Abstract

Despite important research advances in the areas of family firm ownership, social capital, and bribe payments, their three-way theoretical and empirical relationship remains unexplored. To address this gap in the literature we use a sample of 13,639 firms from 25 developing countries and examine whether and how social capital moderates the association between family firm ownership and bribe payments. The results show that greater family ownership is associated with a higher proportion of sales paid in bribes. Consistent with our expectations, country-level social capital moderates this relationship. As country-level social capital increases, the positive impact of family ownership falls and after a certain threshold the relationship between family ownership and bribe payments becomes negative. Social capital also moderates the relationship between family involvement in key managerial positions and bribe payments. Finally, the results show that the moderating role of social capital is facilitated by its components of social and civil participation, personal and family relationships, and social networks; however, the components of interpersonal and institutional trust do not appear to play a moderating role.