Achieving Sustained Competitive Advantage: A Family Capital Theory

Posted: 11 Nov 2009

See all articles by James Hoffman

James Hoffman

Texas Tech University - Area of Management

Mark Hoelscher

Illinois State University - Institute for Entrepreneurial Studies

Ritch Sorenson

Texas Tech University - Area of Management

Multiple version iconThere are 2 versions of this paper

Date Written: 2006

Abstract

Family owned businesses have competitiveadvantage over nonfamily firms; as a group they outperform the Standard &Poors 500. No clear and cohesive theory provides a structure for analysis ofthe family firm's performance and capabilities. This study attempts to providean explanation by introducing the concept of "family capital," aconcept derived from social capital. Social capital identifies the relationships that exist among people. Familycapital is defined as those family relationships unique to family businesses.Both social and family capital are resources that are appropriable and acollective good. They provide avenues for communication and sense-making of theenvironment, and both need maintenance and provide closure (a pressure to actwithin accepted social norms). The dimensions of family capital are identified as information channels andfamily norms (obligations, reputation, collective trust, and identity and moralinfrastructure). Each dimension provides benefits and efficiencies to theorganization. Family capital may be considered a strategic resource.(TNM)

Keywords: Information sharing, Family capital, Family firms, Competitive advantages, Firm ownership, Social capital, Firm performance, Family networks, Information networks, Social networks, Trust relationships

Suggested Citation

Hoffman, James and Hoelscher, Mark and Sorenson, Ritch, Achieving Sustained Competitive Advantage: A Family Capital Theory (2006). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1503839

James Hoffman

Texas Tech University - Area of Management ( email )

United States

Mark Hoelscher

Illinois State University - Institute for Entrepreneurial Studies ( email )

Normal, IL 61761
United States

Ritch Sorenson

Texas Tech University - Area of Management ( email )

United States
806- 742-2173 (Phone)
806- 742-2308 (Fax)

HOME PAGE: http://management.ba.ttu.edu/Faculty/RSorenson.htm

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