Investigating Dynamic Capabilities of Family Businesses in China: A Social Capital Perspective

Abstract

Purpose - Dynamic capabilities are regarded as the bedrock of businesses that survive in a dynamic environment. Building upon the social capital theory, this study aims to investigate the nexus between dynamic capabilities and social capital in family businesses. Design/methodology/approach - The study adopted a quantitative approach. As there is no formal business database available in China, the study followed a snowball sampling procedure. 628 useful responses were gathered. Findings – The study echoes the call of Arregle et al. (2007) for understanding family business’s internal sources of competitiveness and the role of social capital. Results show that the three dimensions of social capital, namely structural, cognitive, and relational capital, influence dynamic capabilities of family businesses. Research limitations - The lack of an official business database in China made the conventional representative sample survey used in the West difficult to replicate. Furthermore, empirical data were collected from different regions of China; regional cultures and different levels of economic development across the regions might influence the social capital-dynamic capabilities connection, but these were not examined in the current study. Originality/value – The study integrates two significant but disconnected research streams, i.e. social capital and dynamic capabilities. Furthermore, the study shows how different dimensions of social capital influence dynamic capabilities. Research findings derived may contribute to the entrepreneurial debate as to why some family businesses can survive in the dynamic environment while others cannot.