Seminar #26 – September 29, 2021

ABSTRACT – How the family actually affects a business is a fundamental question for family business research and the answer is constantly reinterpreted. Two contrasting arguments claim the family has either a positive or a negative effect on the business. This grounded theory study presents data from fieldwork that intensively interviewed 28 family members from 25 family farms across England and sheds light on the phenomenon of family business. It presents a theory of family social capital synthesizing system-agency theory and the resource-based view. It extends the resource bathtub analogy that explains the immobility and non-instantaneity of resources. We propose that the level of family social capital required to produce a positive effect requires a period to cultivate and must be preserved. In addition, internal family social capital must be balanced by external family social capital, analogous to mixing hot and cold water when running a bath. Consequently, a goldilocks zone is postulated where an optimal level of both internal and external family social capital exists. Furthermore, whether a family is moving away or towards this zone can be articulated by four trajectories of family social capital: hot and increasing, hot and decreasing, cold and increasing, and cold and decreasing. Each trajectory is characterised by specific factors showing the effect of the family is subject to the current and anticipated state.