Family firm performance: the effects of organizational culture and organizational social capital

Abstract

PurposeThe goal of this paper is to examine the mediating role of organizational social capital between family firms' organizational culture, characterized by their group vs individual orientation and external vs internal orientation, and their performance.Design/methodology/approachA structural equation model is developed and tested in a sample of 176 US family firms recruited through Prolific Academic.FindingsThe authors show that group vs individual cultural orientation fosters bonding social capital, while external vs internal cultural orientation fosters bridging social capital. In turn, family firm performance is only enhanced by bridging social capital, not bonding social capital, which appears to have neutral to negative direct performance effects. Nevertheless, it is noteworthy that bonding social capital facilitates the establishment of bridging ties, leading to overall positive performance outcomes.Originality/valueThe understanding of how organizational culture influences family business heterogeneity and performance, along with the clarification of how bonding social capital fosters or hinders performance, provides novel insights for researchers and practitioners seeking to understand the complexities within the unique context of family businesses.