strong>and</strong> services. It would be valuable to include other aspects of<br />

innovation, such as managerial <strong>and</strong> organizational innovation. Kraus et al. (2012) find, for<br />

example, that organizational innovation is a type of innovation that has a significant positive<br />

effect on the corporate success of family firms. Furthermore, this study entails cross-sectional<br />

data from only one country (the Netherl<strong>and</strong>s). Further research in other countries will reveal<br />

whether the results are country specific. Especially with regard to aspects of bonding<br />

ownership, social capital scholars are aware of the potential influences of cultural differences.<br />

For instance, trust among organizational members is probably highly correlated with the<br />

more general variable of trust in other persons (Westlund & Adam, 2010). The general score<br />

on trust within society can vary widely from country to country, an aspect that may be worthy<br />

of consideration in future research.<br />

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Conclusions<br />

The purpose of this study was to investigate whether ownership social capital contributes to<br />

the development of new products <strong>and</strong> services by private firms, <strong>and</strong> whether family<br />

involvement moderates this relationship. A first contribution of this study is an enhanced<br />

underst<strong>and</strong>ing of the concept of ownership social capital in relation to product innovation.<br />

Based on a r<strong>and</strong>om sample of Dutch private firms, this study reveals that the mobilization of<br />

the network resources of the business-owning group has a direct positive relationship with<br />

product innovation. An indirect effect is found between quality of relationships among the<br />

members of the business-owning group <strong>and</strong> product innovation via network mobilization.<br />

These findings confirm earlier research that highlights the role of owners in relation to<br />

product innovation (Bergfeld & Weber, 2011). Also the positive impact of social capital on<br />

product innovation is confirmed in this study (Zheng, 2010).<br />

A second contribution relates to the impact of family involvement on product innovation.<br />

Interestingly, the study finds only one moderating effect, namely a negative effect of family<br />

involvement on the relationship between network mobilization <strong>and</strong> product innovation. When<br />

combined with the positive effects of ownership, this negative family effect highlights the<br />

need for a better underst<strong>and</strong>ing of these different contributions to product innovation. This<br />

research is a first step towards a better underst<strong>and</strong>ing of this topic, <strong>and</strong> highlights the<br />

importance of distinguishing between ownership <strong>and</strong> family as two systems that interact with<br />

each other <strong>and</strong> with the business system.<br />

Finally, the indication that interaction effects are present between the bonding <strong>and</strong> bridging<br />

elements of social capital is interesting. It may be promising to analyze whether the “small<br />

world” conditions (Fleming & Marx, 2006) hold for the owner groups of privately held firms.<br />

Also, longitudinal research could more accurately investigate the sequential path between<br />

bonding <strong>and</strong> bridging, <strong>and</strong> thereby improve our underst<strong>and</strong>ing of the important concept of<br />

social capital in relation to product innovation.<br />

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4: The relationship between spousal social capital in copreneurial<br />

firms <strong>and</strong> firm performance 11<br />

4.1 Introduction<br />

Case 1: Just as Marc decided to hire the first employees in his construction business, his wife<br />

Alice lost her job as a management assistant at a regional technical school. Alice decided to<br />

take care of the many administrative tasks in her husb<strong>and</strong>’s small business <strong>and</strong> started<br />

working for the firm on a part-time basis. Alice <strong>and</strong> Marc have four children <strong>and</strong> own equal<br />

shares in the business. As the business is located near their home, Alice can easily combine<br />

her work with taking care of the children. The business is growing <strong>and</strong> Alice’s contacts with<br />

her old employer help the company recruit young, qualified personnel. The spouses make all<br />

important decisions together, both at home <strong>and</strong> at work. However, their roles are clear:<br />

Marc is the manager at work <strong>and</strong> Alice is the manager at home.<br />

Case 2: The succession plan seemed clear. Robert <strong>and</strong> his life partner Lianne had taken over<br />

the real estate agency from Robert’s parents, who still worked part-time in the business but<br />

planned to retire within a couple of years. Lianne <strong>and</strong> Robert had a shared vision of the longterm<br />

orientation of the business. Lianne had been working in Robert’s family business for 10<br />

years, <strong>and</strong> she <strong>and</strong> Robert had lived in an apartment above the office. However, things<br />

changed rapidly when Robert ended their relationship six months ago. Lianne found a new<br />

place to live but she still works for the family business. The relationships among the four<br />

adults are tense. Robert’s parents are worried about the completion of the succession plan<br />

<strong>and</strong> the future of the family business. Lianne is devastated. In a short space of time, she has<br />

lost nearly everything: her partner, her house <strong>and</strong>, most likely, her job. Robert feels<br />

responsible for the whole mess <strong>and</strong> is trying hard to keep matters from worsening.<br />

The cases above describe two situations in which couples are responsible for a family<br />

business. Such firms are known as “copreneurial” businesses. According to Ponthieu <strong>and</strong><br />

Caudill (1993), copreneurs are married couples or life partners who jointly own <strong>and</strong> operate<br />

business organizations or who otherwise share risk, ownership, responsibility, <strong>and</strong><br />

management by working together in any phase of a business venture. The first case illustrates<br />

the advantages of such a working relationship (quick decision-making processes <strong>and</strong> the<br />

possibility of combining business with personal life), whereas the second highlights the<br />

vulnerabilities of this type of business. The overlap of business <strong>and</strong> personal life presents<br />

several unique challenges for the couples involved. The purpose of this study is to investigate<br />

the influence of some of these challenges on the performance of copreneurial firms.<br />

Demographical changes <strong>and</strong> changes in society at large have not only influenced how<br />

families are composed but also the roles <strong>and</strong> relationships among family members. These<br />

11 This chapter is based on a manuscript by Matser, Van Helvert-Beugels, Farrington, Venter & Rigtering.<br />

(2012), which was presented at EFMD Conference Maastricht, March 5-6, 2012.<br />

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changes have implications for new business opportunities, opportunity recognition, business<br />

start-up decisions, <strong>and</strong> the resource mobilization process (Aldrich & Cliff, 2003). The<br />

copreneurial business serves as a good example of how these changes can impact an<br />

organization. In a representative study undertaken in the Netherl<strong>and</strong>s (Flören et al., 2010),<br />

16% of all family firms described themselves as copreneurial businesses (see also Chapter 1,<br />

section 1.5.3). Similarly, figures for the UK indicate that 26% of all business owners have a<br />

partner or spouse working with them (Fletcher, 2010).<br />

However, relatively little research has been done on this important subgroup of family firms<br />

(Rutherford, Muse, & Oswald, 2006). One exception is a research project conducted by<br />

Fitzgerald <strong>and</strong> Muske (2002) in the United States. Results from their study show that, when<br />

compared to other types of entrepreneurs, copreneurs work longer hours, have lower financial<br />

performance, <strong>and</strong> view their businesses more as a way of life than a source of income.<br />

Furthermore, copreneurs experience a need to renegotiate roles <strong>and</strong> expectations for both<br />

their firms <strong>and</strong> their spousal relationships.<br />

The importance of the spousal relationship is emphasized in the literature on new venture<br />

creation. The commitment of spouses seems critical to overcoming difficulties during the<br />

initial phases of operation (Bosma, Van Praag, Thurik & De Wit, 2004; Danes, Lee, Stafford<br />

& Heck, 2008; Davidsson & Honig, 2003). A spouse with low levels of commitment is said<br />

to add to the stress associated with starting a business, as a lack of commitment often creates<br />

work <strong>and</strong> family conflicts (Van Auken & Werbel, 2006). Bosma et al. (2004) find the<br />

emotional support of a spouse to be important—those entrepreneurs who enjoy it earn<br />

approximately 40% more than their counterparts who have no such support.<br />

This chapter exp<strong>and</strong>s the extant research on new venture creation to established copreneurial<br />

firms. Within this context, the impact of the spousal relationship on the financial performance<br />

of the business is analyzed <strong>and</strong> differences in performance within copreneurial businesses are<br />

explained in terms of dimensions of spousal social capital. In line with Danes et al.’s (2009)<br />

definition of family social capital, spousal social capital is defined as the goodwill among <strong>and</strong><br />

between spouses <strong>and</strong> their external network that can serve as input for the couple <strong>and</strong> their<br />

business to facilitate action. Social capital is used as the theoretical framework because social<br />

capital is based on relational aspects <strong>and</strong> has been identified as a key strategic resource for<br />

achieving a long-term competitive advantage (Adler & Kwon, 2002).<br />

Given the large number of businesses characterized as copreneurial, as well as the role that<br />

spousal social capital can play in their success, the primary objective of this chapter is to<br />

investigate the influence of dimensions of spousal social capital on the performance of<br />

copreneurial businesses. This research also adds to the underst<strong>and</strong>ing of how social capital<br />

develops through the life cycle of copreneurial firms. The focus of this investigation is on<br />

established copreneurial firms. Until recently, most research on copreneurial firms has related<br />

to those in the start-up phase (Danes et al., 2008; Matzek, Gudmunson & Danes, 2010).<br />

Lastly, following Lee’s (2009) suggestion that the linkages <strong>and</strong> interplay among the various<br />

70


dimensions of social capital warrant further investigation, this study aims to investigate the<br />

interactions of various dimensions of spousal social capital.<br />

The article proceeds as follows. First, the literature overview discusses the concept of social<br />

capital theory <strong>and</strong> how it can be applied to copreneurial companies. The concept of spousal<br />

social capital is discussed in detail <strong>and</strong> the different dimensions of spousal social capital – the<br />

structural, relational, <strong>and</strong> cognitive dimensions – are discussed. The hypotheses <strong>and</strong> the<br />

methodology are then presented, as is the data analysis. Lastly, the implications of the<br />

research results are discussed, as are recommendations for future research.<br />

4.2 Spousal social capital: background <strong>and</strong> hypotheses<br />

4.2.1 The copreneurial relationship as a strategic resource<br />

“Familiness” refers to the unique bundle of resources created by the interaction that occurs<br />

between the family <strong>and</strong> business (Sirmon & Hitt, 2003). The concept was introduced by<br />

Habbershon <strong>and</strong> Williams (1999), who use the resource-based view (RBV) to link the<br />

uniqueness of family firms to an advantage in the market. The overlap that occurs between<br />

the business <strong>and</strong> the family creates a strategic resource that can result in a long-term<br />

competitive advantage for the family business. Pearson et al. (2008) <strong>and</strong> Arregle et al.<br />

(2007a) use social capital theory to further develop the familiness construct. The focus on<br />

social capital arises because it is seen as a key strategic resource <strong>and</strong> as a way of leveraging<br />

other sources of capital (human, financial, emotional, <strong>and</strong> physical) (Arregle et al., 2007a;<br />

Montemerlo & Sharma, 2010; Steier, 2007). Similarly, the focus is on spousal social capital<br />

in the form of strategic resources derived from the couple’s relationship that span the home<br />

<strong>and</strong> work environments. Research has shown that spousal social capital is an important<br />

resource for couples starting a business (e.g., Bosma et al., 2004; Davidsson & Honig, 2003).<br />

The commitment of spouses to the business <strong>and</strong> the emotional support of spouses appear to<br />

be valuable resources during the initial phases of operation.<br />

However, familiness does not always lead to a competitive advantage. Habbershon <strong>and</strong><br />

Williams (1999) distinguish between “constrictive” familiness <strong>and</strong> “distinctive” familiness.<br />

Constrictive familiness occurs when the overlap between the family <strong>and</strong> the business<br />

negatively affects the functioning of the family firm, whereas distinctive familiness occurs<br />

when the impact is positive. Therefore, this study suggests that spousal attributes can lead to<br />

a competitive advantage in some situations but not in all cases.<br />

In this study, “social capital” is defined as the sum of the actual <strong>and</strong> potential resources<br />

embedded within, available through, <strong>and</strong> derived from the network of relationships possessed<br />

by an individual or social unit (Nahapiet & Ghoshal, 1998). In organization studies, social<br />

capital theory is used to analyze the effect that the structure <strong>and</strong> content of social relations<br />

can have on firm performance (Nahapiet & Ghoshal, 1998). Westlund <strong>and</strong> Adam’s (2010)<br />

meta-analysis of the relation between social capital <strong>and</strong> performance shows strong evidence<br />

71


of this relationship. Of the 21 studies in their survey, 18 found a positive impact of social<br />

capital on performance when the latter was measured in terms of economic growth.<br />

Nahapiet <strong>and</strong> Ghoshal (1998) argue that it is useful to define social capital in terms of three<br />

dimensions: the structural, the cognitive, <strong>and</strong> the relational. This division has been adopted<br />

by numerous scholars, including Pearson et al. (2008). Pearson et al. (2008) designed a model<br />

of social capital stemming from familiness by incorporating the studies of Arregle et al.<br />

(2007a), Leana <strong>and</strong> van Buren (1999), Nahapiet <strong>and</strong> Ghoshal (1998), Oh, Labianca, <strong>and</strong><br />

Chung (2006), <strong>and</strong> Tsai <strong>and</strong> Ghoshal (1998). To analyze the functioning of social capital in<br />

family firms, Pearson et al. distinguish between family firm resources <strong>and</strong> family firm<br />

capabilities: “The presence <strong>and</strong> strength of the resources lead to organizational capabilities<br />

that are advantageous for superior firm performance” (Pearson et al., 2008, p. 960). Pearson<br />

et al.’s (2008) model forms the basis of the research discussed in this chapter, which<br />

investigates the concept of spousal social capital in copreneurial firms.<br />

4.2.2 Three dimensions of spousal social capital<br />

Structural dimension<br />

In general, the structural dimension of social capital refers to the configuration of the<br />

networks that link a social unit’s members to one another (internal networks) or to external<br />

individuals <strong>and</strong> units (external networks) (Nahapiet & Ghoshal, 1998). In other words, this<br />

dimension is about social interactions <strong>and</strong> network ties in terms of who can be reached <strong>and</strong><br />

how (Burt, 1992).<br />

This definition highlights a central component of the structural dimension: the existence or<br />

absence of external ties. For family firms, external ties are an important source of the<br />

knowledge necessary to stimulate entrepreneurship <strong>and</strong> safeguard against conservatism <strong>and</strong><br />

nepotism, which can plague family firms (Zahra, 2010). An external network can help ownermanagers<br />

of small firms exp<strong>and</strong> their limited supply of tangible <strong>and</strong> intangible assets. For<br />

instance, product innovation becomes a viable strategy when undertaken in cooperation with<br />

a supplier <strong>and</strong>/or client. For such purposes, external ties are valuable for gaining access to<br />

knowledge <strong>and</strong> sharing costs. In copreneurial firms, it seems important that couples approach<br />

non-family members for advice <strong>and</strong> expertise on business matters when needed. Chua et al.<br />

(2003) highlight the importance of non-family involvement by showing empirically that nonfamily<br />

executives play a critical role in strategic decision making. According to Sharma<br />

(2004), there is a clear need to devote more attention to underst<strong>and</strong>ing the role <strong>and</strong> influence<br />

of non-family employees. In this study, therefore, spousal social capital is linked to the usage<br />

of an external network for advice <strong>and</strong> for help in making strategic decisions.<br />

Not only is the existence of an external network relevant, but the willingness to use external<br />

ties also seems pivotal. Sorenson (2000, p. 197) indicates that consultation with outside<br />

professionals is correlated with both business <strong>and</strong> family outcomes: “Perhaps the best<br />

analogy of a family business leader that does not consult with professionals is the<br />

72


stereotypical man who refuses to stop to get directions when he is lost.” This analogy<br />

suggests that one characteristic of an effective family businesses is a willingness to utilize the<br />

expertise of competent external professionals.<br />

In a test of survey data covering firms in Finl<strong>and</strong>, Mustakallio et al. (2002) show that outsider<br />

expertise positively influences strategy formation, decision making, <strong>and</strong> business survival.<br />

Furthermore, Farrington, Venter, Eybers, <strong>and</strong> Boshoff (2011) find evidence of a positive<br />

relation between non-family involvement <strong>and</strong> the performance of the copreneurial firm.<br />

Classen et al. (2012) find a positive relation between a higher percentage of non-family<br />

managers <strong>and</strong> a higher performance on product innovation. Arregle, Nordqvist, Mari, Melin,<br />

<strong>and</strong> Very (2007b) emphasize the role of the board in mitigating conflicts among family<br />

owners. Woods, Dalziel, <strong>and</strong> Barton (2012) stress the importance of outside board members<br />

in avoiding escalation of commitment. Long-term dependence on a single owner or small<br />

group of owner-managers can result in owner-managers becoming entangled in their own<br />

rhetoric <strong>and</strong> beliefs, <strong>and</strong> prevent them from facing reality <strong>and</strong> objectivity. Taken together,<br />

these arguments lead to the first hypothesis:<br />

Hypothesis 1: There is a positive relationship between non-family involvement <strong>and</strong> the<br />

financial performance of the copreneurial business.<br />

Cognitive dimension<br />

The cognitive dimension refers to those resources providing shared representations,<br />

interpretations, <strong>and</strong> systems of meaning among members of a collective (Nahapiet &<br />

Ghoshal, 1998). When actors within a collective participate in meaningful communication,<br />

synergy is created (Tymon & Stumpf, 2003). For instance, shared meanings <strong>and</strong> language<br />

facilitate the exchange of information that allows actors to share thinking processes (De<br />

Carolis & Saparito, 2006), which can lead to knowledge creation.<br />

Within family firms, a shared vision <strong>and</strong> a shared language are often deeply embedded in the<br />

family’s history. This creates fertile ground for the creation of a shared focus on the longterm<br />

continuity of the firm (Pearson et al., 2008). For example, a well-known, thirdgeneration<br />

Dutch family firm uses mottos introduced by the first generation as a point of<br />

departure for its current strategic focus, highlighting that values from the past are still useful<br />

for shaping the present situation. In copreneurial firms, a key component of the cognitive<br />

dimension is the spouses’ shared vision for the firm. According to Van Auken <strong>and</strong> Werbel<br />

(2006), committed spouses/partners work cooperatively towards common goals, which in<br />

turn has a positive effect on business performance <strong>and</strong> perceived success. In their research on<br />

private firms, Uhlaner, et al. (2007) find a positive relation between collective norms <strong>and</strong><br />

goals, <strong>and</strong> commitment, <strong>and</strong> that more commitment leads to higher financial performance.<br />

Similarly, Berent-Braun (2010) proposes that a firm that is unified by a shared vision among<br />

the owners will achieve better performance. In line with these findings, copreneurs who have<br />

a shared vision should perform better than their counterparts. These leads to the second<br />

hypotheses:<br />

73


Hypothesis 2: There is a positive relationship between a shared vision between the spouses<br />

<strong>and</strong> the financial performance of the copreneurial business.<br />

Relational dimension<br />

The relational dimension refers to those assets created <strong>and</strong> leveraged through relationships.<br />

The key aspects of this dimension are trust <strong>and</strong> trustworthiness, norms <strong>and</strong> sanctions,<br />

obligations <strong>and</strong> expectations, <strong>and</strong> identity <strong>and</strong> identification (Nahapiet & Ghoshal, 1998). A<br />

core element is trust, especially a trustor’s belief that a trustee will act beneficially because<br />

the trustee cares about the trustor’s welfare (De Carolis & Saparito, 2006). Lee’s review of<br />

empirical findings on social capital (2009) uncovers several benefits of high trust within a<br />

business environment: trust seems to enhance firm confidence, trust stimulates firm<br />

performance during times of market uncertainty, <strong>and</strong> trust facilitates the formation of<br />

alliances <strong>and</strong> resource exchange.<br />

The characteristics of family firms create conditions that are favourable for the development<br />

of the relational dimension. Especially in first-generation family firms, trust is regarded as an<br />

important strategic asset that can lead to a competitive advantage (Steier, 2007), particularly<br />

because the family firm stays within the context of a single nuclear family. This is also the<br />

case in copreneurial firms. Obligations to both the family <strong>and</strong> the business create an<br />

environment that stimulates collective actions (Pearson et al., 2008). However, a high-quality<br />

relationship between the spouses cannot be assumed. When couples are unable to effectively<br />

manage their professional <strong>and</strong> personal relationship, performance might be negatively<br />

affected. In this regard, Flechter (2010) identifies issues related to power, competition, <strong>and</strong><br />

control. For example, the diversification of the business might be justified by the importance<br />

of creating “own space” for spouses. In contrast, when couples work <strong>and</strong> live together in<br />

harmony, Farrington et al. (2011) find a positive effect on firm performance <strong>and</strong> perceived<br />

success. Against this background, the proposition is that firms in which couples have a highquality<br />

relationship that is characterized by trust <strong>and</strong> respect will outperform their<br />

counterparts, which leads to the third hypothesis:<br />

Hypothesis 3: There is a positive relationship between the quality of the copreneurial<br />

relationship <strong>and</strong> the financial performance of the copreneurial business.<br />

Shared vision as a mediating variable<br />

Little existing empirical research analyzes the interactions among the three dimensions of<br />

social capital (Lee, 2009). The association between the relational <strong>and</strong> cognitive dimensions of<br />

social capital can be viewed in opposing directions. Pearson et al. (2008) argue that the<br />

cognitive dimension is an antecedent of the relational dimension. For instance, a partner who<br />

is deeply committed to the firm’s goals is expected to invest more in keeping the relationship<br />

healthy. Empirical evidence for this proposition is provided by Liao <strong>and</strong> Welsch (2005), who<br />

74


find that nascent entrepreneurs distinguish themselves from a control group in their ability to<br />

utilize their cognitive capital to build relational capital. However, other scholars argue that<br />

the link between the cognitive dimension <strong>and</strong> the relational dimension functions in the<br />

opposition direction. Lee (2009) <strong>and</strong> Long (2011) posit the relational dimension of social<br />

capital as a critical starting point. In their view, meaningful communication is necessary for<br />

the development of intellectual capability. Sorenson et al. (2009) focus on two different but<br />

related building blocks of family social capital, they argue that collaborative dialogue relates<br />

positively to the presence of ethical norms of families in business. Collaborative dialogue can<br />

be viewed as a method for sustaining good relationships, <strong>and</strong> a moral infrastructure within a<br />

family might be extended to the business <strong>and</strong> positively influencing a shared vision on the<br />

business. The way in which the two dimensions influence each other may also be explained<br />

in terms of the stage in the firm’s life cycle. For a new business venture, a shared vision can<br />

help the copreneurial couple achieve a satisfactory relationship that can be sustained during<br />

the hectic initial years of the business (e.g., Van Auken & Werbel, 2006). If the couple can<br />

sustain a healthy relationship after working together for an extended period, their shared<br />

vision on the future of the firm will be positively affected. If instead a couple encounters<br />

problems in their private life, the strategic planning for the business will be negatively<br />

affected. Based on this discussion <strong>and</strong> the conflicting viewpoints, the following relation is<br />

hypothesized:<br />

Hypothesis 4: The relationship between the quality of the copreneurial relationship <strong>and</strong> the<br />

financial performance of the copreneurial business is mediated by the shared vision of the<br />

copreneurs.<br />

75


4.2.3 Developmental conditions for spousal social capital<br />

Arregle et al. (2007a) focus on the development of familiness <strong>and</strong> highlight the importance of<br />

the conditions for developing social capital. In general, favorable conditions include high<br />

levels of mutual interdependence, interaction, time <strong>and</strong> stability in social relationships, <strong>and</strong> a<br />

closed social network (Nahapiet & Ghoshal, 1998). Pearson et al. (2008) argue that a family<br />

firm context leads to more favorable conditions for the development of social capital than a<br />

non-family firm context. These favorable conditions should also be evident among<br />

copreneurial firms for several reasons. First, mutual interdependence <strong>and</strong> interaction typically<br />

characterize the relationship of spouses working together in a small firm. Second, evidence<br />

indicates that a closed network is a feature of social relationships that is conducive to the<br />

development of social capital (Nahapiet & Ghoshal, 1998), <strong>and</strong> that such closure is<br />

particularly strong in family firms (Arregle et al., 2007a), including copreneurial firms.<br />

However, while it is important to emphasize that closure is necessary to create social capital,<br />

too much closure can have a negative effect on the continuity of copreneurial firms. In this<br />

respect, Sirmon, Hitt, Arregle & Webb (2008) mention several negative effects of family<br />

influence: group think, alienation, strategic simplicity, nepotism, reliance on tradition, <strong>and</strong><br />

succession biases. Non-family involvement can help prevent these negative effects, a<br />

suggestion reflected in the first hypothesis of this chapter.<br />

In line with the positive <strong>and</strong> negatives outcomes of a closed network, Adler <strong>and</strong> Kwon (2002)<br />

stipulate the importance of a balanced view on social capital, suggesting that social capital<br />

should not be seen as a resource with only positive effects. Montemerlo <strong>and</strong> Sharma (2010)<br />

posit that it is necessary to unbundle the family business into two separate units: the business<br />

<strong>and</strong> the family. This makes it possible to underst<strong>and</strong> how stocks of bonding social capital are<br />

built <strong>and</strong> can flow from one system to the other. To ensure the long-term continuity of the<br />

two systems, it is necessary to find a balance, as an imbalance will eventually lead to reduced<br />

capital stock for one or both systems (Sharma, 2008). In the long run, the flow of stock<br />

between the business system <strong>and</strong> the family system will have to lead to a positive outcome<br />

(Litz, 2008; Sharma, 2004). Therefore, it is proposed that a balance between work <strong>and</strong> family<br />

life is an important developmental condition for social capital in copreneurial firms. Role<br />

clarity between the spouses can help to achieve this balance.<br />

Role clarity<br />

Boundary theory can help clarify the overlap <strong>and</strong> interaction between the family system <strong>and</strong><br />

the business system. According to Sundaramurthy <strong>and</strong> Kreiner (2008), boundary theory is<br />

helpful in predicting the nature of interactions between social actors, <strong>and</strong> the potential<br />

benefits <strong>and</strong> liabilities of varying degrees of interaction. Most copreneurs will spend a<br />

significant amount of time together at home <strong>and</strong> at work. Consequently, they are expected to<br />

bring personal issues to work <strong>and</strong> vice versa. Boundary theory makes it possible to identify<br />

the roles of the copreneurs (partners for life versus partners in business), their role flexibility<br />

(the degree to which an individual changes roles, e.g., discussing work-related issues at<br />

76


home), <strong>and</strong> the role permeability (the degree to which a role allows for elements of another<br />

role to be integrated <strong>and</strong> assimilated, e.g., taking care of a child at work) (Sundaramurthy &<br />

Kreiner, 2008). For copreneurs in particular, dealing with these boundaries is challenging.<br />

Sundaramurthy <strong>and</strong> Kreiner (2008) identify a range of situations from full segmentation to<br />

full integration of private life <strong>and</strong> work. They highlight that all options have possible<br />

advantages <strong>and</strong> disadvantages. For instance, full integration, a common situation in<br />

copreneurial firms, can not only lead to a shared identity but also to role ambiguity or role<br />

conflict. Therefore, there is a need for actors in the firm to engage in “boundary work” to<br />

manage the integration of the family <strong>and</strong> the business to reach an optimal situation within a<br />

specific context.<br />

The relatively high interdependence between the business system <strong>and</strong> the family system in<br />

copreneurial firms can be seen as a risk for the continuity of the business. The copreneurial<br />

couples studied by Fletcher (2010) identify several key challenges stemming from this high<br />

interdependence with potential negative outcomes: balancing roles between family <strong>and</strong> work<br />

life; making the business more professional; <strong>and</strong> problems related to leadership ambiguity.<br />

Most firms in Fletcher’s (2010) study show signs of emotional intensity. In addition,<br />

Farrington et al. (2011) find evidence of a positive relation between balance of work <strong>and</strong><br />

home <strong>and</strong> the quality of the relationship between spouses. It is therefore hypothesized that<br />

role clarity between spouses has a positive effect on the cognitive <strong>and</strong> relational dimensions<br />

of spousal social capital:<br />

Hypothesis 5a: The greater the role clarity between spouses, the higher the shared vision<br />

among the copreneurs.<br />

Hypothesis 5b: The greater the role clarity between spouses, the higher the quality of the<br />

copreneurial relationship.<br />

Role clarity has been hypothesized to have a direct positive impact on the relational <strong>and</strong><br />

cognitive dimensions of social capital (hypotheses H5a <strong>and</strong> H5b). The relational <strong>and</strong><br />

cognitive dimensions of social capital have also been hypothesized to have direct positive<br />

effects on financial performance (hypotheses H2 <strong>and</strong> H3). When these four hypotheses are<br />

combined, mediation effects are expected. Therefore, the following two hypotheses are<br />

proposed:<br />

Hypothesis 5c: The relationship between the role clarity between spouses <strong>and</strong> the financial<br />

performance of the business is mediated by the shared vision between the copreneurs.<br />

Hypothesis 5d: The relationship between the role clarity between spouses <strong>and</strong> the financial<br />

performance of the business is mediated by the quality of the copreneurial relationship.<br />

The hypothesized relationships are depicted in Figure 4.1.<br />

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Figure 4.1: Research framework<br />

Role clarity<br />

between spouses<br />

H5b H5d<br />

H5a H5c<br />

Spousal social capital<br />

Quality of relationships<br />

between spouses<br />

Shared vision<br />

between spouses<br />

Non-family involvement<br />

Control variables<br />

Sector, age of business, gender <strong>and</strong> education level of respondent<br />

4.3 Method<br />

4.3.1 Sample <strong>and</strong> data collection<br />

H4<br />

H3<br />

H2 H4 H5c<br />

H1<br />

H5d<br />

Financial<br />

performance<br />

The target group for this research is small <strong>and</strong> medium sized enterprises 12 (SMEs), as most<br />

copreneurial businesses are likely to fall within this category. 13 In order to identify potential<br />

respondents, the database of The Dutch Centre for <strong>Family</strong> <strong>Firm</strong>s (Centrum van het<br />

Familiebedrijf) was used. This database contains the contact details of 628 family businesses<br />

throughout the Netherl<strong>and</strong>s. Once identified, potential respondents were contacted by<br />

telephone <strong>and</strong> invited to participate in the study. As in other research where access to a<br />

national database has been limited (Sonfield & Lussier, 2004; Van der Merwe & Ellis, 2007;<br />

Farrington, 2009), a convenience snowball sampling technique was used to increase the<br />

number of respondents. Once the copreneurs confirmed their willingness to participate in the<br />

study, they were asked to identify other copreneurial businesses that could be approached.<br />

These potential respondents were then also contacted by telephone <strong>and</strong> the process was<br />

repeated.<br />

12<br />

SMEs are categorized using the European Commission’s definition (Eurostat, 2011): micro less than 9<br />

employees; small 10-49 employees; medium 50-249 employees.<br />

13<br />

For example, an additional analysis of the sample of Dutch private firms (Flören et al., 2010) shows that no<br />

more than 2.5% of the copreneurial firms have more than 200 employees.<br />

78


An instrument developed by Farrington et al. (2011) was used to measure the success of<br />

copreneurial firms <strong>and</strong> to gather data for each factor under investigation. Farrington et al.<br />

(2011) utilize items sourced from validated measuring instruments used in previous studies as<br />

well as several self-generated items based on secondary sources. In addition, questions were<br />

included in this study to solicit demographic <strong>and</strong> ownership information. Given our<br />

conceptual definition of copreneurs, responses were only included in the statistical analysis<br />

when the married or co-habiting couples shared ownership <strong>and</strong>/or when they worked together<br />

in the firm.<br />

An online survey instrument 14 was made available via a web link sent by email to the<br />

copreneurs that agreed to participate. The email explained the purpose of the study <strong>and</strong> gave<br />

assurances of confidentiality. In total, 171 questionnaires were completed. Three cases were<br />

removed from the sample because data relating to company size was missing, making it<br />

impossible to check whether the company in question belonged to the target group. One case<br />

was deleted because the company did not meet the criteria for classification as an SME. All<br />

other responding firms met the criteria for copreneurial businesses <strong>and</strong> for SMEs, resulting in<br />

a final sample of 167 valid cases.<br />

The majority of the copreneurial businesses were retail businesses <strong>and</strong> the firms had, on<br />

average, 9 employees. Most respondents (56%) were male, the average respondent age was<br />

47 years, <strong>and</strong> 33.13% of the respondents held a bachelor or master degree. A detailed<br />

overview of all sample statistics can be found in Table 4.1.<br />

14 The Dutch questionnaire is available from the author upon request (i.a.matser@uu.nl).<br />

79


Table 4.1: Overview of sample characteristics<br />

Variable Demographic information<br />

Sex 56% of the respondents are male<br />

Respondent age Average age is 47 years<br />

Partners Partners in life: mean of 22 years; partners in business: mean of 14 years<br />

Education 33% B.Sc. or higher<br />

Number of<br />

employees<br />

The average number of employees is 9; 30% have 0 employees, 45% are micro firms<br />

(1-9 employees), 22% are small firms (10-49 employees), 3% are medium-sized firms<br />

(50-249 employees)<br />

Sales 34% have sales of less than EUR 250,000; 15% have EUR 250,000-500,000; 21% have<br />

EUR 500,000-1 million; 25% have EUR 1-5 million; 5% have more than EUR 5 million<br />

Sector 3% are in manufacturing 9% are in construction; 5% are in wholesale; 34% are in<br />

retail; 16% are in catering; 8% are in financial services; <strong>and</strong> 25% are in “other”<br />

industries.<br />

Age of the<br />

business<br />

4.3.2 Variables<br />

13% were established prior to 1949, 16% in 1950-1974; 38% in 1975-1999; 31% after<br />

1999<br />

This section briefly describes each of the variables used in the study. A more detailed<br />

description of each composite variable is provided in Appendix A at the end of this chapter.<br />

Non-family involvement is a component of the structural dimension of social capital, <strong>and</strong><br />

refers to the extent to which the copreneurial couples involve non-family members in order to<br />

effectively manage their businesses <strong>and</strong> when making strategic decisions in their business.<br />

Respondents were asked to respond to four statements (see Appendix A) using a seven-point<br />

Likert-type scale, ranging from totally disagree (1) to totally agree (7). In line with Classen et<br />

al. (2012), respondents were asked whether non-family members were part of the<br />

management team. Other statements elaborated on this by investigating when <strong>and</strong> how these<br />

non-family members were involved.<br />

To measure the shared vision of the copreneurs, respondents were asked to respond to four<br />

statements using a seven-point Likert-type scale. The first three items resembled the items<br />

Mustakallio et al. (2002) developed to measure shared vision.<br />

Quality of the relationship relates to the relational dimension of social capital. Respondents<br />

were asked to respond to three items that measured the quality of their relationship inside <strong>and</strong><br />

outside the working environment. These items were based, to some extent, on the research<br />

conducted by Morris <strong>and</strong> Williams (1996).<br />

Role clarity between spouses relates to the relative balance in the working relationship of the<br />

copreneurial couple. Respondents were asked to respond to three statements that were<br />

80


measured on a seven-point Likert-type scale. The statements were formulated based on<br />

anecdotal evidence on the division of labor (Marshack, 1993; Gale, 2002; Roha & Blum,<br />

1990).<br />

Financial performance is the dependent variable in this study. It was measured by asking<br />

respondents to provide information on their firms’ performance. Van Teeffelen (2010) <strong>and</strong><br />

Ghobadian <strong>and</strong> O’Regan (2006) argue that it is acceptable to use perceived performance<br />

measures because owners of small, private firms are often reluctant to provide detailed data<br />

on performance. Furthermore, other studies show that perceptions of performance are reliable<br />

or highly correlated with objective measures of performance. Financial performance was<br />

measured using several dimensions: growth in turnover, profit, <strong>and</strong> number of employees;<br />

overall profitability; <strong>and</strong> financial well-being. All items were measured on a seven-point<br />

Likert-type scale.<br />

Control variables are usually included in statistical analyses to identify partial relationships<br />

<strong>and</strong> to rule out alternative explanations (Babbie, 2004). Recently, there have been some<br />

concerns regarding the use of control variables in statistical models. Although researchers<br />

generally assume that the inclusion of a number of control variables in the model leads to<br />

more precise results, control variables can contaminate evidence of statistical relationships,<br />

<strong>and</strong> may lead to underestimated or overestimated relationships (Spector & Brannick, 2011).<br />

However, the blind inclusion of control variables remains the dominant approach even among<br />

top management journals (Atinc, Simmering & Kroll, 2012). In this study, Becker’s (2005)<br />

recommendations are followed in that control variables are only included when there is a<br />

significant relationship between those variables <strong>and</strong> the dependent variable, <strong>and</strong>/or when<br />

there is prior evidence <strong>and</strong> a logical reason for inclusion in the statistical model.<br />

The following variables were viewed as potential control variables in the present study:<br />

gender of the respondent, age of the respondent, education of the respondent, <strong>and</strong> age of the<br />

business. Gender <strong>and</strong> age have shown to be related to the quality of the interpersonal<br />

relationship within a marriage (Levenson, Carstensen & Gottman, 1993). As the quality of<br />

the copreneurial relationship is an essential element within the proposed model, these two<br />

control variables were added to filter out respondent-specific characteristics. Gender was<br />

measured as a dummy variable (0 = male; 1 = female), while age was measured as a<br />

continuous variable. Management training <strong>and</strong> education have been proven to increase the<br />

financial performance of small businesses (Jennings & Beaver, 1997). On the basis of the<br />

assumption that higher formal educational levels can synthesize such management training,<br />

education (measured as no bachelor degree (0), <strong>and</strong> bachelor degree or higher (1)) was added<br />

as a control variable. <strong>Firm</strong> age was added as a firm-level control variable, as firm age has<br />

been proven to have a negative effect on performance within large family firms (Anderson &<br />

Reeb, 2003). This relationship is expected to be similar for small <strong>and</strong> medium-sized family<br />

businesses. The inception year of the business was categorized on the following scale: before<br />

1900, 1900-1924, 1925-1949, 1950-1974, 1975-1999, <strong>and</strong> after 1999.<br />

81


4.4 Results<br />

The empirical analysis starts with tests of the convergent <strong>and</strong> discriminant validity, as well as<br />

a test of the reliability of the proposed measurement scales. The zero-order correlations<br />

between the different constructs developed to examine the hypothesized relationships, <strong>and</strong><br />

the relationships between the control variables <strong>and</strong> variables under study are analyzed.<br />

Finally, the hypothesized model is tested using structural equation modeling (AMOS 18).<br />

4.4.1 Factor analysis<br />

All independent composite variables are included in a confirmatory factor analysis (CFA). To<br />

assess model fit, the confirmative fit index (CFI), root mean square error approximation<br />

(RMSEA), Tucker-Lewis index (TLI), <strong>and</strong> normative fit index (NFI) are calculated.<br />

Following Hair et al. (2006), a threshold value of .90 is set for the TLI, NFI, <strong>and</strong> CFI, while<br />

.08 is set as the threshold value for the RMSEA. The initial CFA yields acceptable levels of<br />

model fit for the CFI (.934), RMSEA (.062), <strong>and</strong> TLI (.916). Only the NFI (.850) is below<br />

the threshold value of .90. The latter is mainly due to the first item of the scale role clarity<br />

between spouses, which displays significant (p = < .01) cross loadings on the shared vision<br />

scale. This item is removed from the measurement scale because it is significantly related to<br />

another factor than to which was hypothesized. The adjusted model yields good to excellent<br />

model fit (CFI .988; RMSEA .028; TLI .984; NFI .906) <strong>and</strong> further model respecification<br />

seems unnecessary.<br />

Convergent validity in a measurement model is generally achieved when the squared factor<br />

loadings on the hypothesized latent construct are greater than .50 <strong>and</strong>/or when there is a<br />

significant relationship between the indicator <strong>and</strong> its hypothesized latent construct (Bollen,<br />

1989). In the present study, all averaged squared factor loadings are above .50 except for the<br />

family involvement scale (average λ 2 = .40). However, the individual item factor loadings for<br />

this scale are highly significant (p = < .01). Discriminant validity refers to the degree to<br />

which measures of theoretically unrelated constructs do not correlate with one another<br />

(Brown, Churchill Jr., Gilbert & Peter, 1993, p. 130). Farrell’s (2010) procedure for testing<br />

the discriminant validity of a scale, which is based upon the seminal work of Fornell <strong>and</strong><br />

Larcker (1981), is applied. It involves the comparison of the average variance extracted<br />

(AVE) on each latent factor with the shared variances between the factors. As shown in Table<br />

4.2, the AVE for each factor far exceeds the shared variances between the relevant factors.<br />

Therefore, it can be concluded that the developed measurement instrument displays good<br />

discriminant <strong>and</strong> convergent validity.<br />

82


Table 4.2: Average variance extracted <strong>and</strong> shared variance estimates<br />

Variable Items 1 2 3 4<br />

1 Non-family involvement 4 .16 .00 .02 .00<br />

2 Shared vision 4 .08 .62 .44 .12<br />

3 Quality of relationships 3 .14 .66 .73 .12<br />

4 Role clarity between the spouses 2 .06 .35 .35 .60<br />

Note: Correlations are below the diagonal, shared variance estimates are above<br />

the diagonal, <strong>and</strong> AVE estimates are on the diagonal.<br />

A Cronbach’s alpha test is used to calculate the reliability of the different measurement<br />

scales. A Cronbach’s alpha of .70 or higher is generally preferred (see Nunnally, 1978). All<br />

measurement scales within the present study can be regarded as reliable (see Table 4.3)<br />

except for the balance scale, which has a Cronbach’s alpha of .59. However, Cortina (1993)<br />

has shown that a Cronbach’s alpha test is sensitive to the number of items within the<br />

measurement scale <strong>and</strong> that an average inter-item correlation of .50 should generally lead to<br />

acceptable levels of reliability (Cronbach’s alpha > .75). The inter-item correlation within our<br />

two-item balance scale is .46 (p = < .01). Therefore, it can be concluded that the reliability of<br />

this scale is sufficient for use within the statistical analysis. The theoretical constructs were<br />

created by calculating the average score for each respondent.<br />

4.4.2 Descriptive statistics <strong>and</strong> correlations<br />

The zero-order correlation coefficients as well as the means <strong>and</strong> st<strong>and</strong>ard deviations of the<br />

variables under investigation are presented in Table 4.3. None of the control variables are<br />

significantly related to company performance. Contrary to expectations, age <strong>and</strong> gender are<br />

also not significantly related to the quality of the copreneurial relationship or the balance<br />

within that relationship. Following Becker's (2005) recommendations, these control variables<br />

are excluded from the statistical model. As a result, the only tested involving the proposed<br />

control variables focuses on whether their inclusion would change the results at a qualitative<br />

level.<br />

All variables under study are significantly related to firm performance <strong>and</strong> the directions of<br />

the relationships are consistent with our hypotheses (see Table 4.2). The results also offer<br />

support for the potential existence of the proposed mediating relationships, as all relevant<br />

independent variables are significantly related to both the potential mediating variables <strong>and</strong><br />

the dependent variable. All mediating variables are significantly related to the dependent<br />

variable. Therefore the proposed mediating relationship is included within the statistical<br />

model.<br />

83


Table 4.3.: Means, st<strong>and</strong>ard deviations, <strong>and</strong> zero-order correlations<br />

Variable 1 2 3 4 5 6 7 8 9<br />

1. Gender (-)<br />

2. Age<br />

-<br />

.23**<br />

(-)<br />

3. Education -.03 -.08 (-)<br />

4. Age of organization<br />

(category)<br />

.11 -.20* .26** (-)<br />

5.Non-family<br />

involvement<br />

-.09 -.06 .05 .05 (.70)<br />

6. Shared vision .11 .01 -.05 .02 .08 (.81)<br />

7. Quality of<br />

relationship<br />

-.04 .05 -.01 .03 .12 .56** (.73)<br />

8. Role clarity -.05 -.04 .11 .06 .17* .26** .24** (.59)<br />

9. <strong>Firm</strong> performance -.10 -.07 .06 .01 .17* .32** .28** .20** (.77)<br />

Mean .44 47.17 .33 4.79 4.24 6.05 6.53 5.54 5.11<br />

SD .50 9.45 .47 1.24 1.31 .70 .50 1.09 1.13<br />

Notes: The reliabilities (Cronbach’s alphas) are shown on the diagonal axis. Cronbach’s alphas cannot be<br />

calculated for one-item measures—these are labeled (-). N=167 * p = < .05 ; ** p = < .01.<br />

4.4.4 Structural model<br />

The hypothesized structural model (see Figure 4.2) is fitted to the data (N = 167), <strong>and</strong> the<br />

structural weights <strong>and</strong> model fit is examined. The model yields excellent model fit (CFI 1.0;<br />

RMSEA .0; TLI 1.008; NFI .974) <strong>and</strong> supports hypothesis H1, which suggests that nonfamily<br />

involvement increases firm performance (ß = .13, p = < .10). There is also support for<br />

hypothesis H2, which highlights the role of a shared vision in enhancing firm performance (ß<br />

= .25, p = < .01). Hypothesis H3, which states that the quality of the copreneurial relationship<br />

enhances firm performance, is not supported. Furthermore, role clarity between the spouses<br />

results in higher levels of shared vision (ß = .13, p = < .05) <strong>and</strong> increases the quality of the<br />

copreneurial relationship (ß = .24, p = < .01), providing support for hypotheses H5a <strong>and</strong> H5b.<br />

Within the structural model, neither role clarity between the spouses or the quality of the<br />

copreneurial relationship have significant direct effects on performance. In both cases, shared<br />

vision acts as a mediating variable, which provides support for hypotheses H4 <strong>and</strong> H5c.<br />

Given the absence of a direct relationship between the quality of the copreneurial relationship<br />

<strong>and</strong> firm performance, hypothesis H5d, which highlights the mediating role of the relational<br />

dimension of structural capital, is rejected. The inclusion of the control variables in the<br />

structural model with all hypothesized relationships between the control variables <strong>and</strong> the<br />

dependent <strong>and</strong> mediating variables does not change the results at a qualitative level.<br />

84


Figure 4.2: Structural model<br />

Note: Covariances between the constructs <strong>and</strong> measurement errors have been omitted for the sake of clarity.<br />

† p = < .10; * p = < .05; ** p = < .01<br />

4.5 Discussion <strong>and</strong> conclusion<br />

The aim of this chapter was to identify those factors that influence the financial performance<br />

of copreneurial firms. The results contribute to the underst<strong>and</strong>ing of this type of business,<br />

which has received little attention from family business scholars.<br />

The statistical results show that various factors affect the financial performance of<br />

copreneurial business. Non-family involvement, for example, has a direct positive effect on<br />

financial performance. Role clarity has a positive effect on the relationship between the<br />

spouses <strong>and</strong> the shared vision of the copreneurial couple. The association between the quality<br />

of the copreneurial relationship <strong>and</strong> financial performance is mediated by the copreneurs’<br />

shared vision. In addition, shared vision has a direct positive effect on the financial<br />

performance of the business.<br />

85


Theoretical implications<br />

The findings have several implications for family firm scholars. One of the goals of this<br />

research was to enhance the underst<strong>and</strong>ing of how social capital develops throughout the life<br />

cycle of copreneurial firms. Where other research has revealed the positive impact of spousal<br />

social capital in the start-up phase (e.g., Davidsson & Honig, 2003), this study shows that<br />

spousal social capital also has a positive impact on the financial performance of established<br />

copreneurial firms. In addition, this study identifies shared vision between spouses, <strong>and</strong> the<br />

use of non-family involvement at the strategic <strong>and</strong> management levels as elements of social<br />

capital that have a direct, positive impact on financial performance. Zheng’s (2010) review of<br />

social capital <strong>and</strong> innovation reveals the cognitive dimension of social capital as an underresearched<br />

dimension. Moreover, the results of the available research show that the cognitive<br />

dimension significantly overlaps the relational dimension. This study shows that shared<br />

vision, as a key element of the cognitive dimension, is a distinctive <strong>and</strong> significant variable –<br />

at least in this sample of copreneurs.<br />

Another aim of this study was to gain more insight into the linkages <strong>and</strong> interplay among the<br />

three dimensions of social capital. One of this study’s interesting findings is that the<br />

association between the quality of the copreneurs’ relationship <strong>and</strong> financial performance is<br />

mediated by the shared vision, <strong>and</strong> not vice versa. This finding differs from the theoretical<br />

construct proposed by Pearson et al. (2008) but is in line with the viewpoints of Lee (2009)<br />

<strong>and</strong> Long (2011).<br />

Limitations <strong>and</strong> recommendations for future research<br />

This research project is not free of limitations. A first limitation stems from the variable used<br />

to measure financial performance – objective financial data would enhance the credibility of<br />

the results. Second, the relatively small sample size implies that the possibilities to generalize<br />

the results are constrained. Third, as the sample consists only of copreneurial firms, the<br />

approach adopted here reveals factors that make some copreneurial firms more successful<br />

than other copreneurial firms. However, this study does not compare copreneurial firms with<br />

other types of firms. Future research with a more diverse sample would make it possible to<br />

identify the specific characteristics that distinguish copreneurial firms from other firms.<br />

Fourth, the dataset is biased for periods of economic growth. It would be interesting to test<br />

the assumptions in periods of economic decline. Therefore, future researchers may wish to<br />

work with a longitudinal research design. Repeated measurements would make it possible to<br />

establish causality <strong>and</strong> provide insight into the dynamics of the social capital dimensions.<br />

Such an approach would make it possible to test Long’s (2009) iterative model of social<br />

capital development.<br />

86


Practical implications<br />

The analyses of the data presented here can be translated into recommendations for<br />

copreneurs <strong>and</strong> their advisors. They offer several key messages for copreneurs. For<br />

copreneurs, working together with a spouse can create social capital <strong>and</strong> have a positive<br />

impact on the performance of the copreneurial business. In fact, the business will benefit<br />

from a good relationship between the spouses. However, the opposite is also true. If the<br />

relationship deteriorates, the shared vision of the business will be negatively affected <strong>and</strong><br />

financial performance will suffer. Couples should be aware of these risks <strong>and</strong> should invest in<br />

keeping the relation healthy. One way of doing so is maintaining clear definitions of the<br />

various roles in play. Above all, the results highlight the importance of paying attention to<br />

spousal social capital. The findings presented here are in line with Sharma’s (2004) matrix on<br />

family <strong>and</strong> business dimensions: for long-term success, family firms need positive scores on<br />

both the business <strong>and</strong> the family dimension. Investments of time <strong>and</strong> effort in these “soft”<br />

issues will be beneficial for the private life of the couple <strong>and</strong> for the copreneurial business.<br />

Business advisors may discuss with couples the benefits <strong>and</strong> costs of working together in the<br />

business. They can help copreneurs by explaining the factors that influence the success of the<br />

businesses. By raising awareness of these “soft” issues, they can help these couples to<br />

achieve sustainability of both the business <strong>and</strong> the relationship.<br />

Conclusion<br />

To conclude, this study makes several contributions to the family business literature. The<br />

results help clarify the social capital components that are relevant for copreneurial firms.<br />

Moreover, these components are linked to the financial performance of copreneurial<br />

businesses.<br />

87


Appendix: Questionnaire items<br />

Financial performance<br />

Our copreneurial business has experienced growth in turnover<br />

over the past two years.<br />

Our copreneurial business has experienced growth in profits<br />

over the past two years.<br />

Our copreneurial business has experienced growth in employee<br />

numbers over the past two years.<br />

Completely<br />

disagree<br />

Neutral<br />

Completely<br />

agree<br />

1 2 3 4 5 6 7<br />

1 2 3 4 5 6 7<br />

1 2 3 4 5 6 7<br />

Our copreneurial business is profitable. 1 2 3 4 5 6 7<br />

The financial well-being of our copreneurial business is secure. 1 2 3 4 5 6 7<br />

Structural social capital<br />

In our business, my spouse <strong>and</strong> I involve non-family members<br />

in assisting us to effectively manage our business.<br />

In our copreneurial business, non-family employees form part<br />

of the management team.<br />

In our copreneurial business, we involve non-family members<br />

when we have to make important strategic decisions about our<br />

business.<br />

If necessary, my spouse <strong>and</strong> I draw on the expertise of nonfamily<br />

members to assist us with business matters.<br />

Shared vision<br />

1 2 3 4 5 6 7<br />

1 2 3 4 5 6 7<br />

1 2 3 4 5 6 7<br />

1 2 3 4 5 6 7<br />

My spouse <strong>and</strong> I have agreed on the goals for our copreneurial<br />

business.<br />

1 2 3 4 5 6 7<br />

My spouse <strong>and</strong> I have agreed on the future direction for our<br />

copreneurial business.<br />

1 2 3 4 5 6 7<br />

My spouse <strong>and</strong> I have agreed on the vision for our business. 1 2 3 4 5 6 7<br />

My spouse <strong>and</strong> I freely express our opinions to each other<br />

concerning day-to-day business decisions.<br />

Quality of relationships<br />

1 2 3 4 5 6 7<br />

My spouse <strong>and</strong> I trust each other. 1 2 3 4 5 6 7<br />

My spouse <strong>and</strong> I respect each other. 1 2 3 4 5 6 7<br />

My spouse <strong>and</strong> I are emotionally attached to one another. 1 2 3 4 5 6 7<br />

Role clarity<br />

In our business, a clearly defined division of labor exists<br />

between my spouse <strong>and</strong> I.*<br />

My spouse <strong>and</strong> I have agreed on each other’s areas of authority<br />

<strong>and</strong> responsibility in our business.<br />

In our business, clearly demarcated areas of authority <strong>and</strong><br />

responsibility exist between my spouse <strong>and</strong> I.<br />

* Item dropped after factor analysis<br />

1 2 3 4 5 6 7<br />

1 2 3 4 5 6 7<br />

1 2 3 4 5 6 7<br />

88


5: Securing post-succession continuity in family firms through<br />

knowledge transfer 15<br />

5.1 Introduction<br />

In the wake of the worldwide recession, family firms might prove to be a solid foundation for<br />

economic recovery. <strong>Family</strong> firms are viewed as the original form of business activity<br />

(Wakefield, 1995) <strong>and</strong> they dominate the economic l<strong>and</strong>scapes of most major economies<br />

(Astrachan, 2003; Kraus et al., 2012; Morck <strong>and</strong> Yeung, 2003; Shanker & Astrachan, 1996).<br />

Furthermore, family firms appear to be less sensitive to rigorous, short-term dem<strong>and</strong>s from<br />

external shareholders. However, in periods of slow economic growth <strong>and</strong> less financing<br />

availability, the transfer of firms from generation to generation may prove challenging. A<br />

crucial moment in the life cycle of any family firm is a succession phase. An unsuccessful<br />

succession can have detrimental effects on performance <strong>and</strong> continuity. In addition, given the<br />

number of family firms, issues related to succession can have an impact at the<br />

macroeconomic level.<br />

The resource-based view (RBV) is often used as a theoretical basis to argue that “familiness”<br />

is a unique bundle of resources that ensures the competitive advantage of the family firm (e.g.<br />

Habbershon & Williams, 1999). In this article, familiness is linked to the growing interest in<br />

the knowledge-based view (KBV) of the firm. The KBV states that a firm’s ability to gain<br />

new knowledge <strong>and</strong> absorb it can be a great competitive advantage (Tsai & Ghoshal, 1998).<br />

<strong>Family</strong> firms have a significant amount of knowledge stored outside their real “knowledge<br />

tanks,” such as protocols <strong>and</strong> business archives. In these firms, extensive knowledge is also<br />

stored in routines, values, <strong>and</strong> norms (Grant, 1991). This reservoir can be labeled “tacit<br />

knowledge” (Cabrera-Suárez et al., 2001). This specific firm knowledge, together with the<br />

ability to create <strong>and</strong> transfer it, is considered a key strategic asset. It is argued that postsuccession<br />

performance is highly dependent on the extent to which tacit knowledge has been<br />

transferred to the successor (Zahra et al., 2007). This chapter therefore suggests that tacit<br />

knowledge transfer plays an important role in post-succession performance.<br />

People are often not aware of tacit knowledge or how it can be of value to others. It is<br />

considered valuable because it provides contexts for people, places, ideas, <strong>and</strong> experiences.<br />

Given the characteristics of tacit knowledge, transferring it generally requires intense<br />

personal contact <strong>and</strong> trust. Royer, Simons, Boyd & Rafferty (2008) state that<br />

intergenerational succession has an advantage in this respect, as a positive knowledge transfer<br />

climate appears crucial for the success of the transfer of tacit knowledge. Therefore, the aim<br />

of this paper is to increase the underst<strong>and</strong>ing of one particular aspect of the succession<br />

process: the role of knowledge transfer. To assess the knowledge transfer climate, a construct<br />

15 This chapter is based on Matser, Kraus, <strong>and</strong> Märk (2011), “Securing post-succession continuity in family<br />

firms through knowledge transfer,” which was published in the International Journal of Entrepreneurship <strong>and</strong><br />

Small Business, Volume 14, No. 4.<br />

89


ased on the theoretical framework proposed by Cabrera-Suárez et al. (2001) is built <strong>and</strong><br />

tested.<br />

In May 2008, a survey of Dutch family firms was conducted. All firms had recently<br />

completed a succession process. An ordinary least squares (OLS) regression method was<br />

used to test the hypotheses. The data provide insights into the relations between knowledge<br />

transfer <strong>and</strong> post-succession performance, <strong>and</strong> show that trans-generational succession is<br />

preferred relative to transfer to an outside successor. The aim is to underst<strong>and</strong> how<br />

knowledge transfer influences post-succession performance <strong>and</strong> to assess whether transgenerational<br />

succession should be preferred due to relatively better post-succession<br />

performance when compared to succession to outside parties.<br />

The chapter begins with a discussion of the familiness construct <strong>and</strong> the family firm’s focus<br />

on continuity as a key strategic asset. If familiness can be transferred from one generation to<br />

another, this legacy may be the core of the family firm concept. An important requirement for<br />

successful succession is the transfer of tacit knowledge from incumbent to successor. In<br />

Section 5.2.2, therefore, knowledge management, types of knowledge, <strong>and</strong> barriers to<br />

knowledge transfer are discussed. In Section 5.2.3, the moderator effect of a family successor<br />

is discussed. In Section 5.3, the methodology is explained, the data is described, <strong>and</strong> the<br />

hypotheses are tested. In the final section, the social implications of the findings are<br />

discussed <strong>and</strong> suggestions are made for further research.<br />

5.2 Research framework <strong>and</strong> hypotheses<br />

5.2.1 Post-succession continuity<br />

The concept of familiness, which was first introduced by Habbershon <strong>and</strong> Williams (1999)<br />

<strong>and</strong> based on the RBV, suggests that the unique resources that family firms may possess may<br />

give them an advantage in the marketplace. The RBV argues that firms can outperform others<br />

if they are able to maintain a competitive advantage. These competitive advantages can be<br />

maintained over the long run if resources are valuable, rare, inimitable, <strong>and</strong> non-substitutable<br />

(Barney, 1991). Several scholars suggest that the connection between family <strong>and</strong> business<br />

may lead to unique advantages in the acquisition of resources (Aldrich & Cliff, 2003;<br />

Haynes, Walker, Rowe & Hong, 1999; Stewart, 2003). For example, Barney, Clark &<br />

Alvarez (2002) argue that family ties may provide an advantage in opportunity identification<br />

because family members might be more likely to share information with each other than nonfamily<br />

members. Sirmon <strong>and</strong> Hitt (2003) distinguish five sources of so-called “family firm<br />

capital”: human capital, social capital, survival capital, patient capital, <strong>and</strong> governance<br />

structures. These authors argue that family firms acquire, bundle, <strong>and</strong> leverage their resources<br />

differently than non-family firms.<br />

Miller <strong>and</strong> Le Breton-Miller (2005) also describe resources that create competitive<br />

advantages for large, family-controlled businesses. They highlight four priorities that drive<br />

90


successful strategies, which they refer to as the “four Cs”: take comm<strong>and</strong>, ensure continuity,<br />

create a community, <strong>and</strong> build connections. In this regard, Miller <strong>and</strong> Le Breton-Miller<br />

(2005) draw attention to continuity as one key aspect of successful family firms. They<br />

distinguish various elements of continuity. Continuity starts with a fundamental mission that<br />

is deeply rooted within the family. This, in turn, motivates patient investment in the<br />

development of core capabilities, which will later enable the achievement of the mission.<br />

This patient capital is combined with a risk-averse financial strategy to secure organizational<br />

health. Another aspect of continuity is the length of top executive apprenticeships <strong>and</strong><br />

tenures, which is a unique characteristic of family firms – one generation runs the company<br />

until the next is ready to take over. This approach to succession seems to be one pillar of<br />

family firm success (Miller & Le Breton-Miller, 2005, p. 38) <strong>and</strong> is in line with the<br />

preferences of most families (Matser & Gerritsen, 2008).<br />

The focus on continuity suggested by Miller <strong>and</strong> Le Breton-Miller (2005) runs parallel to an<br />

important topic in family firm research based on the RBV: the transfer of unique capabilities<br />

in business successions from one generation to another (Habbershon & Williams, 1999). The<br />

main issue here is underst<strong>and</strong>ing which specific resources <strong>and</strong> capabilities a family firm<br />

should have to ensure that its vision will be passed from one generation to another (Wortman,<br />

1994). If RBV is used as a foundation, the creation of familiness proposed by Habbershon et<br />

al. (2003) might be a driver of post-transfer family firm performance. In short, Habbershon et<br />

al. (2003) argue that the intersection of family <strong>and</strong> business leads to hard-to-duplicate<br />

capabilities that make family firms particularly suited for survival <strong>and</strong> growth. If this<br />

familiness can be transferred from one generation to another as a legacy, it might ultimately<br />

comprise the core of the family firm concept (Baker & Wiseman, 1998; Kelly, Athanassiou<br />

& Crittenden, 2000; Poza & Messer, 2001). Therefore, a key question of family business<br />

research is: Can familiness be transferred to the next generation?<br />

Since the inception of academic research on family firms in the early 1980s, one leading<br />

topic has been business succession (Dyer & Sanchez, 1998). This focus probably reflects the<br />

importance of a successful transfer of management within family firms, which is crucial for<br />

firm continuity (Harvey & Evans, 1995). The life span of family firms is often relatively<br />

short, as only a limited number survive the transition to the third generation, <strong>and</strong> barely onethird<br />

survive the second generation (Beckhard & Dyer, 1983; Neubauer & Lank, 1998;<br />

Paisner, 1999). Therefore, the transfer of a firm from one generation to the next represents a<br />

crucial strategic issue of the firm (Barach & Gantisky, 1995). If succession within the family<br />

is not a feasible option than business owners have to look for other solutions to guarantee the<br />

continuity of the firm. In general, the succession issue is unlikely to lose its appeal in the<br />

foreseeable future since about one-third of all SMEs in the European Union are expected to<br />

be involved in a business transfer at some point in the coming years (M<strong>and</strong>le, 2008). Such<br />

business transfers may result in major restructurings in many industries <strong>and</strong> could lead to the<br />

substantial destruction of (tangible <strong>and</strong> intangible) capital (Van Teeffelen, Meijaard &<br />

Geerts, 2005). Within this context, the European Commission (2006) tends to see business<br />

succession as a threat to the survival of small <strong>and</strong> medium-sized firms as well as to overall<br />

employment <strong>and</strong> economic growth.<br />

91


The transfer of a firm is a highly complex process that is influenced by many factors. Le<br />

Breton-Miller, Miller & Steier (2004), for example, show this complexity in a model that<br />

demonstrates that there are different phases in the process; each phase has different aspects;<br />

<strong>and</strong> there are various stakeholders involved, of which the most important are the<br />

incumbent(s) <strong>and</strong> the successor(s). Moreover, the entire process is influenced by the family<br />

context <strong>and</strong> the rational business context. Le Breton-Miller et al. (2004) base this model on a<br />

review of the available research <strong>and</strong> literature on this topic. According to Sharma, Chrisman<br />

& Pablo (2001), the business owner’s inability to “let go” is the most-cited obstacle to<br />

effective succession. Sharma, Chrisman & Chua (1996) state that three internal factors are<br />

consistently identified as factors influencing transfer planning: the incumbent’s propensity to<br />

step aside, the presence of a competent successor, <strong>and</strong> the presence of an active advisory<br />

board. Based on a review of the literature to assess the factors that prevent intra-family<br />

succession, De Massis, Chua & Chrisman (2008) present a preliminary model that includes<br />

five factors. Along with context <strong>and</strong> financial factors, these include individual, relation, <strong>and</strong><br />

process factors. The latter are suggested to influence the individual <strong>and</strong> relation factors.<br />

Examples of these factors include the willingness of the incumbent to resign (individual<br />

factor), the level of trust among family members (relation factor), <strong>and</strong> the professional testing<br />

of the potential successor (process factor).<br />

De Massis et al.’s (2008) framework stresses the complexity of the business transfer process.<br />

To obtain more insight into the factors influencing the process, it makes sense to focus on<br />

specific elements, as doing so helps limit the confusion arising from the various factors as<br />

they interact with each other. Any one of the numerous factors can be chosen. Cabrera-<br />

Suárez et al. (2001) draw attention to the importance of knowledge transfer between<br />

successor <strong>and</strong> incumbent, as a key factor in the business transfer process. In fact, their article<br />

is one of the 25 most influential articles in family business research (Chrisman et al., 2010).<br />

5.2.2 The knowledge transfer climate<br />

The development of the knowledge-based view<br />

Knowledge is seen as an important strategic asset for companies due to growing competition<br />

<strong>and</strong> change (Davenport & Prusak, 1998). The ability of a firm to gain new knowledge <strong>and</strong><br />

absorb it can be a great competitive advantage (Tsai & Ghoshal, 1998). To underst<strong>and</strong> the<br />

importance of knowledge, it is useful to utilize the RBV. The core point of this approach is<br />

that the competitive advantage of a firm comes from its unique bundle of resources (Cabrera-<br />

Suárez et al., 2001). Given the wide spectrum of resources, it is no surprise that researchers<br />

have begun considering whether some resources are more important than others.<br />

Undoubtedly, every resource has its importance in different situations, but the existing<br />

knowledge of a firm <strong>and</strong> the transferability of that knowledge seem to be the most vital<br />

resources to manage (Hoy & Sharma, 2010; Kim & Mauborgne, 1998; Probst, Raub &<br />

Romhardt, 2006).<br />

<strong>Family</strong> firms hold extensive knowledge beyond their actual “knowledge tanks.” Their<br />

knowledge is also stored in routines, values, norms, etc. (Grant, 1991). These types of<br />

92


esources are labeled “tacit knowledge” (Cabrera-Suárez et al., 2001). A firm’s specific<br />

knowledge, as well as the firm’s ability to create <strong>and</strong> transfer it, are together considered a key<br />

strategic asset. This asset has the potential to help improve performance (Cabrera-Suárez et<br />

al., 2001) because it is valuable, rare, <strong>and</strong> difficult to trade <strong>and</strong> imitate (Bierly & Chakrabarti,<br />

1996; Nonaka & Takeuchi, 1995). This phenomenon has been covered by some authors <strong>and</strong><br />

given rise to a new theoretical stream of growing importance in the strategic management<br />

field: the KBV of the firm. From the KBV perspective, knowledge can be defined as<br />

“information that is relevant, actionable, <strong>and</strong> based at least partially on experience” (Leonard<br />

& Sensiper, 1998, p. 113). This approach tries to “analyze how organizations create, acquire,<br />

apply, protect, <strong>and</strong> transfer knowledge” (Bierly & Chakrabarti, 1996, p. 123).<br />

Explicit <strong>and</strong> tacit knowledge<br />

Dalkir (2005), Alavi <strong>and</strong> Leidner (2001), <strong>and</strong> Jennex (2007) point out that effective<br />

knowledge management is one of the most important challenges of this century. Cabrera-<br />

Suárez et al. (2001) perform extensive theoretical <strong>and</strong> practical work in this research area.<br />

Although a multitude of frameworks exist for different kinds of knowledge (Grant, 1996;<br />

Probst et al., 2006; Sackmann, 1992), the distinction between explicit <strong>and</strong> tacit knowledge is<br />

key. The literature clearly distinguishes between “real pure knowledge” (i.e., explicit<br />

knowledge) in the form of information on <strong>and</strong> an underst<strong>and</strong>ing of fundamental principles<br />

acquired through education, <strong>and</strong> “skill” (i.e., tacit knowledge), which is the ability to apply<br />

the accumulated pure knowledge through experience gained (Chirico, 2008).<br />

Another major difference between explicit <strong>and</strong> tacit knowledge is how the knowledge can be<br />

stored. Explicit knowledge can be stored in h<strong>and</strong>books (how to) or in statistical data (how we<br />

did it <strong>and</strong> what the outcome looks like). Such knowledge is always combined with the<br />

interpretations of the people who own it. In contrast to explicit knowledge, tacit knowledge is<br />

hard to transfer. Furthermore, such knowledge is an important advantage in family firms<br />

(Probst et al., 2006; Royer et al., 2008; Von Krogh & Köhne, 1998). This type of knowledge<br />

can be seen as the outcome of the interactions between persons (family members, the<br />

entrepreneur, employees, <strong>and</strong> other important stakeholders), <strong>and</strong> it is formed through network<br />

ties, a shared vision, <strong>and</strong> trust <strong>and</strong> obligations among family members. This social capital can<br />

also result from the overlap between the family <strong>and</strong> the firm. Therefore, it seems reasonable<br />

to argue that, for family firms, trans-generational transfers offer advantages relative to<br />

transfers to an external actor (“external succession”).<br />

Factors influencing knowledge transfer<br />

As mentioned above, family businesses <strong>and</strong> knowledge management are complex. Therefore,<br />

it is not surprising that there are a wide variety of factors that can influence the knowledge<br />

transfer. A literature review highlights the factors that have been named in the literature (see<br />

Table 5.1). It is important to note that the factors can have positive <strong>and</strong> negative effects. The<br />

aim of Table 5.1 is to show the multitude of factors firms face in the knowledge management<br />

process. These factors relate to three main areas:<br />

93


• Trust,<br />

• Conflicts <strong>and</strong> rivalry, <strong>and</strong><br />

• Social structure <strong>and</strong> networks.<br />

Trust is one of the main pillars of family firms (Chirico, 2008; Corbetta, 1995; Steier, 2001).<br />

Chirico (2008) stresses that trust is the foundation of many interactions <strong>and</strong> that the trust that<br />

people show each other has an enormous impact on their willingness to share knowledge.<br />

Other authors argue along similar lines, including Davenport <strong>and</strong> Prusak (1998), Gupta<br />

(2008), Inkpen (2008), Newell (2007), Probst et al. (2006), <strong>and</strong> Von Krogh <strong>and</strong> Köhne<br />

(1998). Under normal circumstances, this should be a positive phenomenon for family firms<br />

because family members typically show a high degree of interaction <strong>and</strong> trust (Chirico, 2008;<br />

Steier, 2001).<br />

Table 5.1: Possible factors influencing the knowledge-management process<br />

Factors Authors<br />

• Openness of those involved in the<br />

knowledge-transfer process<br />

Gupta, 2008; Probst et al., 2006; Simonin, 1999; Wathne<br />

et al., 1996<br />

• Kind of interaction Wathne et al., 1996<br />

• Trust Davenport & Prusak, 1998; Gupta, 2008; Inkpen, 2008;<br />

Newell et al., 2007; Probst et al., 2006; Wathne et al., 1996<br />

• Prior experiences Argote & Ingram, 2000; Kogut & Z<strong>and</strong>er, 1993; Wathne et<br />

al., 1996<br />

• Culture Davenport & Prusak, 1998; King, 2007; Kohlbacher &<br />

Krähe, 2007; Probst et al., 2006; Simonin, 1999<br />

• Absorption <strong>and</strong> learning aptitude Davenport & Prusak, 1998; Gupta, 2008; Lane &<br />

Lutbatkin, 1998; Probst et al., 2006; Szulanski, 2000<br />

• Organizational structure,<br />

organizational context, <strong>and</strong><br />

organizational atmosphere<br />

• Interactions among the persons<br />

involved<br />

• The ability to retain the knowledge Szulanski, 1996<br />

• Motivations of the persons<br />

involved<br />

• Reliability of the bearer Szulanski, 1996<br />

Gupta, 2008; Inkpen, 2008; King, 2007; Lyles & Salk,<br />

1996; Probst et al., 2006; Szulanski, 1996<br />

Argote & Ingram, 2000; Szulanski, 2000<br />

Probst et al., 2006; Gupta, 2008; Kalling, 2003; Szulanski,<br />

2000<br />

• Incentive schemes Davenport & Prusak, 1998; Probst et al., 2006<br />

• Conflicts, rivalries, <strong>and</strong><br />

misunderst<strong>and</strong>ings<br />

Lyles & Salk, 1996; Probst et al., 2006<br />

• Timing of the knowledge transfer Davenport & Prusak, 1998; Gupta, 2008<br />

• Team atmosphere King, 2007<br />

• The network aspect Tsai & Ghoshal, 1998<br />

• The ambiguity of knowledge Simonin, 1999, Szulanski, 1996<br />

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While trust can serve as an important tool for knowledge transfer, conflicts <strong>and</strong> rivalry can<br />

ruin it (Lyles & Salk, 1996; Probst et al., 2006). In this regard, the generational aspect<br />

becomes an important factor. Things that happened long ago can suddenly become important<br />

topics <strong>and</strong> the succession process can create an opportunity to dig up the skeletons of the<br />

past.<br />

Social structure <strong>and</strong> networks can be equally important. Zahra et al. (2008) show that the way<br />

in which family members <strong>and</strong> their employees interact with each other has a significant<br />

impact on the willingness to share knowledge. Zahra et al. (2007) emphasize the importance<br />

of both formal <strong>and</strong> informal knowledge sharing practices to ensure that critical information<br />

is shared. Especially, informal knowledge sharing should benefit from a family firm context<br />

with frequent face-to-face meetings <strong>and</strong> high levels of shared beliefs <strong>and</strong> values (Zahra et al.,<br />

2007).<br />

Much scientific effort has focused on finding success factors for business transfers. Cabrera-<br />

Suárez et al. (2001) draw attention to the importance of knowledge transfer. They follow<br />

Grant (1991), who argues that the tacit collective knowledge embedded in the firm’s routines<br />

is necessary to manage those resources successfully. This KBV of the firm also stipulates the<br />

importance of the transfer of tacit knowledge for achieving successful successions <strong>and</strong><br />

sustainable competitive advantages (Grant, 1996). A favorable knowledge transference<br />

climate is helpful for achieving a smooth transfer <strong>and</strong> overcoming the barriers mentioned<br />

above. Similarly, Cabrera-Suárez et al. (2001) suggest a framework for creating an<br />

environment that encourages knowledge transfer. This includes the owner-manager “being<br />

willing to appreciate <strong>and</strong> be proud of his or her successor’s achievements <strong>and</strong> possibilities”<br />

while also “having the flexibility to explore <strong>and</strong> accept new management approaches”<br />

(Cabrera-Suárez et al., 2001, p. 44). The successor “must appreciate the predecessor’s<br />

knowledge <strong>and</strong> his or her contribution to the firm, not rejecting established work methods <strong>and</strong><br />

practices without having considered their value to the firm.” (Cabrera-Suárez et al., 2001, p.<br />

44).<br />

Although Cabrera-Suárez et al. (2001) focus on family firms, their framework may be<br />

applicable to alternative paths of succession. For instance, Scholes et al. (2008) find evidence<br />

of the importance of information sharing <strong>and</strong> solid relationships in management buyouts<br />

(MBOs) <strong>and</strong> management buy-ins (MBIs). This leads to the first hypothesis:<br />

Hypothesis 1: A positive knowledge transfer climate during succession will have a positive<br />

effect on post-succession continuity.<br />

To measure “post-succession continuity,” part of the firm performance measurement model<br />

developed by Daily <strong>and</strong> Dollinger (1992) is adopted. The variables used to estimate actual<br />

firm performance include size, growth, margins, <strong>and</strong> perceived performance.<br />

95


5.2.3 Moderator: Is the successor a family member?<br />

Pearson et al. (2008) use the social capital theory to argue that a shared vision is often deeply<br />

embedded in the family’s history <strong>and</strong> that the preservation of the family business is an<br />

integral part of this vision. Therefore it can be argued that a trans-generational succession<br />

will have a positive impact on the knowledge transfer climate as a means of achieving postsuccession<br />

continuity. Research done by Royer et al. (2008) provides an indication of the<br />

relative success of intra-generational succession. They argue that a clearer focus among<br />

family firms on the preference for internal successors could enhance the success rate of<br />

business transfers. However, they also identify a crucial precondition: the internal successor<br />

should possess the necessary general <strong>and</strong> technical competencies to effectively manage the<br />

firm. When there are no suitable family members willing or able to take over the company,<br />

the family firm has to look for alternatives. Management <strong>and</strong> ownership transfers through an<br />

internal MBO or an external MBI could be attractive alternatives because they provide a<br />

means of realizing the owner’s investment while allowing for continued independent<br />

ownership of the firm (Scholes, Westhead & Burrows, 2008). The fact that the firm’s identity<br />

will remain the same seems to be important for family firm owners (Westhead, 1997).<br />

An interaction effect can be expected between trans-generational succession <strong>and</strong> a favorable<br />

knowledge transfer climate. It seems plausible that a successor who is a family member<br />

might have deep knowledge about the firm before the actual succession starts (Cabrera-<br />

Suárez et al., 2001). This knowledge may even have been acquired subconsciously, <strong>and</strong> it<br />

may stem from growing up hearing stories about the family firm, helping out during the<br />

holidays, or working as an employee within the firm. As a consequence, a positive<br />

knowledge transference climate becomes less important during the business transfer.<br />

Furthermore, family ties imply that the social ties between the successor <strong>and</strong> the incumbent<br />

will remain close long after the succession has taken place. Therefore, knowledge transfer<br />

can continue even after the succession process, making knowledge transfer during the<br />

succession process less crucial. As a result, a positive knowledge transference climate should<br />

have a greater impact on post-transfer performance in transfers of family businesses to an<br />

outside successor or in succession in non-family firms.<br />

Hypothesis 2: The direct positive effect on performance of a positive knowledge transfer<br />

climate during succession is greater for non-family successions.<br />

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5.3 Method<br />

Sample <strong>and</strong> data collection<br />

The data used in this study were obtained from a research project undertaken by the Dutch<br />

Center for <strong>Family</strong> <strong>Firm</strong>s (Centrum van het Familiebedrijf) in cooperation with Utrecht<br />

University’s School of Economics. In this study, empirical research focused on the<br />

identification of those factors that determine the success of a leadership transfer. In the spring<br />

of 2008, a web survey tool was used to gather the data. An e-mail request to complete the<br />

survey was sent to the contact list of the Dutch Center for <strong>Family</strong> <strong>Firm</strong>s. A reminder was sent<br />

two weeks later, resulting in 330 questionnaires being returned (a response rate of 11%). Of<br />

these 330 respondents, 135 had completed a succession process (involving a change in<br />

leadership) in the preceding ten years.<br />

A next step was to use Flören’s (2002) definition of family firms to categorize the firms.<br />

Under this definition, a firm is classified as a family firm when at least two of the following<br />

three criteria are met: 1. a single family owns more than 50% of the shares or certificates; 2. a<br />

single family is able to exercise considerable influence on the business strategy or succession<br />

decisions; <strong>and</strong> 3. a majority or at least two of the members of the board of directors or board<br />

of advisors are from one family. Based on these criteria 95 firms were coded family firms.<br />

The survey questionnaire 16 consisted of 53 questions that covered various issues, including<br />

the role of the successor, the role of the incumbent, the role of the family, <strong>and</strong> the succession<br />

process itself. All firms in the sample were at least ten years old. After removing cases with<br />

missing values, the final data set consisted of 81 firms.<br />

16 The Dutch questionnaire is available from the author upon request (i.a.matser@uu.nl).<br />

97


Variables<br />

Dependent variable:<br />

The perceived operational profit growth was used (profit) as a proxy for post-transfer<br />

performance. A scale item was used to ask respondents whether they had experienced an<br />

increase in operational profit since succession.<br />

Independent variables:<br />

Two variables were used to test the hypotheses. A dummy variable was used to measure<br />

whether the successor was a family member (family) (1 = family member, 0 = non-family<br />

member).<br />

A scale was created to measure the knowledge transference climate (knowledge). Cabrera-<br />

Suárez et al. (2001, p.44) suggest three items help to create an environment that encourages<br />

knowledge transference: the owner-manager “being willing to appreciate <strong>and</strong> be proud of his<br />

or her successor’s achievements <strong>and</strong> possibilities;” “having the flexibility to explore <strong>and</strong><br />

accept new management approaches;” <strong>and</strong> the successor needing to “appreciate the<br />

predecessor’s knowledge <strong>and</strong> his or her contribution to the firm, not rejecting established<br />

work methods <strong>and</strong> practices without having considered their value to the firm.” Therefore,<br />

three questions asked whether: during the succession process the incumbent had shown an<br />

appropriate amount of appreciation for the way his/her successor operated; during the<br />

succession process the incumbent was open to new ideas <strong>and</strong> the successor’s working<br />

methods; <strong>and</strong> the successor had shown an appropriate amount of appreciation for what the<br />

incumbent had built up in the firm. The answers were categorized into three groups: 1 =<br />

negative, 2 = neutral, 3 = positive. The scale for the knowledge transference climate reflected<br />

the sum of the three questions, so that the lowest possible score was three points <strong>and</strong> the<br />

highest was nine points. In terms of the internal consistency of the scale, the Cronbach alpha<br />

was 0.66, which is sufficient. The scale was therefore included in the analysis.<br />

Control variables:<br />

Five control variables were included in the final regression model, although more control<br />

variables were tested. The control variables include: moment, firm size, education, capacities,<br />

motivation. The choice of these five variables was based on their importance in the literature<br />

<strong>and</strong>/or their statistical significance. Given the type of dependent variable (increase in<br />

operational profit), an adjustment was made for the length of time since the transfer had taken<br />

place. An item indicating the year of the transfer was used <strong>and</strong> the answers were split into<br />

two groups (1996 to 2003, <strong>and</strong> 2004 to the beginning of 2008; group definitions based on the<br />

mean) (moment). A precondition of the proposed model was the availability of an appropriate<br />

internal successor (Royer et al., 2008). Therefore, three control variables concerning the<br />

successor were included:<br />

- Level of education (1 = primary school, 5 = university) (education),<br />

- Perceived capacities of the successor (three-point scale) (capacities), <strong>and</strong><br />

- Perceived motivation to join the business (three-point scale) (motivation).<br />

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The descriptive statistics <strong>and</strong> the correlation matrix are provided in Table 5.2.<br />

Table 5.2: Descriptive statistics <strong>and</strong> correlation matrix<br />

mean SD 1 2 3 4 5 6 7 8<br />

Perceived operational profit growth<br />

(Profit)<br />

3.90 1.20<br />

<strong>Family</strong> successor (<strong>Family</strong>) .74 .44 .45**<br />

Knowledge<br />

(Knowledge)<br />

transfer climate<br />

7.58 1.69 .26* .10<br />

Company size (Size) 41.51 57.47 .07 .01 -.09<br />

Transfer moment (Moment) .56 .50 -.01 -.02 .10 .08<br />

Education (Education) 2.93 .91 -.10 -.27* .05 .07 .04<br />

Motivation successor (Motivation) 2.90 .34 .04 .08 -.01 .03 -.04 .02<br />

Capacities successor (Capacities)<br />

N= 81<br />

2.72 .58 .25 .20 .18 .01 .03 -.04 .30*<br />

Pearson correlation, ** Correlation is significant at the 0.01 level (2-tailed), * Correlation is significant at the<br />

0.05 level (2-tailed)<br />

5.4 Results<br />

A linear regression model was conducted to test the hypotheses. The data was tested using<br />

statistical program SPSS 16.0. An interaction term of family successor with the knowledge<br />

transfer climate was applied to account for the moderating effect of family succession.<br />

The model with all the variables:<br />

Profit = β0 + β1<strong>Family</strong> + β2Knowledge + β3<strong>Family</strong>_Knowledge + β4 Size + β5 Moment + β6<br />

Capacities + β7 Motivation + β8 Education + µ<br />

Table 5.3 presents the results of the multiple regression analysis. The VIF scores for the<br />

models 1 <strong>and</strong> 2 are not higher than 1.18. On the basis of currently accepted st<strong>and</strong>ards, these<br />

results indicate that there is no concern for multicollinearity. Model 3 test for moderating<br />

effect mathematically leading to high VIF scores.<br />

99


Table 5.3: Predicting profit growth<br />

Dependent variable Perceived operational profit growth<br />

Model 1 Model 2 Model 3<br />

Explanatory variables β value e β value e β value e<br />

Company size (ln) .07 .09 .09<br />

Transfer moment .-.02 -.04 -.02<br />

Education .02 .00 .03<br />

Motivation successor -.05 -.04 -.06<br />

Capacities successor .18 .15 .16<br />

<strong>Family</strong> successor .42 d<br />

.40 d<br />

1.39 d<br />

Knowledge transfer climate .20 a<br />

.57 c<br />

<strong>Family</strong> successor x Knowledge<br />

transfer climate<br />

-1.11 b<br />

∆R square .04 d .05 d<br />

R square .23 d<br />

.27 d<br />

.32 d<br />

Adj. R square .17 .20 .24<br />

F statistic 3.77 3.88 4.23<br />

DF (df1, df2) (6, 75) (7, 74) (8, 73)<br />

a significant at 0.10 level, b significant at 0.05 level, c significant at 0.01 level <strong>and</strong> d significant at 0.001 level.<br />

e : β values represent st<strong>and</strong>ardized regression coefficients in the multiple regression analysis.<br />

As shown in Model 1, Table 5.3, the control variables are not significant except for family<br />

successor. The results show that family transfer has a large positive effect on perceived<br />

operational profit growth (β = -.42, p < 0.001). The results related to Hypothesis 1, which<br />

predicts a positive relationship between a positive knowledge transfer climate during<br />

succession <strong>and</strong> post-succession continuity, are presented in Model 2, Table 5.3. The results<br />

show a significant positive relation (β = -.20, p < 0.1) <strong>and</strong> thus offer support for Hypothesis<br />

1.<br />

For Hypothesis 2, the evidence as shown in Model 3, Table 5.3 indicates a significant<br />

interaction effect (β = -1.11, p < 0.05), lending support to Hypothesis 2. The results suggest<br />

that the direct positive effect of a positive knowledge transfer climate on profit during<br />

succession is larger for non-family successions. The nature of the interaction effect is<br />

depicted in Figure 5.1.<br />

100


Figure 5.1: Interaction term family succession <strong>and</strong> knowledge transfer climate<br />

Profit growth<br />

5<br />

4,5<br />

4<br />

3,5<br />

3<br />

2,5<br />

2<br />

1,5<br />

1<br />

Low Knowledge transfer<br />

climate<br />

High Knowledge transfer<br />

climate<br />

Low <strong>Family</strong><br />

succession<br />

High <strong>Family</strong><br />

succession<br />

The steep solid line in Figure 5.1 indicates that in family firms where an external succession<br />

takes place, a positive transfer climate will lead to an increase in the perceived profit growth.<br />

The dashed line shows that in firms with a family successor, the positive effect from a<br />

positive knowledge transfer climate disappears. This result indicates that the transfer of<br />

knowledge follows a different route in family firms with a trans-generational succession than<br />

with an external successor. Furthermore, the dashed line lays above the solid line, which<br />

highlight the proposition that when an internal successor is available who possesses the<br />

necessary general <strong>and</strong> technical competencies, a family firm should prefer a transgenerational<br />

transfer given the expected post-transfer performance. Based on the analysis, the<br />

outcomes can be ranked as follows (from high to low):<br />

1 Trans-generational transfer in a positive knowledge transfer climate,<br />

2 Trans-generational transfer in a negative knowledge transfer climate,<br />

3 Transfer to an external successor in a positive knowledge transfer climate, <strong>and</strong><br />

4 Transfer to an external successor in a negative knowledge transfer climate.<br />

101


5.5 Discussion <strong>and</strong> conclusion<br />

In recognition of the importance of a smooth succession process for family firms, this study<br />

attempted to highlight the positive effects of trans-generational succession <strong>and</strong> the<br />

importance of a positive knowledge transfer climate during the succession process. The<br />

hypotheses were formed on the basis of the familiness construct. The support found for the<br />

hypotheses is therefore also an indication of the relevance of this construct. Some tentative<br />

conclusions were made concerning the positive effect of a family member as a successor <strong>and</strong><br />

the importance of a smooth transfer of a firm’s tacit knowledge.<br />

This study suffers from several limitations, which could be improved with further research.<br />

The relatively small sample size was a significant weakness. More information about the<br />

ownership structure of companies would also be beneficial. With regard to external<br />

successions, it was not known if a “new” family took over the family firm or if an external<br />

director had been hired by the family. Future research that will include non-family firms in<br />

the sample would strengthen the empirical analysis. This would make it possible to analyze<br />

the influence of family involvement on the knowledge transfer climate. Furthermore, this<br />

study relied heavily on the self-judgment of the respondents.<br />

In addition, the sample was biased because only successful successions were included, with<br />

success being measured as the continuity of the firm after the transfer. Sharma (2008)<br />

indicates that the influence of family social capital can also be negative depending on specific<br />

family characteristics. In the sample used here, there may have been a relatively large portion<br />

of firms that had experienced a positive familiness influence. It would be interesting to use a<br />

longitudinal study to gain more insight into whether <strong>and</strong> how this influence plays a role<br />

during succession. For example, strong, positive family ties can motivate families to<br />

overcome the difficulties caused by succession by providing instant survival capital, while<br />

negative influences might have a destructive effect on the continuity of the firm.<br />

The research results indicate a positive relationship between a positive knowledge transfer<br />

climate <strong>and</strong> post-succession performance. Therefore, investments in this climate should be<br />

good for the performance of the firm. The results also indicate that a positive knowledge<br />

transfer climate is even more important for the post-succession performance when the<br />

successor is not a family member. With intra-generational succession, the extent of<br />

knowledge transfer during succession is less important. This might imply that knowledge<br />

transfer in family firms is an ongoing process that spans over a much longer period than in<br />

non-family firms. As such, the transfer of knowledge is perhaps not a conscious process <strong>and</strong><br />

not one solely related to knowledge on the way the business should be run. The outcomes<br />

presented here are also in line with Royer et al. (2008), who found a preference for family<br />

members as successors.<br />

102


Conclusions<br />

Based on the research outcomes some preliminary recommendations for the various<br />

stakeholders of family firms can be made. Successors <strong>and</strong> current leaders can learn from this<br />

study that a positive knowledge climate during succession has a positive effect on postsuccession<br />

performance. Investments in good relationships <strong>and</strong> in information sharing serve<br />

a common interest <strong>and</strong> seem to pay off in the long run. These recommendations hold for<br />

family successors but are even more important when the successor is not a family member.<br />

The results further indicate that a family firm’s focus on continuity <strong>and</strong> its preference for<br />

intergenerational succession could be an effective strategy. This suggestion is in line with<br />

other research findings. A precondition for success is that the family successor is capable <strong>and</strong><br />

motivated. Alternative routes to family succession can be a management buyout or a<br />

management buyin, in which case a positive knowledge climate becomes even more<br />

important.<br />

A recommendation for policy makers that follows from this study is to invest in initiatives<br />

<strong>and</strong> programs to improve the preparation of the next generation family members. How to<br />

create a positive knowledge transfer climate should be a key item here. In line with this it is<br />

recommended for business advisors to be aware of the differences in knowledge transfer<br />

among family members <strong>and</strong> non-family members.<br />

To conclude, this study focused on the process of knowledge transfer. To obtain a more<br />

complete picture, it would be helpful to gain more insight into the type of knowledge that is<br />

transferred. More research is this area would be welcome.<br />

103


104


6: Conclusions <strong>and</strong> implications<br />

In this chapter, the overall conclusions <strong>and</strong> implications of this dissertation are presented. The<br />

chapter starts with a short review of the results of the empirical studies, which is followed by<br />

the answers to the research questions posed in Chapter 1 that have been derived from the<br />

empirical research presented in this dissertation (section 6.2). In section 6.3, the theoretical<br />

implications of this study are discussed. Section 6.4 presents an overview of the limitations of<br />

the current study <strong>and</strong> indicates possible directions for future research. Finally, section 6.5<br />

covers the practical lessons learned from this study.<br />

6.1 Research findings<br />

Past research has raised many interesting questions regarding the effect of family<br />

involvement on businesses. With the resource-based view as the primary theoretical<br />

framework, this dissertation looks at strategic resources in private firms <strong>and</strong> how those<br />

resources are influenced by family involvement. The focus is on the development of tacit<br />

knowledge <strong>and</strong> social capital, as these components of strategic resources have been identified<br />

in the literature as elements for which family involvement may have a strong, positive<br />

influence. This approach led to the following research framework, which was presented in<br />

Chapter 1:<br />

Figure 6.1: Research framework<br />

CONTINGENCY FACTORS RELATED TO BUSINESS CONTEXT<br />

<strong>Firm</strong> characteristics,ownershipcharacteristics,<br />

businesscycle<br />

STRATEGIC RESOURCES<br />

SOCIAL CAPITAL<br />

Bondingownershipsocial capital<br />

Bridgingownership social capital<br />

Spousalsocial capital<br />

HUMAN CAPITAL<br />

Tacit knowledge transfer climate<br />

CONTINGENCY FACTORS RELATED TO FAMILY CONTEXT<br />

<strong>Family</strong> involvement,family successor<br />

FIRM PERFORMANCE<br />

Product innovation<br />

Financial performance<br />

Post succession<br />

continuity<br />

The framework presented in Figure 6.1 forms the basis of the four empirical studies discussed<br />

in the preceding chapters. It also demonstrates how the research questions developed in<br />

Chapters 2 through 5 are related. A summary of the main research findings is presented in<br />

Table 6.1.<br />

105


Table 6.1: Summary of research findings<br />

Chapter Topic/key construct Sample Significant results related to the hypothesized relations<br />

A shared vision among members of the owning group is positively associated with the mobilization<br />

of owning group’s network;<br />

The quality of relationships is positively associated with the mobilization of the owning group’s<br />

network. This relationship is partially mediated by the shared vision of the owning group;<br />

The positive relationship between the shared vision among owners <strong>and</strong> the mobilization of owners’<br />

network is stronger in firms with higher quality of relationship amongst owners;<br />

The relationship between a shared vision among owners <strong>and</strong> the mobilization of owners’ network is<br />

stronger for firms with high family involvement than for firms with low family involvement.<br />

Mobilization of the owning group’s network is positively associated with product innovation;<br />

Quality of relationships among the owning group is indirectly positively associated with product<br />

innovation through network mobilization of the owning group;<br />

The relationship between the quality of relationships among the owning group <strong>and</strong> product<br />

innovation is stronger for firms with high family involvement than for firms with low family<br />

involvement.<br />

The use of non-family involvement is positively associated with the financial performance of<br />

copreneurial businesses;<br />

A shared vision between spouses is positively associated with the financial performance of<br />

copreneurial businesses;<br />

The relationship between the quality of the copreneurial relationship <strong>and</strong> the financial performance<br />

of the copreneurial business is mediated by the shared vision of the copreneurs;<br />

Role clarity between spouses is positively associated with the shared vision between the copreneurs<br />

<strong>and</strong> the quality of the copreneurial relationship;<br />

The relationship between role clarity between spouses <strong>and</strong> the financial performance of the<br />

copreneurial business is mediated by the shared vision between the copreneurs.<br />

A positive knowledge-transfer climate during succession is positively associated with postsuccession<br />

continuity;<br />

The relationship between a positive knowledge transfer climate during succession <strong>and</strong> postsuccession<br />

continuity is stronger for non-family successions than for trans-generational successions;<br />

Trans-generational successions are positively associated with perceived post-transfer performance.<br />

R<strong>and</strong>om stratified<br />

sample of 708<br />

private Dutch firms<br />

with 2-20 owners<br />

<strong>and</strong> less than 500<br />

employees<br />

2 Antecedents of bonding<br />

<strong>and</strong> bridging ownership<br />

social capital; influence<br />

of family involvement.<br />

Key construct:<br />

Ownership social capital<br />

R<strong>and</strong>om stratified<br />

sample of 708<br />

Dutch private firms<br />

with 2-20 owners<br />

<strong>and</strong> less than 500<br />

employees<br />

Snowball sample of<br />

167 Dutch<br />

copreneurial<br />

businesses<br />

3 Bonding <strong>and</strong> bridging<br />

ownership social capital<br />

<strong>and</strong> relation with product<br />

innovation.<br />

Key construct:<br />

Ownership social capital<br />

4 Copreneurial bonding <strong>and</strong><br />

bridging social capital<br />

<strong>and</strong> relation with firm<br />

performance.<br />

Key construct: Spousal<br />

social capital<br />

Non-r<strong>and</strong>om<br />

sample of 81<br />

private Dutch<br />

family firms<br />

5 Influence of the<br />

knowledge-transfer<br />

climate during succession<br />

<strong>and</strong> in relation to postsuccession<br />

continuity.<br />

Key construct: Tacit<br />

knowledge transfer<br />

climate<br />

106


6.2 Overall conclusions<br />

This section starts with a review of the answers to the questions formulated in Chapter 1.<br />

Thereafter, the research framework is adjusted based on these answers. With help of the<br />

adjusted framework, the primary research question is then discussed.<br />

1. What specific components of social capital <strong>and</strong> tacit knowledge are positively or negatively<br />

influenced by family involvement?<br />

The results from the study of business transfers reveal a positive family effect on postsuccession<br />

continuity. In that study, the tacit knowledge transfer climate is found to be less<br />

important during a trans-generational succession than during a non-family succession. These<br />

results together suggest that family involvement has an indirect effect on the development<br />

<strong>and</strong> transfer of tacit knowledge.<br />

This dissertation also shows that family involvement has an indirect effect on the<br />

development of social capital. <strong>Family</strong> involvement has a positive impact as a moderator of<br />

the relationship between a shared vision among owners <strong>and</strong> the mobilization of network<br />

resources – high family involvement stimulates owners who share the same vision to<br />

mobilize their network resources. Interestingly, in the study of copreneurial firms, the<br />

involvement of non-family members is found to have a positive direct effect on the financial<br />

performance of the firm. This outcome confirms that it is important to involve non-family<br />

members instead of relying solely on family members.<br />

However, the results also reveal a negative impact from family involvement, namely as a<br />

moderator of the relationship between mobilizing network resources <strong>and</strong> product innovation.<br />

This negative effect suggests that owners of firms with high family involvement are relatively<br />

passive in mobilizing their network resources to develop new products <strong>and</strong> services.<br />

Overall, the results reveal bivalent outcomes of family involvement. Positive indirect effects<br />

arise in relation to tacit knowledge <strong>and</strong> the bonding aspects of social capital, while negative<br />

effects are evident in relation to mobilization of network resources for the product innovation<br />

process.<br />

2. Which contingency factors other than family involvement influence the development of<br />

components of social capital <strong>and</strong> tacit knowledge in privately held firms?<br />

The empirical studies highlight ownership, role clarity between spouses, ownershipmanagement<br />

overlap, <strong>and</strong> company size as valuable factors in the development of the<br />

strategic resources under study. Furthermore, the results show that the bonding <strong>and</strong> bridging<br />

elements of ownership social capital are positively related – the shared vision among owners<br />

<strong>and</strong> the quality of relationships among owners both have a positive impact on the<br />

mobilization of the owner group’s network resources. In addition, a combination of a shared<br />

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vision <strong>and</strong> a high quality of relationships among owners creates an additional stimulating<br />

factor for the mobilization of the resources in the owners’ network. The overlap between<br />

management <strong>and</strong> ownership roles also has a positive effect on the development of bonding<br />

<strong>and</strong> bridging elements of ownership social capital. Company size is further identified as a<br />

factor that has a positive impact on the mobilization of the owning group’s network<br />

resources. Finally, the clarity of the roles between the spouses is identified as a supportive<br />

developmental condition for the bonding elements of spousal social capital.<br />

3. Do components of social capital <strong>and</strong> tacit knowledge have a positive impact on firm<br />

performance?<br />

In stressing the importance of innovation for the long-term continuity of the firm, this<br />

dissertation focuses on the influence of strategic resources on the introduction of new<br />

products <strong>and</strong> services. The results show that some components of bonding <strong>and</strong> bridging social<br />

capital have a positive impact on the realization of product innovation. For example, the<br />

mobilization of network resources has a direct positive effect, while the quality of<br />

relationships between owners has an indirect effect via the mobilization of network resources.<br />

When looking at the financial performance of copreneurial firms, a direct positive effect is<br />

found for shared vision among copreneurial couples, <strong>and</strong> the inclusion of non-family<br />

members in strategic <strong>and</strong> managerial activities. Furthermore, the quality of the copreneurial<br />

relationship enhances financial performance by stimulating the couple’s shared vision of the<br />

business. Finally, the results reveal a positive effect from a positive knowledge-transfer<br />

climate on post-succession continuity. Overall, the research results identify various strategic<br />

resources that have a positive impact on firm performance.<br />

Based on the findings discussed above, the proposed research framework of this dissertation<br />

can be adjusted (Figure 6.2).<br />

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Figure 6.2: Adjusted Research Framework<br />

CONTINGENCY FACTORS RELATED TO BUSINESS CONTEXT<br />

Companysize, expansion,age, sector, ownership-­‐<br />

management overlap,role clarity between spouses<br />

STRATEGIC RESOURCES<br />

SOCIAL CAPITAL<br />

Bondingownershipsocial capital<br />

Bridgingownership social capital<br />

Spousalsocial capital<br />

HUMAN CAPITAL<br />

Tacit knowledge transfer climate<br />

X<br />

CONTINGENCY FACTORS RELATED TO FAMILY CONTEXT<br />

<strong>Family</strong> involvement,family successor<br />

FIRM PERFORMANCE<br />

Product innovation<br />

Financial performance<br />

Post succession<br />

continuity<br />

<strong>Family</strong> involvement<br />

<strong>Family</strong> successor<br />

As shown in Figure 6.2, the studies in this dissertation confirm that strategic resources, such<br />

as components of social capital <strong>and</strong> tacit knowledge, are positively related to firm<br />

performance. Based on the literature (e.g., Habbershon & Williams, 1999; Sirmon & Hitt,<br />

2003), a positive direct relation between family involvement <strong>and</strong> strategic resources relation<br />

was also expected. However, this relationship is not confirmed by the empirical results.<br />

Therefore, the line connecting strategic resource to contingency factors related to the family<br />

context has been removed. Furthermore, the general contingency factors (firm characteristics,<br />

ownership characteristics, <strong>and</strong> business cycle) related to the business context have been<br />

replaced with the relevant factors (company size, expansion, age, sector, ownershipmanagement<br />

overlap, <strong>and</strong> role clarity between spouses) identified in the empirical studies.<br />

The next step in drawing conclusions based on this study is to use the adjusted framework to<br />

answer the general research question. The general research question is formulated as follows:<br />

How does family involvement influence the development of components of social capital <strong>and</strong><br />

tacit knowledge in privately held firms, <strong>and</strong> to what extent does the development of these<br />

strategic resources have an impact on firm performance?<br />

The main conclusion concerning the first part of the research question is that the impact of<br />

family involvement on the development of strategic resources is indirect <strong>and</strong> bivalent.<br />

Notably, the influence of family involvement in the firm is not as high or as positive as was<br />

expected given the discussed literature on familiness <strong>and</strong> family social capital. With regard to<br />

the second part of the question, the empirical studies reveal a positive impact of strategic<br />

resources on firm performance, <strong>and</strong> show that the owners of privately held firms play a<br />

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prominent role in this respect. Ownership social capital can apparently serve as a strategic<br />

resource for firms.<br />

Interestingly, the role of ownership in privately held firms <strong>and</strong>, more specifically, the active<br />

role of owners are topics that have received little attention from researchers (Hall et al., 2012;<br />

Uhlaner, 2008). Given the findings of this dissertation, it may be relevant to focus on the role<br />

of ownership to gain a deeper underst<strong>and</strong>ing of the antecedents <strong>and</strong> development of strategic<br />

resources in family firms. For this purpose, the three-circle model is useful (Tagiuri & Davis,<br />

1996). The three-circle model, which is used by family business scholars as the key symbolic<br />

generalization of the family business (Moores, 2008; see also section 1.2), clearly defines the<br />

family business as a system that consists of three sub-systems. However, the family business<br />

literature places a great deal of emphasis on the influence of the family on the business <strong>and</strong><br />

not on ownership. This focus on family in relation to the business makes sense, as family<br />

business researchers are convinced that family firms differ from non-family firms – if they<br />

did not, there would be no need to study them separately (Chrisman et al., 2005). This focus<br />

is reflected in the majority of the literature, where the points of interest relate to the<br />

interactions between the family <strong>and</strong> the business, while the role of ownership is generally<br />

neglected (e.g., Litz, 2008; Sharma, 2004; Sirmon <strong>and</strong> Hitt, 2003; Ward, 1987).<br />

Therefore, to develop a better underst<strong>and</strong>ing of how strategic resources develop in family<br />

firms, a focus on the role of ownership is recommended for several reasons. First, family<br />

business scholars need to be more aware of the ownership system as part of the family<br />

business system. Second, the distinction between the influences of ownership <strong>and</strong> the<br />

influences of the family system seems to be a key aspect to investigate. This is particularly<br />

true because there is much to learn about the role of ownership in private firms, an area of<br />

research that has been largely neglected. In the following sections, these recommendations<br />

are applied in discussions of the theoretical <strong>and</strong> practical implications, <strong>and</strong> suggestions for<br />

future research.<br />

6.3 Theoretical implications<br />

This dissertation has theoretical implications for three fields: the resource-based view, the<br />

social capital theory, <strong>and</strong> the theory of the family business.<br />

Resource-based view (RBV)<br />

The main proposition of the resource based view (RBV) is that strategic resources are<br />

valuable because they help in the development of a long-term competitive advantage for<br />

firms. The findings of this study reveal various strategic resources that have a positive impact<br />

on firm performance. The most relevant resources covered in this study are spousal social<br />

capital, ownership social capital, <strong>and</strong> the knowledge-transfer climate. The results do not<br />

consistently confirm the notion that family involvement itself can serve as a strategic<br />

resource. In fact, a direct positive family effect is found only in relation to post-succession<br />

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continuity. Overall, the findings are in line with the meta-analysis undertaken by Crook et al.<br />

(2008), who estimated a positive effect of strategic resources on performance.<br />

The resource-based view is one of the most widely accepted theories of strategic management<br />

(Newbert, 2007) but it has also been subject to critique (Kraaijenbrink, Spender & Groen,<br />

2010). In response to these criticisms, amendments to the theory have been suggested, some<br />

of which seem particularly relevant within the context of this dissertation. On the basis of a<br />

systematic assessment of the available empirical findings, Newbert (2007, p. 142) argues that<br />

“it may well be the firms’ organizing context <strong>and</strong> its valuable, rare, inimitable capabilities<br />

<strong>and</strong> core competencies rather than its static resources that are essential to determining its<br />

competitive position.” Along similar lines, Sirmon, Hitt, Irel<strong>and</strong>, <strong>and</strong> Gilbert (2011)<br />

emphasize the need to explicitly address managers’ actions related to firm’s resources. In<br />

other words, it has been recommended that business owners’ <strong>and</strong> family members’ actions<br />

related to firm resources be incorporated to allow for an accurate assessment of the<br />

competitive advantage of a privately held firm. An example of this action-oriented approach<br />

is found in Chapters 2 <strong>and</strong> 3, where bridging ownership social capital is measured in terms of<br />

the business-owning group’s efforts to mobilize potential network resources.<br />

Social capital theory<br />

The theoretical implications presented in this section refer firstly to the type of social unit <strong>and</strong><br />

the level of analysis to which the social capital theory can be applied. Secondly, they refer to<br />

the interactions among the various dimensions of social capital.<br />

First, as the core concept of social capital concerns the resources derived from social<br />

relations, it is important to specify the specific social context that is being studied. This<br />

dissertation focuses on social capital within the group of owners in private firms <strong>and</strong> on<br />

social capital stemming from the spousal relationship in copreneurial firms. The results<br />

confirm that social capital is an important resource within these specific social contexts.<br />

Payne et al. (2011) highlight the multilevel challenges <strong>and</strong> opportunities in social capital<br />

research. The models presented in Chapters 3 <strong>and</strong> 4 can be seen as examples of cross-level<br />

models, as the dependent <strong>and</strong> independent constructs are at different levels of analysis. For<br />

instance, the effect of spousal social capital on financial performance is measured; this<br />

represents a combination of a construct at the dyadic spousal level of analysis with a<br />

construct at the firm level. While Payne et al. (2011) emphasize the opportunities of this<br />

multilevel approach, the approach also shows the complexity of social capital theory.<br />

Westlund <strong>and</strong> Adam (2010) discuss this complexity with regard to the concept of trust in<br />

general <strong>and</strong> the potential sources of this trust—the cultural context of a nation, business<br />

values, or dyadic relations between actors. The family firm context adds complexity because<br />

of the overlap among the different roles of owners, managers, <strong>and</strong> family members.<br />

Therefore, the focus in Chapter 2 is on ownership social capital while controlling for<br />

management-ownership overlap <strong>and</strong> family involvement. To arrive at an in-depth<br />

underst<strong>and</strong>ing of the construct of social capital, more insight into this aspect is necessary.<br />

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The second issue relates to the interactions among the various dimensions of social capital.<br />

Overall, the results provide empirical support for the notion that bonding <strong>and</strong> bridging<br />

elements of social capital interact. Furthermore, the results of the empirical studies are in line<br />

with the theoretical frameworks suggested by Adler <strong>and</strong> Kwon (2002) <strong>and</strong> Lin (1999), who<br />

emphasize a sequential process toward a return on social capital.<br />

Another matter discussed in the literature is the difficulty of operationalizing the cognitive<br />

dimension of social capital. Zheng’s (2010) empirical literature review on social capital in<br />

relation to innovation concludes that the cognitive components of social capital have not been<br />

found to make a significant contribution to innovation relative to the other two dimensions of<br />

social capital. This finding is supported by the results presented in Chapter 3, where shared<br />

vision as component of the cognitive dimension was not significantly related to product<br />

innovation. However, shared vision is identified as a key component of spousal social capital<br />

<strong>and</strong> as an antecedent for the mobilization of available network resources by the businessowning<br />

group. Given these mixed results, it is clear that more research is necessary to gain a<br />

better underst<strong>and</strong>ing of the specific role of the cognitive dimension of social capital.<br />

Theory of the family business<br />

The resource-based view <strong>and</strong> social capital theory have been important contributors to the<br />

development of the theory of the family firm (Chrisman et al., 2010; Moores, 2008). This<br />

dissertation’s theoretical framework is built on these concepts <strong>and</strong> explores the concept of<br />

familiness (Habbershon & Williams, 1999). Overall, the empirical results indicate that the<br />

effect of familiness can be both “distinctive” <strong>and</strong> “constrictive,” lending support to the<br />

theoretical discussion found in Sharma (2008). Furthermore, these findings support the<br />

argument made by Tagiuri <strong>and</strong> Davis (1996) on the bivalent characteristics of family firms.<br />

Another interesting finding is that familiness does not seem to have, on average, a strong<br />

impact on firm performance. As discussed earlier in this chapter, it seems that scholars have<br />

to be very precise in defining the source of potential strategic resources. For example, the<br />

results presented in Chapters 2 <strong>and</strong> 3 indicate that, to a great extent, committed owners in<br />

non-family firms act in the same way as committed owners in family firms. In other words,<br />

the aspects of social capital identified by Sirmon <strong>and</strong> Hitt (2003) as family-specific resources<br />

are also evident among private firms with multiple owners <strong>and</strong> no family involvement. If<br />

these results are related to the three-circle model, the question is whether the family circle or<br />

the ownership circle is the source of social capital.<br />

The quest to underst<strong>and</strong> the effects of family involvement on the firm is made more difficult<br />

by the fact that some research fails to clarify the types of firms to which family firms are<br />

being compared. The heterogeneity of family firms makes this comparison even more<br />

complicated. It could be that in constructing theories of family firms, family firms are<br />

implicitly compared with publicly traded firms with dispersed ownership. However, even in<br />

such cases, this implied comparison is often followed by empirical investigations using<br />

samples consisting of only family firms. The consequence of this approach is that family<br />

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involvement’s linkages with various elements may be questionable, as the results may stem<br />

from the role of the active owners in general rather than from family involvement. An<br />

important implication of the results presented here is that there is a need to reconsider the<br />

concept of family social capital (Carr et al., 2011; Sorenson et al., 2009). The empirical<br />

studies that measure family social capital may have “labeled” the social capital under study as<br />

family social capital but actually measured ownership social capital.<br />

Some factors identified in the literature are undeniably resources that relate to the family<br />

circle, such as the consequences of the fact that family relations are long lasting. Such<br />

consequences can include deep tacit knowledge of <strong>and</strong> commitment to the firm, which are<br />

built from the moment that young children begin to learn about the business from their<br />

parents. Negative effects can occur when conflicts or incidents from the past reoccur in the<br />

next generation. The overlap of the family <strong>and</strong> the business is also clearly a unique attribute<br />

of family firms. The cases described in the study of copreneurial couples provide good<br />

examples of the positive <strong>and</strong> negative consequences of this interdependency.<br />

In the interest of moving towards a better underst<strong>and</strong>ing of the strategic resources that are<br />

unique to family firms, the driving forces for business-owning families seem to be an<br />

appropriate starting point. The family business literature emphasizes trans-generational<br />

wealth creation as a driving force that is unique to family firms (Habbershon, Williams &<br />

MacMillen, 2003; Chrisman, Sharma & Taggar, 2007). The (often implicit) assumption is<br />

that the goal of the owning family is to ensure the longevity of the firm (e.g., Nordqvist &<br />

Zellweger, 2010). Chrisman et al. (2005) state that the knowledge about to the fundamental<br />

driving forces in family firms is limited but that this knowledge is necessary to build a theory<br />

of the family firm. More research in this particular field would be very helpful for gaining<br />

more insight into the unique attributes of family firms.<br />

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6.4 Limitations <strong>and</strong> directions for future research<br />

The research presented in this dissertation addresses questions concerning the impact of<br />

family involvement on the development of private firms’ strategic resources <strong>and</strong> how these<br />

resources affect firm performance. These studies suffer from several limitations. In this<br />

section, general limitations related to the empirical chapters are discussed <strong>and</strong>, on this basis,<br />

suggestions for future research are made. Moreover, as not all questions concerning strategic<br />

resources could be covered in this dissertation, this section suggests possible avenues for<br />

future research that could help to more fully develop insights in this area.<br />

Definition issues<br />

In this study, several methods of defining family firms are applied. Chapters 2 <strong>and</strong> 3 measure<br />

family involvement on a continuous scale in order to capture the variance within the entire<br />

group of private firms. This scale makes it possible to measure the impact of varying levels of<br />

family involvement on the development of the components of social capital. Chapter 4<br />

focuses on a specific type of family firms, namely copreneurs, to gain a better underst<strong>and</strong>ing<br />

of spousal social capital as a potential strategic resource. Chapter 5 uses the definition<br />

formulated by Flören (2002) to distinguish between family <strong>and</strong> non-family firms. This<br />

approach is used to compare family firms with regard to trans-generational <strong>and</strong> non-family<br />

successions. The application of different definitions limits the possibilities to compare the<br />

research outcomes. In general, family involvement should be measured using a continuous<br />

scale that reflects the variance within the group of family firms (Uhlaner, 2005). Moreover, it<br />

is recommended that future research include both family firms <strong>and</strong> non-family firms, thereby<br />

making it possible to objectively capture the effect of family involvement on the business<br />

system (Poza, Hanlon & Kishida, 2004).<br />

Research methods<br />

The empirical approach of this dissertation is to analyze quantitative data on strategic<br />

resources <strong>and</strong> family firm performance. Different independent <strong>and</strong> dependent variables are<br />

analyzed in each of the chapters 2 through 5. This negatively affects the possibilities to<br />

generalize the four studies. The fact that are no publicly accessible data on private firms in<br />

the Netherl<strong>and</strong>s makes it difficult to collect data for research. This is especially the case,<br />

when the target group of the study consists of a specific subgroup, for instance copreneurs or<br />

firms that recently completed a business transfer. This is reflected in the relatively small<br />

datasets in Chapters 4 <strong>and</strong> 5 <strong>and</strong> affects the external validity of these studies. Therefore the<br />

large <strong>and</strong> r<strong>and</strong>om stratified sample of private firms that is used for the studies in Chapter 2<br />

<strong>and</strong> 3 is an unique dataset that reveals valuable insights into private family <strong>and</strong> non-family<br />

firms in the Netherl<strong>and</strong>s.<br />

The studies presented here are all based on cross-sectional data gathered at one specific point<br />

in time. As the constructs under study interact with each other, a longitudinal research<br />

approach would be valuable. For instance, a longitudinal study would make it possible to<br />

empirically investigate the process of investing in social capital up until the realization of a<br />

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eturn on this investment (Lin, 1999). Furthermore, empirical research based on social<br />

exchange theory as suggested by Long (2011) would lead to a more in-depth underst<strong>and</strong>ing<br />

of how the various dimensions of social capital interact.<br />

All studies in this dissertation rely on data gathered from one source. Future research using<br />

data from multiple sources – such as multiple owners of the same firm – would allow for<br />

confirmation of the reliability of the gathered data. Research that takes multiple perspectives<br />

into account would also generate additional insights. For example, it would be interesting to<br />

combine the viewpoints of owners <strong>and</strong> managers within the same firm.<br />

<strong>Strategic</strong> resources<br />

This research focuses on specific components of bonding social capital, bridging social<br />

capital, <strong>and</strong> tacit knowledge as potential strategic resources. Social capital <strong>and</strong> tacit<br />

knowledge are the subjects of separate studies. Future research that combines these two<br />

elements would add value to the answer to the general research question presented in this<br />

dissertation. This is particularly true because it is argued in the literature that tacit knowledge<br />

can be regarded as the outcome of social interactions among the various stakeholders in the<br />

firm (Irel<strong>and</strong>, Hitt, <strong>and</strong> Sirmon, 2003). Moreover, the combination of these resources serves<br />

as an important potential advantage for family firms (Probst et al., 2006; Royer et al., 2008;<br />

Von Krogh <strong>and</strong> Köhne, 1998). It seems that family firms have opportunities to develop tacit<br />

knowledge through network ties, a shared vision, trust, <strong>and</strong> obligations among family<br />

members.<br />

In addition to social capital <strong>and</strong> tacit knowledge, other sources of strategic resources have<br />

been proposed for which family involvement might have a positive impact. For instance,<br />

Sirmon <strong>and</strong> Hitt (2003) identify “patient financial capital,” “survivability capital,” <strong>and</strong><br />

“governance structure” as additional strategic resources specific to the family firm. As the<br />

research presented here reveals a rather limited effect of family involvement on the<br />

development of the strategic resources under study, it would seem relevant to undertake<br />

additional research into these other strategic resources. The uniqueness of family firms may<br />

be more related to these strategic resources than those studied in this dissertation.<br />

Ownership<br />

One interesting finding in this dissertation relates to the role owners play in creating<br />

ownership social capital. The role of owners is stipulated by Uhlaner (2008) <strong>and</strong> Berent-<br />

Braun (2010). Their recommendations for more research in this direction are supported by the<br />

results of this study. Thus far, ownership research has been dominated by a focus on “having”<br />

shares, <strong>and</strong> has failed to adopt a more dynamic approach that looks at “acting” <strong>and</strong> “doing” in<br />

relation to ownership (Hall et al., 2012). Hall et al. (2012, p. 18) make useful suggestions for<br />

future research on ownership, stipulating the need to take an interest in “owners as human<br />

beings, with the aim of underst<strong>and</strong>ing how their emotions, values <strong>and</strong> relations inform <strong>and</strong><br />

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influence ownership practices, <strong>and</strong> thereby organizations.” In this respect, the research on<br />

ownership social capital is a valuable contribution to this dynamic approach.<br />

For family business researchers, it may be promising to investigate the phenomenon of active<br />

ownership in the context of the succession process, as various actors within the family<br />

business system will change their positions during a period of succession. The role of<br />

ownership becomes more prominent when, for instance, the incumbent leader transfers the<br />

leadership of the business but remains attached as an owner of the firm. The consequences of<br />

these changes <strong>and</strong> the question of how to effectively deal with these changes are interesting<br />

avenues for future research. Another issue related to this topic is the notion that female<br />

successors, in particular, want to share in the ownership of family businesses (Arijs, 2009;<br />

Remery, Matser, Van Zwol, & Flören, 2012). If this desire is met in the next decade, it will<br />

mean an even higher percentage of multiple-owner firms, providing yet another indication of<br />

the relevance of research on the specific dynamics of multiple ownership.<br />

Ultimately, the knowledge derived from this research can help stakeholders in family<br />

businesses perform their different roles in an optimal way. The practical lessons learned from<br />

this study are therefore discussed in the next session.<br />

6.5 Practical implications<br />

The results of this study have practical implications for business owners in private firms. The<br />

results indicate that bonding elements of social capital, such as a shared vision <strong>and</strong> the quality<br />

of relationships, positively affect the performance of the firm. Therefore, business owners<br />

should be encouraged to work on these issues. This holds for family business owners, such as<br />

copreneurs or sibling partnerships, as well as for business partners with no family ties.<br />

Business advisors can help business owners in this regard by raising their awareness of these<br />

“soft” issues. This may appear to be an easy suggestion to apply but research (e.g. Matser &<br />

Gerritsen, 2008) has shown that family business owners generally do not score very high on<br />

communication skills. Discussions about the vision of the firm, evaluations of (shared)<br />

leadership, <strong>and</strong> reflections on relationships are all examples of valuable activities that are<br />

normally not undertaken in most family firms.<br />

The results related to bridging elements of social capital highlight the benefits of mobilizing<br />

network resources. Business owners can support their businesses by actively developing new<br />

contacts, opportunities, <strong>and</strong> resources. This research investigates the impact of network<br />

mobilization on product innovation but the positive relation found in this respect will<br />

probably hold for other firm-performance indicators as well. <strong>Family</strong> business owners could<br />

benefit from working on this aspect, especially because the results indicate that businesses<br />

with high family involvement score relatively low on the use of network contacts in the<br />

development of new products <strong>and</strong> services. The study on copreneurial businesses shows that<br />

the involvement of non-family members has a positive impact on firm performance. This<br />

implies that copreneurs should be encouraged to extend their networks by engaging capable<br />

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<strong>and</strong> motivated non-family members in their businesses. Of course, copreneurs have to<br />

carefully consider their specific contexts to identify where these “outsiders” could contribute<br />

the most. Nevertheless, the possibility of extending the network with “outsiders” is a<br />

promising opportunity.<br />

Business owners should also be aware of the equal importance of bonding <strong>and</strong> bridging<br />

elements of social capital. In particular, the combination of working on internal relations <strong>and</strong><br />

focusing on extending the external pool of resources seems to be an effective strategy for<br />

business owners.<br />

Finally, the results of the study in Chapter 5 reveal the positive effect of family succession on<br />

post-succession continuity. If a capable family member is available who wishes to take over<br />

the family business, then the firm has a strategic asset at h<strong>and</strong>. This implies that putting effort<br />

into the development of next-generation leaders can be viewed as a valuable investment.<br />

Although this focus is the responsibility of the business families, it can be supported by the<br />

government. Studies indicate that succession will be a highly relevant topic for many firms in<br />

the coming years, with potentially significant impacts for the economy as a whole (M<strong>and</strong>le,<br />

2008). The importance of a positive knowledge-transfer climate is also highlighted with<br />

respect to a successful business transfer. All actors in this process – incumbent leaders, future<br />

leaders, <strong>and</strong> business advisors – need to pay attention to factors that support such a climate.<br />

These factors are: a willingness to appreciate <strong>and</strong> be proud of the achievements of the<br />

“counter” party; an openness to exploring <strong>and</strong> accepting new management approaches; <strong>and</strong> a<br />

willingness to maintain established work methods <strong>and</strong> practices until their value for the firm<br />

has been fully examined.<br />

In conclusion, this dissertation takes an important step towards underst<strong>and</strong>ing the<br />

phenomenon of strategic resources within private firms, especially family firms. The study<br />

offers valuable insights for businesses owners, private firms’ stakeholders, <strong>and</strong> family<br />

business scholars. Hopefully, this dissertation will lead to new research in this promising<br />

field.<br />

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Summary<br />

Most companies in the Netherl<strong>and</strong>s can be labeled as family firms (according to the GEEF<br />

definition (M<strong>and</strong>le, 2008; Flören et al., 2010). The family firm can be regarded as an opensystem<br />

model comprising three overlapping, interacting, <strong>and</strong> interdependent subsystems:<br />

owners, family, <strong>and</strong> managers (Moores, 2008). This is known as the three-circle model.<br />

Tagiuri <strong>and</strong> Davis (1996) stipulate that family firms have unique resources that create<br />

positive <strong>and</strong> negative outcomes for the firm. This notion has more recently been referred to as<br />

the “familiness” of the firm (Sirmon et al., 2003). In this dissertation, the resource-based view<br />

(RBV) is adopted as the theoretical foundation for underst<strong>and</strong>ing the distinct attributes of a<br />

family firm (Habbershon & Williams, 1999). With the RBV as the primary theoretical<br />

framework, this dissertation looks at strategic resources in private firms <strong>and</strong> how those<br />

resources are influenced by family involvement. The focus is on the development of tacit<br />

knowledge <strong>and</strong> social capital, as the literature indicates that family involvement may have a<br />

strong <strong>and</strong> positive influence on these components of strategic resources (Arregle et al.,<br />

2007a).<br />

The need for more empirical research in the field of social capital <strong>and</strong> tacit knowledge within<br />

the context of private firms is made clear by a review of extant empirical research. This<br />

review also reveals specific topics of interest: the role of owners, the influence of the family<br />

on the development of social capital, the diverse links among the various dimension of social<br />

capital, the transfer of tacit knowledge during business successions, <strong>and</strong> the construct of the<br />

tacit knowledge climate. Therefore, the primary research question addressed in this<br />

dissertation is:<br />

How does family involvement influence the development of components of social capital <strong>and</strong><br />

tacit knowledge in privately held firms, <strong>and</strong> to what extent does the development of these<br />

strategic resources have an impact on firm performance?<br />

The research question is answered on the basis of empirical research presented in this<br />

dissertation. All studies rely on a quantitative research method. Chapter 2 examines<br />

ownership social capital. The study focuses on a r<strong>and</strong>om sample of 708 privately held family<br />

<strong>and</strong> non-family firms with multiple owners. The results of this study show that high levels of<br />

bonding elements of social capital (specifically a shared vision <strong>and</strong> the quality of<br />

relationships among owners) positively affect the mobilization of the owning group’s<br />

network resources. Interestingly, the results do not indicate a significant direct effect of<br />

family involvement on ownership social capital. However, they do reveal a moderating effect<br />

of family involvement: the family firm context is a fruitful environment for the mobilization<br />

<strong>and</strong> use of the potential of bridging ownership social capital when owners agree on the vision<br />

for the firm.<br />

Chapter 3 investigates the relation between ownership social capital <strong>and</strong> product innovation.<br />

The study is based on the same sample as in Chapter 2. Literature on innovation in family<br />

firms stipulates the crucial role of owners in realizing radical innovation for the firm. The<br />

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esults show a positive direct effect from bridging ownership social capital: the mobilization<br />

of the owning group’s network resources has a positive effect on product innovation. The<br />

positive effect of the quality of relationships among members of the owning group on product<br />

innovation is mediated by network mobilization. Furthermore, family involvement works as a<br />

moderator in the relation between network mobilization <strong>and</strong> product innovation: in firms with<br />

high family involvement, the positive effect of mobilizing network resources is weaker than<br />

in firms with low family involvement. This may imply that family business owners view the<br />

potential value of network resources as relatively unimportant to the development of new<br />

products <strong>and</strong> services.<br />

Chapter 4 looks at the impact of spousal social capital on the financial performance of<br />

copreneurial businesses. The study is based on a snowball sample of 167 copreneurs—<br />

couples who jointly own <strong>and</strong> operate a family business. The results indicate that the inclusion<br />

of non-family actors has a significant, positive effect on the performance of the firm. A<br />

shared vision among the copreneurial couple is also positively related to performance. The<br />

relation between the quality of the copreneurial relationship <strong>and</strong> performance is mediated by<br />

the shared vision of the copreneurs. Furthermore, role clarity between spouses is identified as<br />

a significant condition for the development of the relational <strong>and</strong> cognitive dimensions of<br />

spousal social capital. Overall, the results indicate that both bonding <strong>and</strong> bridging elements of<br />

spousal social capital positively affect the financial performance of copreneurial businesses.<br />

Chapter 5 explores the relation between the transfer of tacit knowledge <strong>and</strong> post-succession<br />

continuity. Tacit knowledge is acknowledged in the literature as a key strategic resource for<br />

all firms. The family business literature further argues that the deep tacit knowledge that is<br />

transferred from one generation to another can be a resource that creates a long-term<br />

competitive advantage for family firms. The study is based on a non-r<strong>and</strong>om sample of 81<br />

Dutch family firms, all of which recently completed a succession process. The findings reveal<br />

a positive effect of family-based succession on post-succession continuity. Furthermore, they<br />

show that a positive knowledge-transfer climate during succession has a positive effect on<br />

post-succession continuity in general, although the knowledge-transfer climate is more<br />

critical in non-family successions.<br />

Conclusions<br />

The studies in this dissertation confirm that some strategic resources, such as components of<br />

social capital <strong>and</strong> tacit knowledge, are positively related to firm performance:<br />

• Components of bonding <strong>and</strong> bridging ownership social capital have a positive impact<br />

on the realization of product innovation. The mobilization of network resources has a<br />

direct positive effect, while the quality of relationships between owners has an<br />

indirect effect via the mobilization of network resources.<br />

• A shared vision <strong>and</strong> the use of non-family members are directly <strong>and</strong> positively related<br />

to the financial performance of copreneurial firms.<br />

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• Furthermore, the quality of the copreneurial relationship enhances performance by<br />

stimulating the couple’s shared vision of the business. A positive knowledge-transfer<br />

climate during business succession has a positive effect on post-succession continuity.<br />

The main conclusion concerning the impact of family involvement on the development of<br />

strategic resources is that this impact is indirect <strong>and</strong> bivalent:<br />

• <strong>Family</strong> involvement has a positive impact as a moderator of the relationship between<br />

shared vision among owners <strong>and</strong> the mobilization of network resources. High family<br />

involvement stimulates owners who share the same vision to mobilize their network<br />

resources.<br />

• <strong>Family</strong> involvement has a negative impact as a moderator of the relationship between<br />

mobilization of network resources <strong>and</strong> product innovation. Owners of firms with high<br />

family involvement are relatively passive in mobilizing their network resources to<br />

develop new products <strong>and</strong> services.<br />

• Involvement of non-family members in copreneurial firms has a positive direct effect<br />

on the financial performance of those firms.<br />

• Trans-generational succession has a positive effect on post-succession continuity.<br />

Furthermore, the tacit knowledge-transfer climate is less important during a transgenerational<br />

succession than during a non-family succession.<br />

Other conclusions include the following:<br />

• The role of ownership, role clarity between spouses, ownership-management overlap,<br />

<strong>and</strong> company size are contingency factors that are positively related to components of<br />

social capital <strong>and</strong> tacit knowledge.<br />

• Bonding <strong>and</strong> bridging elements of ownership social capital are positively related to<br />

each other. A shared vision among owners <strong>and</strong> the quality of relationships among<br />

owners both have positive impacts on the mobilization of the owner group’s network<br />

resources. Furthermore, the combination of these bonding elements creates an<br />

additional stimulus for the mobilization of resources in the owners’ network.<br />

Theoretical <strong>and</strong> practical implications<br />

This study confirms the main proposition of the resource-based view (RBV), that strategic<br />

resources are valuable because they help firms develop a long-term competitive advantage.<br />

Spousal social capital, ownership social capital, <strong>and</strong> the knowledge-transfer climate are<br />

identified as strategic resources. The results do not consistently confirm the notion that family<br />

involvement alone acts as a strategic resource. Recently, attention has shifted within the RBV<br />

from a focus on static resources towards capabilities <strong>and</strong> competencies (Newbert, 2007). In<br />

line with Sirmon et al. (2011), who emphasize the need to explicitly address managers’<br />

actions related to firm’s resources, researchers are advised to incorporate the business<br />

owners’ actions <strong>and</strong> family members’ actions related to firm resources.<br />

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The results are in line with the propositions of social capital theory. Payne et al. (2011)<br />

highlight the multilevel challenges <strong>and</strong> opportunities in social capital research. This study<br />

shows that this multilevel aspect is particularly complex in the family firm context because of<br />

the overlaps among the ownership, business, <strong>and</strong> family systems. To obtain an in-depth<br />

underst<strong>and</strong>ing of the construct of social capital, it is necessary to gain more insight into this<br />

issue. This study contributes to the discussion on the interactions among the various<br />

dimensions of social capital (Zheng, 2010) by providing empirical support for the notion that<br />

the bonding <strong>and</strong> bridging elements of social capital interact. Furthermore, the results are in<br />

line with the theoretical frameworks suggested by Adler <strong>and</strong> Kwon (2002), Long (2011), <strong>and</strong><br />

Lin (1999), which emphasize the sequential process in the development of social capital.<br />

Overall, the empirical results indicate that the effect of familiness can be both “distinctive”<br />

<strong>and</strong> “constrictive,” lending support to the theoretical discussion presented by Habbershon <strong>and</strong><br />

Williams (1999). The findings also confirm Tagiuri <strong>and</strong> Davis’s (1996) argument on the<br />

bivalent characteristics of family firms. Another interesting research finding is that<br />

familiness does not seem to have a significant impact on firm performance. In this regard, it<br />

seems that scholars need to be very precise in defining the source of potential strategic<br />

resources. An important implication is the need to reconsider the concept of family social<br />

capital (Carr et al., 2011; Sorenson et al., 2009). When the focus is on ownership social<br />

capital, a distinction can be made between the ‘family’ effect <strong>and</strong> the ‘ownership’ effect.<br />

This dissertation has practical implications for stakeholders of private firms. Stakeholders<br />

should be encouraged to work on bonding elements of social capital, as firms benefit from<br />

investments in the quality of relationships <strong>and</strong> a shared vision among members of the<br />

business-owning groups <strong>and</strong> copreneurial couples. Business advisors can help by raising<br />

awareness of these “soft” issues when consulting with their clients.<br />

Business owners can also support their businesses by actively developing new contacts,<br />

opportunities, <strong>and</strong> resources. <strong>Family</strong> business owners, in particular, st<strong>and</strong> to benefit from<br />

focusing on this aspect because they score relatively low in this regard in relation to product<br />

innovation. The results also indicate that copreneurs should be encouraged to exp<strong>and</strong> their<br />

networks by engaging capable <strong>and</strong> motivated non-family members in their businesses.<br />

Finally, the results reveal a positive effect of family succession on post-succession continuity.<br />

This implies that a focus on the development of next-generation leaders can be viewed as a<br />

valuable investment. The importance of a positive knowledge-transfer climate is also<br />

highlighted with respect to the success of a business transfer. All actors in this process need<br />

to pay attention to factors that support such a climate.<br />

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Recommendations for future research<br />

The research presented in this dissertation does not answer every question regarding the<br />

impact of family involvement on the development of strategic resources in private firms <strong>and</strong><br />

how these resources affect firm performance. There are several possible avenues for future<br />

scientific inquiry:<br />

• Qualitative research, such as case studies with a longitudinal timeframe, would be a<br />

valuable addition, as such research would make it possible to empirically investigate the<br />

process of investing in social capital from its initiation until a return on investments is<br />

realized (Lin, 1999). Case studies would also make it possible to take multiple<br />

perspectives into account, which would generate additional insights.<br />

• Future research could combine components of social capital with components of human<br />

capital, thereby adding value to the general research question defined for this dissertation.<br />

This is particularly true because it can be argued that bonding aspects of social capital<br />

may act as building blocks for the development of tacit knowledge.<br />

• Research into additional sources of strategic resources, such as “patient financial capital”<br />

<strong>and</strong> “survivability capital” (Sirmon & Hitt, 2003), would improve the underst<strong>and</strong>ing of<br />

the mechanisms behind the development <strong>and</strong> impact of strategic resources in private<br />

firms. The role of family involvement in relation to these strategic resources is also<br />

worthy of investigation.<br />

• <strong>Family</strong> business scholars are encouraged to take both the family system <strong>and</strong> the<br />

ownership system into account. Such an approach would make it possible to identify the<br />

specific antecedents of the various strategic resources <strong>and</strong> clarify how these resources<br />

develop in family firms. Furthermore, it would add to the knowledge of how family firms<br />

can be distinguished within the group of private firms.<br />

• In general, more research into the role of ownership is recommended. In particular, a<br />

dynamic approach that looks at “acting” <strong>and</strong> “doing” forms of ownership (Hall et al.,<br />

2012) would be a valuable contribution to the field of ownership research.<br />

• Finally, it seems promising for family business researchers to investigate the impact of<br />

active ownership in the context of the succession process, especially as actors within the<br />

family business system are likely to change positions during the course of a succession.<br />

This will lead to situations of shared ownership.<br />

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124


Samenvatting (in Dutch)<br />

De meerderheid van de private bedrijven in Nederl<strong>and</strong> kunnen worden bestempeld als<br />

familiebedrijven (volgens de GEEF definitie (M<strong>and</strong>le, 2008); Flören et al., 2010). Dit<br />

proefschrift richt zich op deze groep bedrijven en onderzoekt meer specifiek de strategische<br />

resources waarmee familiebedrijven een concurrentievoordeel voor de lange termijn kunnen<br />

ontwikkelen. Bezien als model kan het familiebedrijf beschouwd worden als een open<br />

systeem, besta<strong>and</strong>e uit drie van elkaar afhankelijke subsystemen die elkaar overlappen en op<br />

elkaar reageren: de eigenaren, de familie, en de directie (Tagiuri & Davis, 1996). Dit model<br />

staat bekend als het drie-cirkelmodel. Zoals ook weergegeven in dit model benadrukken<br />

Tagiuri en Davis (1996) dat familiebedrijven door de overlap van de subsystemen unieke<br />

middelen (strategic resources) bezitten die positieve en negatieve effecten voor de<br />

onderneming genereren. Dit onderscheidende kenmerk wordt aangeduid als de familiness van<br />

de onderneming (Sirmon et al., 2003).<br />

In dit proefschrift wordt de theorie van de resource-based view (RBV) als basis gebruikt om<br />

de rol van familiness in het familiebedrijf verder te onderzoeken (Habbershon & Williams,<br />

1999). Met de RBV als het primaire theoretisch kader, zal in dit proefschrift worden gekeken<br />

naar de strategische resources in private ondernemingen in het algemeen. Meer in het<br />

bijzonder zal worden bestudeerd hoe de ontwikkeling van deze resources beïnvloed wordt<br />

door de betrokkenheid van de familie en wat vervolgens het effect daarvan is op de<br />

economische prestaties van bedrijven. De focus ligt hierbij op een tweetal strategische<br />

resources en hoe die zich ontwikkelen: tacit knowledge en social capital. Onder tacit<br />

knowlegde wordt impliciete kennis verstaan, dit is kennis die ‘in het hoofd’ zit en moeilijk<br />

overdraagbaar is. Bij social capital gaat om de meerwaarde die sociale netwerken tussen<br />

mensen opleveren, niet alleen voor hen zelf maar ook voor de organisaties waarvan ze deel<br />

uit maken. Er is voor deze focus gekozen omdat uit voorga<strong>and</strong>e onderzoeken is gebleken dat<br />

juist bij deze resources de betrokkenheid van de familie op het bedrijf een sterke en positieve<br />

invloed heeft (onder <strong>and</strong>ere Arregle et al., 2007a).<br />

Een inventarisatie van besta<strong>and</strong> empirisch onderzoek laat zien dat er nog weinig onderzoek is<br />

gedaan op het gebied van social capital en tacit knowledge bij private ondernemingen. Het<br />

besta<strong>and</strong>e onderzoek toont tevens enkele specifieke onderwerpen die nader onderzoek<br />

behoeven: de rol van de eigenaren, de rol van de familie, de interacties tussen de<br />

verschillende dimensies van social capital en de opbouw van tacit knowledge. Voor wat<br />

betreft tacit knowlegde betreft dit met name de overdracht van tacit knowledge in de context<br />

van de bedrijfsopvolging.<br />

De centrale onderzoeksvraag van dit proefschrift luidt:<br />

Hoe beïnvloedt de betrokkenheid van de familie de ontwikkeling van componenten van social<br />

capital en tacit knowlegde in niet-beursgenoteerde bedrijven en in welke mate is de<br />

ontwikkeling van deze strategische resources van invloed op de prestaties van die bedrijven?<br />

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De onderzoeksvraag wordt beantwoord aan de h<strong>and</strong> van verschillende deelonderzoeken die in<br />

dit proefschrift worden gepresenteerd. Al deze studies maken gebruik van kwantitatieve<br />

onderzoeksmethoden. De bedrijfsprestaties worden op verschillende manieren gemeten:<br />

bedrijfscontinuïteit, innovatie en behaalde financiële resultaten.<br />

Hoofdstuk 2 beschrijft en onderzoekt de rol van ownership social capital. Dit is social capital<br />

toegespitst op de eigenaren van de onderneming. Twee typen van social capital kunnen<br />

worden onderscheiden, bonding en bridging. Vertaald naar ownership social capital betreft<br />

de bonding dimensie het aspect van de interpersoonlijke relaties binnen de groep van<br />

eigenaren die een positieve invloed uitoefenen op het benoemen en behalen van gezamenlijke<br />

doelen (de intern-georiënteerde, verbindende functie). De bridging dimensie omvat de<br />

overbruggende verb<strong>and</strong>en vanuit het sociale netwerk van de eigenaren waarmee toegang<br />

verkregen wordt tot informatie en voorzieningen (de extern-georiënteerde, overbruggende<br />

functie).<br />

Het onderzoek richt zich op een aselecte steekproef van 708 niet-beursgenoteerde familie en<br />

niet-familiebedrijven, allen met meerdere eigenaren. De resultaten van deze studie tonen aan<br />

dat een positieve score op de bonding dimensie van ownership social capital (in het bijzonder<br />

een gedeelde visie op het bedrijf en goede relaties tussen de eigenaren) een positief effect<br />

heeft op de bridging dimensie. Het gaat dan vooral om het mobiliseren van resources die het<br />

netwerk van de eigenaren te bieden heeft. Opmerkelijk is dat – in tegenstelling tot de<br />

verwachting vanuit de literatuur – de resultaten niet wijzen op een significant direct effect<br />

van de familiebetrokkenheid op de ontwikkeling van ownership social capital. Er is wel een<br />

indirect effect van de familiebetrokkenheid vast te stellen: de context van het familiebedrijf<br />

blijkt een vruchtbare omgeving voor de mobilisatie en het gebruik van de bridging dimensie<br />

van ownership social capital indien de groep van eigenaren het eens is over de visie voor het<br />

bedrijf.<br />

Hoofdstuk 3 onderzoekt de relatie tussen ownership social capital en productinnovatie.<br />

Literatuur over innovatieprocessen in familiebedrijven wordt aan eigenaren een cruciale rol<br />

toegedicht bij het realiseren van radicale innovatie binnen een onderneming. Onder radicale<br />

innovatie wordt verstaan innovatie die leidt tot nieuwe producten en diensten die tevens<br />

nieuw zijn voor de markt. De resultaten tonen een direct positief effect van de bridging<br />

dimensie van ownership social capital: de mate waarin het netwerk van de eigenaren wordt<br />

ingezet ten behoeve van het bedrijf heeft een positief effect op het realiseren van nieuwe<br />

producten en diensten. Daarnaast blijkt een indirect positief effect van de kwaliteit van de<br />

interpersoonlijke relaties binnen de groep van eigenaren op de gerealiseerde productinnovatie<br />

te bestaan. Opvallend is dat de familiebetrokkenheid werkt als een negatieve moderator in de<br />

relatie tussen de mobilisatie van het netwerk en productinnovatie: in bedrijven met een grote<br />

mate van familiebetrokkenheid is het positieve effect van het mobiliseren van het netwerk<br />

van de eigenaren zwakker dan in bedrijven met een lage mate van familiebetrokkenheid. Dit<br />

kan betekenen dat de familiale ondernemers de potentiële waarde van het externe netwerk<br />

onderschatten bij de ontwikkeling van nieuwe producten en diensten.<br />

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Hoofdstuk 4 gaat in op het effect van spousal social capital op de financiële prestaties van<br />

bedrijven van copreneurs. Copreneurs zijn levenspartners die gezamelijk een bedrijf runnen.<br />

Deze ondernemingen, ook wel man-vrouwfirma’s genoemd, vormen een belangrijke<br />

subgroep onder de familiebedrijven. Spousal social capital – echtelijk sociaal kapitaal – staat<br />

voor de meerwaarde die de relatie niet alleen henzelf, maar ook de onderneming oplevert. De<br />

studie is gebaseerd op een steekproef van 167 copreneurs. De resultaten geven aan dat het<br />

betrekken van externen bij de strategische besluitvorming een aanzienlijke, positieve invloed<br />

heeft op de prestaties van het bedrijf. Een gedeelde visie onder de copreneurs zorgt voor een<br />

direct positief effect op de financiële prestaties. De kwaliteit van de relatie van de copreneurs<br />

heeft een indirect positief effect op de financiële prestaties. Bovendien blijkt dat duidelijkheid<br />

over de rolverdeling tussen de echtgenoten een belangrijke voorwaarde is voor de<br />

ontwikkeling van de binding dimensie van spousal social capital.<br />

Hoofdstuk 5 onderzoekt de relatie tussen de overdracht van tacit knowledge en<br />

bedrijfscontinuïteit na een overdracht. Tacit knowledge wordt in de literatuur erkend als een<br />

belangrijke strategische resource voor bedrijven. De literatuur over familiebedrijven voert<br />

verder aan dat tacit knowlegde die wordt overgedragen van de ene generatie naar de <strong>and</strong>ere<br />

een bron kan zijn voor een langdurig concurrentievoordeel bij familiebedrijven. Het<br />

onderzoek is gebaseerd op een steekproef van 81 familiebedrijven waar recentelijk een<br />

bedrijfsoverdracht plaatsvond. De bevindingen tonen aan dat het hebben van een opvolger uit<br />

de familie een positief effect heeft op de continuïteit van het bedrijf. Bovendien laten de<br />

resultaten zien dat een positief klimaat met betrekking tot de kennisoverdracht een positief<br />

effect heeft op de bedrijfscontinuïteit in het algemeen. Overigens blijkt het klimaat waarin<br />

kennisoverdracht plaatsvindt een nog belangrijkere factor bij niet-familiale bedrijfsopvolging.<br />

Conclusies<br />

Het onderzoek dat is uitgevoerd voor dit proefschrift bevestigt dat bepaalde strategische<br />

resources, zoals componenten van social capital en tacit knowledge, een positieve relatie<br />

hebben met de prestaties van bedrijven:<br />

• Bonding en binding elementen van ownership social capital hebben een positief effect<br />

op de realisatie van productinnovatie. De mobilisatie van het netwerk van de<br />

eigenaren heeft een direct positief effect, terwijl de kwaliteit van de relaties tussen de<br />

eigenaren een indirect effect laat zien.<br />

• Een gedeelde visie en het betrekken van niet-familieleden zijn beide direct en positief<br />

gerelateerd aan de financiële prestaties van bedrijven van copreneurs. De kwaliteit<br />

van de copreneurial relatie heeft een indirect positief effect op de financiële<br />

prestaties.<br />

• Een positief kennisoverdrachtklimaat bij de bedrijfsopvolging heeft een positief effect<br />

op de bedrijfscontinuïteit.<br />

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De belangrijkste conclusie met betrekking tot de impact van de familiebetrokkenheid op<br />

de ontwikkeling van strategische resources is dat deze invloed indirect en bivalent is:<br />

• Familiebetrokkenheid heeft een positieve invloed als moderator van de relatie tussen<br />

de gedeelde eigenaarsvisie en de mobilisatie van het netwerk van de eigenaren: hoge<br />

familiebetrokkenheid stimuleert eigenaren die dezelfde visie delen om hun netwerk te<br />

mobiliseren.<br />

• Familiebetrokkenheid heeft een negatieve invloed als moderator van de relatie tussen<br />

enerzijds de mobilisatie van het netwerk van de eigenaren en <strong>and</strong>erzijds<br />

productinnovatie. Eigenaren van bedrijven met een sterke familiebetrokkenheid zijn<br />

relatief passief in het mobiliseren van hun netwerk als ondersteuning bij het<br />

ontwikkelen van nieuwe producten en diensten.<br />

• Het betrekken van niet-familieleden in bedrijven van copreneurs heeft een direct<br />

positief effect op de financiële prestaties van deze bedrijven.<br />

• Familiale opvolging heeft een positief effect op de bedrijfscontinuïteit. Bovendien is<br />

het kennisoverdrachtklimaat minder belangrijk tijdens een familiale opvolging dan bij<br />

een niet-familiale opvolging.<br />

Aanvullende conclusies zijn:<br />

• Vier belangrijke contextuele factoren die positief gerelateerd zijn aan de ontwikkeling<br />

van social capital en tacit knowledge zijn: de rol van eigenaarschap, een duidelijke<br />

rolverdeling tussen echtgenoten, overlap tussen eigendom en management en de<br />

omvang van de onderneming.<br />

• Interne en externe elementen van ownership social capital zijn positief gerelateerd<br />

aan elkaar. Een gedeelde visie onder eigenaren en de kwaliteit van de relaties tussen<br />

de eigenaren hebben beide een positief effect op de mobilisatie van het netwerk van<br />

de eigenaren. Bovendien blijkt dat een combinatie van de interne elementen zorgt<br />

voor een extra stimulans op de inzet van het netwerk van de eigenaren ten behoeve<br />

van het bedrijf.<br />

Theoretische en praktische implicaties<br />

Deze studie ondersteunt de belangrijkste stelling van de resource-based view (RBV),<br />

namelijk dat strategische resources waardevol zijn omdat bedrijven hiermee een<br />

concurrentievoordeel voor de lange termijn kunnen ontwikkelen. Spousal social capital,<br />

ownership social capital en het kennisoverdrachtklimaat zijn geïdentificeerd als strategische<br />

resources die een positief effect hebben op de gemeten bedrijfsprestaties. Opvallend is dat de<br />

resultaten niet het veel gehoorde idee bevestigen dat familiebetrokkenheid uit zichzelf zou<br />

werken als een strategische resource.<br />

De laatste jaren is de a<strong>and</strong>acht binnen de RBV verschoven van een focus op de aanwezigheid<br />

van strategische resources naar de capaciteiten en competenties die nodig zijn om vanuit<br />

128


strategische resources een concurrentievoordeel te ontwikkelen (Newbert, 2007). In lijn met<br />

Sirmon et al. (2011), die de nadruk leggen op de noodzaak om expliciet a<strong>and</strong>acht te besteden<br />

aan initiatieven die managers ondernemen met betrekking tot de strategische resources, is het<br />

aan te bevelen om ook de h<strong>and</strong>elingen die eigenaren en familieleden verrichten met<br />

betrekking tot de ontwikkeling van strategische resources, te onderzoeken.<br />

De resultaten van deze studie zijn tevens in overeenstemming met de proposities uit de social<br />

capital theorie. Social capital kan dienen als strategische resource voor ondernemingen. Om<br />

het onderzoek naar social capital verder te brengen, stellen Payne et al. (2010) dat er<br />

uitdagingen en kansen voortvloeien uit het gegeven dat het fenomeen van social capital op<br />

meerdere niveaus kan worden onderzocht (zoals de maatschappij, de organisatie, het team en<br />

de familie). De complexiteit van het familiebedrijf als gevolg van de overlappende<br />

subsystemen, namelijk eigendom, bedrijf en familie, laat duidelijk zien dat social capital zich<br />

op verschillende niveaus kan manifesteren. Voor het verkrijgen van een diepga<strong>and</strong> inzicht in<br />

het construct social capital, is het noodzakelijk om meer inzicht te krijgen in deze<br />

complexiteit. Dit onderzoek levert verder een bijdrage aan deze discussie over de interacties<br />

tussen de verschillende elementen van social capital (Zheng, 2010). De empirische resultaten<br />

onderbouwen het theoretische idee dat interne en externe elementen van social capital elkaar<br />

kunnen versterken. Bovendien zijn de resultaten in lijn met de theoretische kaders die<br />

voorgesteld zijn door Lin (1999), Adler en Kwon (2002) en Long (2011), die het sequentiële<br />

karakter benadrukken bij de ontwikkeling van social capital.<br />

In het algemeen kan worden gesteld dat de empirische resultaten de theoretische<br />

beschouwing van Sharma (2008) ondersteunen. Sharma stelt dat het effect van familiness<br />

zowel distinctive als constrictive kan zijn. Met <strong>and</strong>er woorden, de familiebetrokkenheid kan<br />

zowel een onderscheidend als beperkend effect op de onderneming hebben. De bevindingen<br />

bevestigen daarmee ook het argument van Tagiuri en Davis (1996) betreffende de bivalente<br />

eigenschappen van familiebedrijven. Een <strong>and</strong>er interessant resultaat van dit proefschrift is de<br />

vaststelling dat familiebetrokkenheid geen direct significant positieve<br />

invloed heeft op de financiële prestaties van bedrijven. In dit verb<strong>and</strong> lijkt het erop dat<br />

onderzoekers zeer precies moeten zijn in het bepalen van de antecedenten van potentiële<br />

strategische resources. Zo lijkt het noodzakelijk om het concept van family social capital<br />

(Carr et al., 2011; Sorenson et al., 2009) te heroverwegen. Deze studie laat namelijk zien dat<br />

als de focus ligt op ownership social capital, er een onderscheid gemaakt kan worden tussen<br />

een 'familie' effect en een 'eigendom' effect. Bij het meten van family social capital zou de rol<br />

van de eigenaren meegenomen moeten worden. Hiermee kan een duidelijker onderscheid<br />

gemaakt worden tussen enerzijds familiebedrijven en <strong>and</strong>erzijds private bedrijven waar geen<br />

familieb<strong>and</strong> is tussen de eigenaren.<br />

Dit proefschrift heeft praktische relevantie voor de eigenaren van niet-beursgenoteerde<br />

bedrijven. Eigenaren worden aangemoedigd om te werken aan de verbindende elementen van<br />

social capital. De resultaten leveren een indicatie dat investeren in het opbouwen van interpersoonlijke<br />

relaties binnen de groep van eigenaren een positief effect zal hebben op de<br />

bedrijfsresultaten. Dit geldt ook voor levenspartners die samen een bedrijf runnen. Adviseurs<br />

129


kunnen daarbij helpen door het verhogen van het bewustzijn aanga<strong>and</strong>e het belang van deze<br />

"zachte" factoren.<br />

Eigenaren kunnen het bedrijf ondersteunen door het actief ontwikkelen van nieuwe externe<br />

contacten en het identificeren en benutten van mogelijkheden vanuit hun besta<strong>and</strong>e netwerk<br />

(de brugfunctie van social capital). Familiale ondernemers in het bijzonder, zijn gebaat bij<br />

a<strong>and</strong>acht voor dit aspect, omdat ze bij het ontwikkelen van nieuwe producten en diensten<br />

relatief laag scoren op deze brugfunctie van social capital. De resultaten suggereren verder<br />

dat het een goede strategie is voor copreneurs om niet-familieleden te betrekken bij hun<br />

bedrijven.<br />

Tot slot blijkt uit de resultaten een positief effect van een opvolging door een familielid op de<br />

bedrijfscontinuïteit na bedrijfsoverdracht. Dit betekent dat tijdige a<strong>and</strong>acht voor de<br />

ontwikkeling van de volgende generatie als toekomstige leiders van het familiebedrijf kan<br />

worden gezien als een waardevolle investering. Het belang van een positief<br />

kennisoverdrachtklimaat wordt ook benadrukt met betrekking tot het succes van een<br />

bedrijfsoverdracht. Alle actoren in dit proces doen er goed aan om a<strong>and</strong>acht te besteden aan<br />

de factoren die een dergelijk klimaat ondersteunen.<br />

Aanbevelingen voor toekomstig onderzoek<br />

Uiteraard kan het onderzoek in dit proefschrift niet alle vragen beantwoorden met betrekking<br />

tot strategische resources in familiebedrijven. Mogelijkheden voor toekomstig onderzoek<br />

kunnen als volgt worden samengevat:<br />

• Kwalitatief onderzoek, zoals case studies met een longitudinaal karakter, zou een<br />

waardevolle aanvulling zijn, omdat dergelijk onderzoek het mogelijk kan maken om<br />

empirisch te onderzoeken hoe het proces verloopt van investering in social capital tot<br />

en met het realiseren van een rendement op deze investering (Lin, 1999). Case studies<br />

maken het tevens mogelijk om dit proces vanuit meerdere perspectieven (bijvoorbeeld<br />

eigenaar, familielid en management) te belichten, hetgeen aanvullende inzichten kan<br />

genereren.<br />

• Toekomstig onderzoek zou de onderlinge relaties tussen de verschillende strategische<br />

resources kunnen bestuderen. Dit zal de kennis over strategische resources verder<br />

verdiepen. Dit geldt in het bijzonder omdat vanuit eerder onderzoek is aangeven dat<br />

de verbindende elementen van social capital kunnen fungeren als bouwstenen voor de<br />

ontwikkeling van tacit knowledge.<br />

• Onderzoek zou zich ook kunnen richten op <strong>and</strong>ere potentiële strategische resources,<br />

zoals patient financial capital en survavibility capital (Sirmon & Hitt, 2003). De rol<br />

van de familiebetrokkenheid met betrekking tot deze strategische middelen is ook een<br />

interessante onderzoeksvraag.<br />

• Onderzoekers worden aangemoedigd om zowel met het familiesysteem als met het<br />

eigendomsysteem rekening te houden. Een dergelijke aanpak zou het mogelijk<br />

130


kunnen maken om de specifieke antecedenten van de verschillende strategische<br />

resources te identificeren en te bepalen hoe de ontwikkeling van deze resources in<br />

familiebedrijven verloopt. Bovendien zou dit aanvullende kennis opleveren over de<br />

wijze waarop familiebedrijven kunnen worden onderscheiden binnen de totale groep<br />

van niet-beursgenoteerde bedrijven.<br />

• Vervolgonderzoek naar de invloed van eigenaarschap is aan te bevelen. In het<br />

bijzonder zou een onderzoeksaanpak die zich richt op actieve vormen van eigendom<br />

(Hall et al., 2012) een waardevolle bijdrage kunnen leveren op het gebied van<br />

governance onderzoek.<br />

• Tenslotte, het lijkt veelbelovend voor onderzoekers om de gevolgen van actief<br />

a<strong>and</strong>eelhouderschap te onderzoeken in relatie tot bedrijfsopvolging. Tijdens de<br />

bedrijfsopvolging zullen stakeholders van positie gaan ver<strong>and</strong>eren en de verwachting<br />

is dat dit in toenemende mate zal leiden tot situaties van gedeeld eigendom.<br />

131


132


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Curriculum Vitae<br />

Ilse A. Matser (1969) works since 1998 as an assistant professor at the Utrecht School of<br />

Economics of Utrecht University. In 2007 Utrecht University became the academic partner of<br />

the Dutch Centre for <strong>Family</strong> Business <strong>and</strong> Ilse became the managing director of this expertise<br />

centre for family firms. The centre combines practical experience with the results of scientific<br />

themes that are topical in family business.<br />

Ilse also has the position as Professor of <strong>Family</strong> Business Management at <strong>Windesheim</strong><br />

University of Applied Sciences in Zwolle, the Netherl<strong>and</strong>s. She is head of a new research<br />

group that is started in 2009 <strong>and</strong> which now consists of ten people. The focus is on research<br />

questions regarding ownership, governance <strong>and</strong> strategic entrepreneurship in family firms.<br />

The results of the research projects are, amongst others, used in <strong>Windesheim</strong>’s bachelor <strong>and</strong><br />

executive programs.<br />

Ilse is an active member of an international network of family business scholars <strong>and</strong><br />

practitioners. The research group is engaged in international research projects <strong>and</strong><br />

collaborates with Belgium <strong>and</strong> South African partners.<br />

Ilse Matser obtained her Master’s degree in Economics & Business at Vrije Universiteit<br />

Amsterdam. Her primary research interests are in the field of strategic management <strong>and</strong><br />

governance. She publishes in newspapers, professional <strong>and</strong> academic journals. She is married<br />

<strong>and</strong> has two children.<br />

149


Past research has raised many interesting questions regar-<br />

ding the effect of family involvement on businesses. With the<br />

resource-based view as the primary theoretical framework,<br />

this dissertation looks at strategic resources in private firms<br />

<strong>and</strong> how those resources are influenced by family involvement.<br />

Furthermore, the research investigates to what extent<br />

the development of these strategic resources have an impact<br />

on firm performance. The focus is on the development of<br />

tacit knowledge <strong>and</strong> social capital, as these components of<br />

strategic resources have been identified in the literature as<br />

elements for which family involvement may have a strong,<br />

positive influence.<br />

Ilse A. Matser (1969) works since<br />

1998 as an assistant professor at the<br />

Utrecht School of Economics of<br />

Utrecht University. In 2007 Utrecht<br />

University became the academic<br />

partner of the Dutch Centre for<br />

<strong>Family</strong> Business <strong>and</strong> Ilse became<br />

the managing director of this expertise centre for family<br />

firms. Ilse also has the position as Professor of <strong>Family</strong><br />

Business Management at <strong>Windesheim</strong> University of Applied<br />

Sciences in Zwolle, the Netherl<strong>and</strong>s. Her primary research<br />

interests are in the field of ownership, governance <strong>and</strong> strategic<br />

entrepreneurship in family firms.<br />

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