by Maarten B.T. de Groot, Oli R. Mihalache, and Tom Elfring (2021) | Summary :
In Toward a Theory of Family Social Capital in Wealthy Transgenerational Enterprise Families, the authors explore how social capital is maintained and enhanced in wealthy families across multiple generations. They focus on “cousin consortiums,” where ownership and management of family wealth pass through several generations, and examine how family social capital—key resources like trust, shared norms, and relationships—can decay over time. The study uncovers that social capital in these families is enhanced through mechanisms such as family governance, family learning, family identity, and physical grounding.
Through an inductive qualitative study of seven wealthy, transgenerational enterprise families, the research reveals how these families manage their relationships and maintain cohesion despite the challenges posed by increasing generational distance. The authors argue that a shift from focusing solely on business longevity to considering the family as the unit of analysis is necessary for understanding long-term success.
Family governance plays a key role by providing clarity and structure, ensuring that family members are involved and informed. Family learning is also crucial, as it involves modeling behavior, mentoring, and values transmission to the younger generation. Family identity, through shared history and values, strengthens the family bond and enhances social capital. Physical grounding—such as maintaining family properties—also serves as a practical and emotional connection point for family members.
This study highlights the importance of social capital in preserving family enterprises over generations and offers insights into how family governance structures and practices can enhance this capital, thus ensuring the family’s transgenerational success. The findings contribute to the understanding of how family relationships, beyond business performance, are key to sustaining wealth and ensuring continuity across generations.
Over generations, decaying family social capital is a primary cause of enterprise wealth loss in enterprise families that share ownership of multiple entities and multiple assets. We answer recent calls to uncover the origins of family social capital by studying seven old, wealthy, and large transgenerational enterprise families. We complement existing research on wealth cre- ation through entrepreneurship by offering a deeper understanding of how family social capital is enhanced in transgenerational enterprise families. Our inductive qualitative study finds that enterprise family social capital appears to be enhanced by family governance, family learning, family identity, and physical grounding.
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