Edited by Kosmas X. Smyrnios, Panikkos Z. Poutziouris and Sanjay Goel
Chapter 11: Strategy in family businesses: the analysis of human capital and social capital
Recurring questions in strategic management literature focus on how to explain performance differences and on how to predict the firms that will switch strategy positioning. Considering family businesses, what would be the family contributions to strategy change and to business performance? Although we recognize previous literature on the influence of family in strategy decisions (Habbershon and Williams, 1999; Hoffman et al., 2006; Salvato and Melin, 2008; Danes et al., 2009), little was researched on how the family changes the probability of switching strategies and its resulting performance. Moreover, in our investigation, we controlled for endogeneity problems by applying appropriate estimation methods to derive contributions to family business, entrepreneurship and strategy research fields. From the strategy perspective, we recognize that the literature linking transaction-cost economics, the resource-based view and strategic positioning has been growing over recent years (Nickerson et al., 2001; Ghosh and John, 1999). These studies focus on the tangible resources and the associated level of specificity (Williamson, 1985) that they represent for a certain transaction, by assuming homogeneous management ability, skills and experience for all firms. However, many scholars consider the fact that human capital (Becker, 1964; Schultz, 1961, 1982) and social capital (Burt, 1992; Coleman, 1988) are positively associated to firms’ performance (Hitt et al., 2001; Harrington, 2001) and competitive advantage (Ding and Abetti, 2002; Hatch and Dyer, 2004; Acqaah, 2007).
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