The Effect Of Social Capital On Family Business Innovation

With the development of economic globalization as well as the increasingly fierce external competition, in the face of large multinational corporations and growing state-owned enterprises of China during the globalization process, the development environment and space of Chinese family businesses is limited further. In the new competitive environment, any business can not be completely isolated expanding their production and innovation activities.Our family business has achieved considerable development during the thirty years of reform and opening up to the outside world. As an important part of the private economy, the family business has become a major enabler of technological innovation. However, in the early days of course, the family business can converge the power of a smooth transition based on their blood, kinship and geopolitical basis, but, when these companies are growing stronger, the original family governance has been unable to meet the demand of growth, it is focused on the lack of outstanding performance in the introduction of innovative thinking and creative ability of personnel training. And an important feature of the family business is the family members involved, mainly for management and key positions in the family-oriented, which restricts the introduction of external talent to a large extent, coupled with the excessive centralization of business owners and decision arbitrariness innovation capacity of enterprises is difficult to develop. Therefore, it is necessary to explore the innovative family business for achieving the goal of "Evergreen family business".Harvard economics professor Alessandro·Potts (1995) pointed out that "social capital refers to the ability of individuals or groups through the use of social networks, norms and trust and other elements to obtain scarce resources." Based on this, the aim of the introduction of social capital in a family business is trying to find the relationship between family social capital and innovation capacity among family businesses, find out how the special degree of internal social capital and the external social capital size of family businesses affect the innovation of family businesses. From the micro level, this article studies the family business as an individual object, analyze its impact on the family business innovation capability from the view of external social factors that influence the size of the capital stock; from the medium-level view, this paper dedicate to explore the internal members of the family business elements of the network structure, such as trust, norms and networks, analyze its impact on the family enterprise innovation ability from the perspective of the degree of specificity of social capital within family firms. Therefore, this paper aims at making a comprehensive summary and conclusion through the internal and external factors that affect the family business innovation capability, in order to further improve the social capital of the family enterprise innovation ability as well as providing guidance for the Chinese family business innovation.This paper uses the method of combining theoretical research with empirical research. Firstly, comb the related concepts, including the definition of the family business, social capital theory and innovation theory, and based on this review of previous academic research on social capital impact on business innovation; then, from the perspective of internal and external of the family business, analyze the mechanism of external social capital within the family business innovation, and on the basis of the identification of the elements of social capital, using content analysis, explored the effect of internal social capital on family business innovation; based on the analysis of external social capital’s impact on innovation, building an innovative model of social capital outside the family business conditions, through the relevant data listed family businesses, empirical analysis and testing of the family business the size of external social capital impact of family business innovation.Comparing with the existing researches, the main innovation of this study was to investigate the effects of social capital on family business innovation capabilities with quantitative research methods. In the existing literature on the influence of social capital on technological innovation is still based on qualitative research, this article start on quantitative research, using the method of content analysis and regression analyzed the special degree of internal social capital and the external social capital size of family businesses affect the innovation of family businesses, and the current researches on such relative area era rare; the scholars study on the innovation of family business emphasis more on the business performance, and therefore the study of combination of the family social capital and innovation capacity can be regarded as a major innovation of this article.