Social capital of family firms and organisational efficiency: theoretical proposals for a transmission model through bureaucratic costs

Abstract

Recent studies have highlighted the specificity of the family business, with particular focus on the perspective of its social capital arising from the interpenetration of the private (the family) and the professional (the organisation) spheres. We have extended these studies to provide a theoretical framework explaining how this social capital can lead to greater organisational efficiency. Here is a “missing link” in the literature on family business. After demonstrating how this mechanism works, we develop our analysis around two main sources of variation: the size of the company and the generation involved - factors that tend to evolve over time. We thus argue that the dilution of the family in the ownership and management of the business, and an increase in the number of actors and possible divergent interests, can handicap the family business in the long term with respect to organisational efficiency and can reduce its capacity for survival compared to a non-family business.