Simulating Dynamic Capabilities and Value Creation in Family Firms: Is Paternalism an “Asset” or a “Liability”?

The authors conduct a simulation study using system dynamics methods to interpret how and when paternalism
affects dynamic capabilities (DCs) and by association value creation in family firms. Their simulation experiments
suggest that the effect of paternalism on DCs and value creation varies over time. Initially, increasing levels of family
social capital and low levels of paternalism are associated with high rates of DCs and value creation accumulation
(asset). Later, higher levels of paternalism produce their pressure to decrease DCs, value creation, and family social
capital accumulation rates (liability).