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CEO social capital in family businesses and its effect on investment opportunities: Asset or liability?
Author(s) -
Romano Mauro,
Favino Christian,
Pennacchio Luca,
Grimaldi Francesco
Publication year - 2020
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.1941
Subject(s) - social capital , business , investment (military) , intangible asset , centrality , asset (computer security) , liability , context (archaeology) , capital (architecture) , finance , paleontology , social science , mathematics , computer security , combinatorics , sociology , politics , political science , computer science , law , biology , history , archaeology
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.