ABSTRACT
In addition to the transfer of economic capital and human capital, social capital is regarded as another critical element that determines the success or failure of family business transmission. Unlike physical capital, such as land, real estate, machinery, jewellery and vehicles that can be simply transferred by reassigning ownership, personal ties and social connections are complex and abstract, and therefore cannot be transmitted by using similar procedures. Similarly, unlike educational attainment and professional qualifications, which can be obtained through formal examination, personal connections are relatively harder to cultivate or transmit. In order to make the succession process smooth and successful, many patriarchs try to transmit their social capital to their children as much as possible. Generally speaking, during early childhood, the founding patriarch may try to involve their children in the family business, either by their direct participation, or involving them in social gatherings. If they want to pass the leadership to the next generation, they must first cultivate their successors’ interest in business and give them working experience, personal connections and business networks. To use a Chinese expression, one should establish his jianghu diwei, which means his social status in the community, so that he would have the sufficient ‘standing or authority’ to lead the enterprise.
