Social Capital And Crisis Management In Private Business

With increasingly fierce market competition, crisis management attracts the attention of many research fields such as administration, public relation, sociology and psychology. In the study of these fields, shortcomings are obvious.Crisis management theories study business crisis management only from the aspect of business itself, which leads to overemphasize the significance of firms' internal resources while ignore the influence of external resources to the process of crisis management. In reality, the effect of business crisis management of a firm is not only dependant to the internal resources and abilities it owns, but also dependant to all kinds of social networks and reputations it builds. At present, though some theories on business crisis management, such as structualist crisis management, general model of pain index and diffused theory, begin to shift their aspects from business itself to outside environment of business and start to admit that the firm should advance its ability of crisis management through integrating both its internal and external resources, these theories only table a proposal from some aspect that business crisis management should wake up to both internal and external environment. They have not yet systematically studied the relations between social capital and business crisis management from the aspect of social capital.Focusing on these problems, this article attempts to carry on the special discussion upon the crisis management of our domestic private business. We choose the private business of "C" city in Hubei province as a case, explore the crisis management's channels and processes of the private business under the aspect of social capital theory, and try to provide another aspect for studying on the crisis management of our native private business.In addition, most of our private business are medium or small-sized, which have little internal resource to be used when in the process of business crisis management owning to their small size and other contraints. Therefore, the key factor that affects the efficiency of crisis management is whatever the private business can obtain their necessary resources from external environment. Furthermore, since the property right of private business belongs to private entrepreneurs, this makes private entrepreneurs try their best to mobilize their social capital to obtain external resources to do crisis management.In order to show the effect of social capital on business crisis management, the article choose private business as the case to study the relations between social capital and crisis management. The findings are as follows:Firstly, in the process of crisis prevention, the most two important elements of social capital are both important tactics of private entrepreneurs. On one hand, before the crisis break out, private entrepreneurs accumulate social relations in daily management to avoid the crisis happening. On the other hand, some private entrepreneurs have already recognized that honest and trust is helpful to avoid the crisis. In this process, the function of social network works through the information it flows.Secondly, in the process of crisis resolution, private entrepreneurs rely on social network to deal with the crisis. When the crisis breaks out, private entrepreneurs should deal with the crisis as fast as possible whether or not they are lack of manpower, material resources and financial resources. In addition, the firm's insufficient resources and the traditional cultural influence make the private entrepreneurs choose social network to deal with the crisis by the light of nature. In this process, the function of the social network works through financial resources and power it flows. When the firm suffers financial crisis or other crisis, the private entrepreneurs usually use the social network to get financial help. In addition, during the transitional period in China, administrative power still control many rare resources, in order to succeed in resolving the crisis, the private entrepreneurs always attempt to approach to the power through their social network.Thirdly, in the process of crisis recovery, social network and trust are both tactics of the private entrepreneurs. Social network, especially the strong ties can provide financial help for the firm and give emotional support for the private entrepreneurs. While honest and trust help the firm recover from the crisis through stimulating other people's passion to help the firm or the owner.