FOREWORD

Social capital – that is, capital that takes the form of norms, trust, and networks – has been the subject of considerable recent research. It has been found to facilitate corporate competitiveness and economic development, enabling individuals and organizations to bond together and bridge gaps. The competitiveness of Asian enterprises is a matter very close to the heart of the work of the APO. Hence, it is both timely and appropriate to commission research into the important role that social capital plays in Asia.

This project was undertaken in two phases. The results of the first phase were published under the title Social Capital in Asia. The research was led by Professor Heon Deok Yoon of Soongsil University, Republic of Korea. The second phase, led by Professor Tan Wee Liang of Singapore Management University, followed from the initial work and explored the role of social capital in family firms as the largest category of enterprises in Asia.

Research on social capital in Asian family-owned firms is needed as many small- and medium-size enterprises fall into this category and rely on contacts from within their networks and circles. The close-knit nature of families and the significant level of social capital employed have a significant potential impact on business transformation, which must occur for firm development and growth. If social capital is to be a boon to business transformation and not a hindrance, its utilization should be encouraged. On the other hand, if it leads to less-effective business practices or to a preference for the status quo, it is necessary to become aware of its disadvantages. The research found that in the firms examined social capital played a crucial role in business transformation, and the examples revealed certain best practices that other Asian businesses can emulate.

The APO is grateful to all contributors to this book for conveying the emerging concept of social capital through their studies. It is our hope that this research on social capital will encourage firms and policymakers to examine social capital and its linkages to business excellence and higher productivity. The APO will continue to support research in this area and seek ways in which to enlighten businesses in member countries on the virtues of social capital for business transformation for sustainable growth and greater competitiveness.

Shigeo Takenaka, Secretary-General, Tokyo
April 2008