According to How to Choose & Use Advisors: Getting the Best Professional Family Business Advice, Dr. John Ward and Dr. Craig Aronoff list special needs for family businesses that should be understood by their professional advisors.
Family capital consists of resources within the family that can be made available to the business. When family resources or assets outweigh liabilities, a family has family capital. Consistent with previous research, family capital is defined as social, human and financial resources available to the business. Together, all three types of family capital— social, human and financial—account for a significant portion of family firm gross revenue and perceived success, particularly in small firms. The common thread that runs through all the articles and commentaries is family social capital.
Based on the social capital, conflict and ethics literatures, this study introduces a new concept—the family point of view—and provides theoretical arguments resulting in the following hypotheses: (a) the family point of view emerges from collaborative dialogue, which helps develop agreement to ethical norms; (b) the presence of ethical norms further helps cultivate family social capital; and (c) as a resource in a family business, family social capital is positively related to family firm performance. Using structural equation modeling, an exploratory test of 405 small family firms found support for all three hypotheses. The findings indicate a fully mediated relationship among collaborative dialogue, ethical norms, family social capital and firm performance. The study not only highlights the importance of moral infrastructure in family firms but also helps clarify components of family social capital.