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Family connections and entrepreneurial human capital: The uncertain destiny of proprietary capitalism

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  • Maria Rosaria Carillo

    ()
    (University of Naples Parthenope)

  • Vincenzo Lombardo

    ()
    (University of Naples Parthenope)

  • Alberto Zazzaro

    ()
    (Universit… Politecnica delle Marche, MoFiR)

Abstract

Two general conclusions can be drawn from the historical and empirical economic research on family firms: (1) it is impossible to identify a single definitive destiny for proprietary capitalism in the process of industrial development regardless of the cultural and institutional context in which the family firms operate; (2) in the same or similar economic environments well-performing (well managed) coexist with underperforming (poorly managed) family firms. In this paper, we develop an overlapping generations model, where agents are endowed with heterogeneous innate talent, and family firms have a comparative advantage over non-family enterprises as they have access to an additional source of immaterial capital, namely the network of family connections. Our results accommodate both the polarization of family firms into two groups with different levels of profitability and the uncertain destiny of proprietary capitalism between a crony and an entrepreneurial society, depending on the institutional framework and technological dynamism of the economy.

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Bibliographic Info

Paper provided by Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences in its series Mo.Fi.R. Working Papers with number 89.

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Length: 52
Date of creation: Oct 2013
Date of revision:
Handle: RePEc:anc:wmofir:89

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Keywords: Family firms; allocation of talents; economic growth; family connections; technological change;

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