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Next-Generation Entrepreneurs and Succession: An Exploratory Study of Modes and Means of Managing Social Capital

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Relationships and connectivity play an enhanced role in most models of the new economy. For many firms, strategic advantage resides in the social capital (or relational wealth) they are able to nourish and maintain. This important asset is accumulated over time and not easily traded or transferred. For family firms with long-term continuity goals, the transfer and management of this largely intangible asset are a most significant activity. This research is based on interviews of next-generation entrepreneurs in 18 different firms. It contributes to the family business and more general management literature by identifying different ways in which relational wealth is transferred, created, and managed. Four different modes of transferring social capital emerged from the data: unplanned, sudden succession; rushed succession; natural immersion; and planned succession and deliberate transfer of social capital. Additionally, seven means of managing social capital emerged: deciphering existing network structures, deciphering the transactional content of network relationships, determining criticalities, attaining legitimacy, clarifying optimal role, managing ties through delegation and division of labor, and striving for optimal network configuration and reconstituting network structure and content. This paper concludes with a series of propositions for further research.
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Document Type: Research Article

Affiliations: Endowed professor and academic director of the Centre for Entrepreneurship and Family Enterprise at the University of Alberta School of Business, Edmonton, Alberta, Canada.

Publication date: September 1, 2001

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