CEO social capital in family businesses and its effect on investment opportunities: Asset or liability?

Social capital is a widely recognized critical intangible resource for firm success, especially in family businesses, which are considered “emotional arenas”. CEOs' social capital could represent a decisive factor, although its influence is unclear. This research aims to deepen the relationship...

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Bibliographic Details
Published in:Corporate social-responsibility and environmental management 2020-09, Vol.27 (5), p.2004-2015
Main Authors: Romano, Mauro, Favino, Christian, Pennacchio, Luca, Grimaldi, Francesco
Format: Article
Language:English
Subjects:
CEO social capital
Environmental conditions
family businesses
Family owned businesses
Investment
investment opportunity set
Liability
Network analysis
Social capital
social network analysis
Social networks
Social organization
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Summary:Social capital is a widely recognized critical intangible resource for firm success, especially in family businesses, which are considered “emotional arenas”. CEOs' social capital could represent a decisive factor, although its influence is unclear. This research aims to deepen the relationship between CEOs' social capital and firm investment opportunity set (IOS). The research hypothesis assumes a positive relationship between CEO social capital and firm's IOS. CEO social capital is estimated considering network centrality indicators suggested by the authoritative social network analysis literature. The IOS is represented by a single composite indicator of four price‐based proxies and one accounting variable. Using a wide sample of listed Italian family firms, the analysis shows that a CEO with a broader relational network decreases firm investment opportunities. The findings suggest that family businesses, in the Italian context, lack the environmental conditions and critical factors to valorize the CEO's social capital in terms of future investment opportunities.
ISSN:1535-3958
1535-3966
DOI:10.1002/csr.1941