Academic journal article Entrepreneurship: Theory and Practice

Commentary: Familiness: Capital Stocks and Flows between Family and Business

Academic journal article Entrepreneurship: Theory and Practice

Commentary: Familiness: Capital Stocks and Flows between Family and Business

Article excerpt

Because constructs and variables are the building blocks of hypotheses and propositions, theorists must first evaluate them before analyzing the relational properties of theories. If they are working with inappropriate constructs and variables, how these constructs and variables are assembled into hypotheses and propositions is irrelevant. All parts of a bridge may fit together perfectly, but if this bridge is constructed of "silly-putty," it is not a good idea to drive over it (Bacharach, 1989, p. 501).

Since Habbershon and colleagues introduced the construct of "familiness," describing it as the idiosyncratic firm level bundle of resources and capabilities resulting from the interactions between the family, its individual members, and the business (Habbershon & Williams, 1999, p. 11; Habbershon, Williams, & MacMillan, 2003, p. 451), this construct has received significant attention from family business scholars. Efforts have been directed to understand the components of family involvement in business and the essence or consequences of such involvement (Chrisman, Chua, & Sharma, 2005). However, the fundamental task of evaluating the construct itself--its dimensions, antecedents, and consequences--had been left unattended, slowing down the theory-building aspirations of the field (Zahra & Sharma, 2004).

Using criteria for evaluation of constructs presented in classic articles, such as Bacharach (1989), Kaplan (1964), and Pearson, Carr, and Shaw's (2008, this issue) systematic evaluation of the "familiness" construct reveals opportunities for its elaboration and development. Drawing upon the social capital theory (e.g., Adler & Kwon, 2002; Leana & Van Buren, 1999), they elaborate on the structural, cognitive, and relational dimensions of social capital and its consequences in building capabilities and competitive advantages. In turn, the developed competitive advantages are theorized to lead to value and wealth creation in family firms. This article complements recent theorizing by Arregle, Hitt, Sirmon, and Very (2007) regarding the mechanisms that enable the flow of "family social capital" (FSC) to create "organizational social capital" (OSC). Arregle et al. suggest that the strength of FSC is determined by the stability in membership, interactions and interdependence among members, and closure or interconnections within members. Together, these four factors influence the flow of FSC into a family firm, thereby affecting the stocks of unique bundles of this resource in the firm. These two articles help develop the foundation for a "social capital model of familiness," and in doing so partially respond to Habbershon and Williams's (1999) suggestion for a need to understand the antecedent conditions and performance outcomes of "familiness."

While good progress on the important task of deconstructing, analyzing, and understanding the relational properties of the construct of "familiness" has been made by these efforts, two opportunities for elaboration are identified and developed in this commentary: Content and flow of bonding and bridging social capital, and capital resource portfolio of family firms. This discussion leads to a modified definition of "familiness" that incorporates various forms of capital resources, as well as the temporal aspects.

Content and Flow of Bonding and Bridging Social Capital

While Pearson et al. (2008) developed the content of the social capital at the nexus of family and business, Arregle et al. (2007) focused on its flow from family to business system. Both articles adopt an internal view of social capital, that is, within the family and/or business system. Research aimed to understand factors that help drive the sustainability and viability of family firms over centuries attests to the importance of strong ties within the family business "community" (e.g., Miller & Le-Breton Miller, 2005, p. 50; Ward, 2004). Thus, a focus on understanding the dimensions, antecedents, and outcomes of internal social capital in family firms is an important first step in developing a social capital model of familiness. …

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