The empirical research carried out in different countries on the performance of family businesses in comparison to their non-family counterparts show that the former are more effective than the latter. The natural source of the family business competitive advantage is family, social capital. Trust is a major element which makes up the capital. In the paper, the author describes the nature of the trust and identifies critical conditions necessary to sustain this strategic resource as time goes by and the business grows. According to the concept by Sundaramurthy to sustain the emotional trust in family businesses, their found-ers and managers have to focus on developing other forms of trust which are complementary to the emotional one and support it. Family firms have potential to generate bigger cross-border social capital, which lets them achieve better results in foreign markets.
The problem of HRM in a family enterprise has two aspects. The first is the assurance of high involvement, motivation, and loyalty on the part of employees. The second is the prevention of hiring and promoting people with low competencies who only have a family background to show.
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